Which has the Top Economy – Colorado, Utah, Washington?

There are frequent references in the local media about how Colorado is one of the top state economies in the country. And it is!

There are many metrics that can be used to compare state economies. The two best metrics are the growth rates for Real GDP and employment. In this post we look at these metrics from 2005 to the present for Colorado, Utah, Washington and the U.S.

Employment
• Washington has the greatest number of employees, followed by Colorado.
• Utah had the highest rate of employment growth of the three states. Colorado and Washington have grown at similar rates; however, Washington’s rate of growth has been off a larger base of employment.
• Employment for all three states has grown at a faster rate than the U.S. That rate of growth has accelerated since 2010 for all three states.

Colorado Utah Washington

Real GDP
• Washington has the largest GDP, followed by Colorado.
• The Real GDP for all three states has grown at a higher rate than the U.S.
• Utah had the fastest rate of Real GDP growth from 2005 to present followed by Washington. Colorado is third.
• Since the end of the recession the GDP for all three states has grown at a faster rate than the United States. Colorado had the fastest rate of Real GDP growth from 2013 to present because of the rapid growth in the extractive industries. That rate of growth is likely to decrease in 2015 and beyond as a result of challenges facing the oil and gas industry caused by lower oil prices.

Colorado Utah Washington

Based on these metrics Washington has the largest economy and Utah is growing at a faster rate than the other two states. The strengths of the economies in Utah, Washington, and Colorado make them great places to live, work, and play. Here’s to a prosperous year for all three states in 2016.

Employment Data for November Shows Continued Deterioration in Colorado Job Growth

The Bureau of Labor Statistics released wage and salary employment data for November that shows the level of Colorado job growth continued to deteriorate. In October, the jobs data reported there were 49,000 more jobs than 2014 and the difference for November was 43,600 jobs.

On a quarterly basis employment gains for 2015 are as follows:
• Q1 75,000
• Q2 60,200
• Q3 46,400
• Q4 46,300 (estimated).

The current employment data shows the state is on track to add 57,000 jobs in 2015. Henry Sobanet, Director of the Governor’s Office of State Planning and Budgeting recently stated the slowdown in the rate of job growth could be attributed to two things – the lower price of oil and the slower growth in the Chinese economy. In other words, the slowdown is a “bump in the road” and not a major recession.

Through the first eleven months of the year:
• About 78.8% of the total jobs added were in the top five sectors: Health Care; Accommodations and Food Services; Construction; Professional, Scientific, and Technical Services; and Financial Activities.
• Approximately 24.8% of all jobs added were in Leisure and Hospitality (Accommodations and Food Services plus Arts, Entertainment, and Recreation).
• About 10.9% of total jobs added were in the PST, Manufacturing, and Information Sectors. These sectors are the source of primary and advanced technology jobs.

Projected revisions, which will be made in March 2016, are estimated to bring Colorado job growth closer to the lower limit of the 2015 cber.co forecast, a forecasted increase of 73,000 to 79,000 jobs.

The total number of unemployed workers at the end of November 2015 was 102,035.

The total number of unemployed is 8,306 greater than the trough in May 2007 and 138,542 less than the peak in October 2010.

Lower unemployment rates have brought about shortages of trained workers in key sectors and occupations. The November 2015 unemployment rate of 3.6% is down from 4.3% in November 2014. In addition there are 19,567 fewer unemployed workers compared to a year ago.

The lower unemployment rates across the state are a mixed blessing. On the positive side, workers who are on the sideline will have more and better opportunities to find a job if their skills match the current openings. It is also likely that upward wage pressures my make it possible for them to be paid higher wages. On the downside there will be greater turnover at companies as people jump to “better” jobs, which may reduce productivity and drive up operational costs.

Looking ahead, 2016 stands to be a solid year if the unemployment rate will stabilize and job increases will be stronger than they were in the second half of 2015.

colorado jobs data

 

Colorado Unemployment Rate Drops to 3.6%

Earlier today the Bureau of Labor Statistics released employment and unemployment data  Colorado. It was a mixed blessing.

Unemployment

The Colorado unemployment rate for November dropped to 3.6%, down from 3.8% in October and 4.3% a year ago.

Nationally, the unemployment rate declined in 45 states compared to a year ago. By contrast only 27 states have rates lower than October. Colorado’s seasonally adjusted unemployment rate has been at or below 4.2% since December 2014 and there is little room for it to drop much further.

For job hunters this is good news as long as their skills match the available jobs. In addition, there will be upward wage pressure for occupations facing a shortage of qualified workers, such a construction, machining, and technicians.

On the other hand, the lower rate may be bad news for some companies. They may have greater difficulty finding qualified and clean workers. As a result they may have to pay higher wages for skilled positions. In addition, there is greater employee turnover during times of lower unemployment. This may decrease productivity and increase recruitment, hiring, and training costs. These increased costs will lead to lower profit margins and increased prices.

At the end of November there were 102,035 unemployed workers in Colorado. This is only 8,306 greater than the trough in May 2007 and 138,542 less than the peak in October 2010.

unemployment rate

Employment

Despite the lower unemployment rate, November wage and salary job growth was lackluster, only 43,600 greater than a year ago. During the first half of 2015 Colorado employment increased at an average monthly rate of about 5,600 jobs. That average has dropped to 3,900 jobs during the second half of the year.

Even with the declining rate of job growth Colorado will add 55,000 to 60,000 jobs this year – prior to BLS benchmark revisions that will be released in March 2016. Those revisions may push 2015 average employment to 70,000+. The leading sectors for job growth are Health Care, Accommodations and Food Services, and Construction.

As the level of job growth has tapered off there has been an increase in the number of discussions about a recession; however; the Fed’s recent decision to hike interest rates suggests the economy is on solid footing and a recession will not occur in the short-term.

U.S. Employment Continues Growth at a Slower Rate

On December 4th, the Bureau of Labor Statistics released its monthly update for U.S. nonfarm payroll employment for November. The number of non-seasonally adjusted jobs increased by 2,650,000 in November compared to a year ago.

Based on current trends, the U.S. is on track to add 2,959,455 jobs in 2015.That equates to about 269,000 workers per month.

The November unemployment rate remained at 5.0% down from 5.8% a year ago. There were 7.9 million unemployed compared to 9.0 million last November.

A look at the seasonally adjusted data shows that job growth occurred in construction, professional and technical services, and health care. Losses occurred only in the mining and information sectors.

• Construction employment posted a gain of 46,000 in November. About 26,000 of those jobs were in the residential specialty trade contracting subsector. Year-over year construction employment is about 259,000 workers greater than last November.

• Professional and technical services added 28,000 jobs in November. About 11,000 jobs were in accounting and bookkeeping services and 5,000 were in computer systems design services. Compared to a year ago, the PST sector is about 298,000 jobs greater than the same period in 2015.

• Health care employment for November was 24,000 greater than October. About 13,000 workers were added in the hospital subsector. On a YOY basis health care employment is about 470,000 greater in 2015.

• Employment in food services and drinking places increase by about 32,000 jobs in November and it is up by 374,000 greater than a year ago.

• Combined, the four sectors mentioned above show job gains of about 1.4 million compared to a year ago.

• Compared to the prior month there was little change in the following sectors: manufacturing, wholesale trade, transportation and warehousing, financial activities, and government.

All eyes will continue to be on the Fed and their meeting later this month. Although U.S. employment has increased at a decreasing rate through 2015, the latest BLS report is probably strong enough for them to finally announce a hike in short term interest rates.

Moving forward the $64 question is, “Will job growth continue at the rate experienced in the second half of the year or will we move forward at the more robust rate shown in the first half of the year?”

U.S. Employment

Colorado Employment Increases by 13,000 jobs in October – Really?

On Friday November 20th, the BLS released wage and salary employment data for the states. The seasonally adjusted data indicated that Colorado employment increased by 13,000 jobs last month.

This is in sharp contrast to the previous three months. The data for July showed a gain of 600 jobs; an increase of 1,600 workers was posted in August, and a decline of 1,600 jobs showed up in September.

If these numbers prove to be accurate, it is reasonable to raise the question: Which is the anomaly – the posted employment for July through September or the employment for October?

The non-seasonally adjusted data shows the Colorado employment continues to post solid job growth. Approximately 59,700 jobs will be added this year.

Colorado employment

The state’s job growth is led by the health care, construction, and accommodations and food services industries. There are fears that construction growth will be constrained by the lack of trained workers.

In addition, all of the state’s MSAs have shown solid to strong job growth. Local governments are continuing to spend and the state government is offering more tax incentives to out-of-state companies to move to Colorado.

A review of the top news stories for the past month echoes the sentiment of state leaders (Office of state Planning and Budgeting and Colorado Legislative Council) who say that the economy is on solid footing.

A majority of the coverage about the economy is very positive, however, there is one story that is unsettling. Union Pacific is laying off workers in Denver and BNSF is following suit in other states. While there is reason to be concerned about the individuals who are furloughed or laid off, there is greater concern because the railroads are facing decreased demand for shipments (coal, oil, agriculture products, and industrial products). This suggests there may be something fundamentally wrong with the overall economy, i.e. manufacturing may be woefully weak.

Another note of concern, the state of Colorado is expected to take in record levels of revenue, yet it will experience a budget shortfall for a variety of reasons beyond the control of state legislators. Special interest groups are addressing this issue, but there is limited interest in their efforts.

The bottom line is the Colorado economy is on solid footing, at least for the moment.

 

U.S. Employment Shows Strong Gain in October

On November 6th, the Bureau of Labor Statistics released its monthly update for U.S. nonfarm payroll employment. The number of seasonally adjusted jobs increased by 271,000 in October. Over the previous 12 months, employment has increased by an average of 230,000 workers per month. That equates to 2.8 million per year.

The unemployment rate was down from 5.7% to 5.0% a year ago and 5.1% in the previous month. The number of unemployed persons was down from million a year ago to 7.9 million in October.

The areas with the largest increases were professional and business services (PBS), health care, retail trade, food services and drinking places, and construction.
• Employment in the PBS Sector increased by 78,000 in October, compared with an average gain of 52,000 per month over the prior 12 months.
• Health care employment increased by 45,000 jobs in October. Over the past year, health care has added about 41,200 jobs per month, or slightly less than a half million jobs for the year. About 27,000 jobs were added in ambulatory health care services and 18,000 in hospitals.
• The number of retail trade jobs increased by 44,000 in October. This is well above the average monthly gain of 25,000 jobs for the past 12 months. In October about 20,000 were added in clothing and accessories stores, 11,000 were added in general merchandise stores and 6,000 were added in automobile dealerships.
• About 42,000 workers were added in food services and drinking places in October. For the past year the monthly average has been about 31,000.
• Finally, construction employment rose by 31,000 in October. This is slightly higher than previous months. About two-thirds of the October growth was in nonresidential specialty trade contractors.

On the down side, mining employment fell by 5000 workers. The sector peaked in December 2014 and has since shed 109,000 jobs.

Employment in other major industries was similar to the prior month.
It was encouraging to see this level of job gains. Next month, we will learn whether the level of October employment was a “one hit wonder” or a reversal of the downward trend that has been taking place since the second quarter.

Colorado’s October Job Growth Reverses Downward Trend

Recent data from the Bureau of Labor Statistics shows that 2015 wage and salary job growth continues to be positive, but it is increasing at a decreasing rate. Through the first nine months Colorado employment is 61,000 jobs greater than the same period last year.

During Q1 job growth was 75,000 greater than the same period a year ago. It dropped significantly during Q2 – 60,100 greater than Q2 2014. Q3 2015 job growth was only 47,700 greater than Q3 2014.

After declining for six months (March through August), employment increased from 42,100 in August to 42,400 in September.

About 76.2% of total jobs added were in the top five sectors:
Health Care 13,800
Accommodations and Food Services 12,300
Construction 11,500
Professional and Scientific 5,200
Manufacturing 3,600

Approximately 23.8% of all jobs added were in Leisure and Hospitality (AFS + AER). This sector touches all Colorado counties.

About 10.8% of total jobs added were in the PST, Manufacturing, and Information Sectors. These sectors are the source of primary and advanced technology jobs.

Colorado is projected to add 73,000 to 79,000 jobs in 2015, a gain of 3.0% to 3.2%. As mentioned earlier Colorado is on track to add 61,000 jobs this year.

CDLE/LMI has projected that a significant upward adjustment will be made to the Q4 2014 data and data for the first four months of 2015. These revisions will be made in March 2016. Total employment for 2015 should be at the lower end of the range of 73,000 to 79,000. This is the level of job growth forecasted by cber.co for 2015.

The good news is the downward trend in the number of jobs added may have been reversed in October. We will learn more next month and in March 2016 when the 2015 data is revised.

Wage and Salary Job Growth

 

U.S. Posts Weak Job Growth in September

On October 2nd the Bureau of Labor Statistics released its monthly update for U.S. nonfarm payroll employment. The number of seasonally adjusted jobs increased by a meager 142,000 workers in September.

Despite the weak job growth in September, the unemployment rate was unchanged at 5.1% and is likely to continue on a downward trend for the remainder of the year.

For the month of September job growth occurred in five major areas.

• Health care added 34,000 jobs in September. This is slightly below the average increase of 38,000 jobs per month over the prior 12 months. About 16,000 jobs were added in hospitals and another 13,000 in ambulatory health care services.

• Employment in information rose by 12,000 in September. The sector has about 44,000 more workers than a year ago.

• During September professional and business services added 31,000 jobs. This is well below the average of 45,000 per month so far this year. By comparison, the sector increased by an average of 59,000 in 2014. Notable job gains occurred in computer systems design and legal services. Because many companies in this sector are a part of the country’s advanced technology cluster, there are concerns that growth is not stronger.

• Retail trade employment rose by 24,000 in September. This is slightly less than the average monthly gain of 27,000 jobs over the past 12 months. Notable gains were in general merchandise stores and automobile dealers.

• Employment in food services and drinking places added 21,000 workers in September, well below the monthly average of 29,100 workers.

Once again, mining employment dropped sharply, this time a decrease of 10,000 workers. Most of the lost jobs were in support activities. Lower prices for a barrel of oil is taking a toll on the industry.

Employment in other major industries was similar to previous months.

Two things are unsettling about the employment report for September:
•The level of job growth is weak.
• The quality of jobs are weak. While it is great that people are finding work, many of the jobs have lower than average wages.

Time will tell whether the economy has headed south or if it has hit a bump in the road.

Colorado Economy On Track to Add At Least 68,600 Jobs in 2015

At the midpoint of the year the U.S. economy is on solid footing and the second half of the year will be much stronger than the first half. The Colorado economy continues to outperform the U.S. in its rate of growth for population, employment, and GDP.

Key Data Points for the U.S.
Real GDP – Q2 will be stronger. Annual growth will be 2.5% to 2.9% in 2015.
Retail Sales – Up 1.3% for 6 months, projected to be up 3.0% for 2015.
U.S. Employment – The U.S. is on track to add 3.1 million jobs this year.
Unemployment Rate – 5.3%, down from 6.1% a year ago, 8.3 million unemployed, trending down.
ISM Indices –Manufacturing is sluggish and expected to remain that way; Non-Manufacturing is steady and well above 50.
Price of a Barrel of Oil (WTI) – Since mid-March it has varied from $43 to $61. Currently in the low 50s, but trending down.
Construction – For 6 months, employment up 4.2%, weekly earnings up 3.0%.
Case Shiller Housing Prices – U.S. prices up 4.2% from a year ago.
Dow Jones Industrial Average – On July 17rd the DJIA was 18,086, up 1.5% from 17,823 at the end of the year.

Average Colorado employment is 68,600 greater than the same period last year, with the potential of being revised upward at a later date.

Colorado Economy

As has been the case in the past, the sectors with the top job growth are: Health Care; Accommodations and Food Services (part of the Tourism Industry); Construction; Professional, Scientific, and Technical Services; and Manufacturing. These sectors accounted for about 72% of total job growth in the first half of 2015.

The Bureau of Economic Analysis has released the 2014 Gross Domestic Product for Colorado. The state’s Real GDP expanded at a rate of 4.7% compared to 2.2% for the U.S.

Key Data Points for Colorado
QCEW Revisions – Recent revisions to Q4 2014 could cause 2014 employment to be revised upward in the March 2016 benchmark revisions. There was stronger momentum coming into 2015 than originally anticipated.
Population – Colorado’s population will increase by 88,800 people this year.
Unemployment Rate – 4.4%, down from 5.0% a year ago.
MSA Unemployment Rate – Boulder and Ft. Collins have the lowest rates at 3.5% and 3.6% respectively.
2014 Colorado GDP – The state Real GDP grew by 4.7% in 2014 compared to 2.2% for the U.S.
2014 Contribution to GDP Growth – The Mining sector accounted for 6.2% of GDP and 18.2% of GDP growth in 2014.
Wage and Salary Employment – On average Colorado has added 68,600 jobs this year based on current data. This is not adjusted for the projected revisions.
Leading Sectors for Growth – About 72.2% of the jobs have been added in the Health Care; Construction; Accommodations and Food Services; Professional, Scientific, and Technical Services; and Manufacturing.

For details or more information about the Colorado economy, check out the 2015 cber.co forecast and economic updates on this website, https://cber.co.

Boulder County and Larimer County Business Development

Both Boulder County and Larimer County are the source of innovation and entrepreneurship that helps drive the Colorado economy.

This analysis compares changes in the unemployment rate, population growth, the number of private sector establishments, and employment. It shows how the growth patterns for the two counties are significantly different for these demographics.

In summary, this comparison shows that:
• Since 2001, Boulder County and Larimer County have usually had unemployment rates below the state – which is a mixed blessing.
• Since 2001, the population, employment, and number of private sector establishments for Boulder County have grown below the rates for Colorado and Larimer County.
Finally, this analysis poses questions that relate to the changes in these data sets.

Unemployment Rate

Typically, the unemployment rates for both Boulder and Larimer County are below the rate for the state.Boulder County and Larimer County

Population

In 2001 Larimer County population was 260,746. It increased by 63,376 and was 324,122 in 2014.
In 2001 the Colorado population was 4,444,513. It increased by 906,059 and was 5,350,572 in 2014.
In 2001 Boulder County population was 278,981. It increased by 34,352 and was 313,333 in 2014.

For this period the rates of change in the population follow:
• Larimer County 24.3%
• Colorado 20.4%
• Boulder County 12.3%.

Boulder County and Larimer County

Establishments

In 2001 there were 8,479 Larimer County establishments. The number increased by 1,976 to 10,455 in 2014.
In 2001 there were 151,025 Colorado establishments. The number increased by 24,957 to 175,992 in 2014.
In 2001 there were 12,335 Boulder County establishments. The number increased by 1,165 to 13,500 in 2014.

For this period the rate of change in the number of establishments follows:
• Larimer County 23.0%
• Colorado 16.5%
• Boulder County 9.4%.

Boulder County and Larimer County

Employment

In 2001 Larimer County employment was 126,300. It increased by 22,300 and was 148,600 in 2014.
In 2001 Colorado employment was 2,226,800. It increased by 234,000 and was 2,460,800 in 2014.
In 2001 Boulder County employment was 166,200. It increased by 10,500 and was 176,700 in 2014.

For this period the rate of change in the employment follows:
• Larimer County 17.6%
• Colorado 10.5%
• Boulder County 6.3%.

Boulder County and Larimer County

Implications

The following questions arise when looking at the changes in the unemployment rate, population, the number of private sector establishments, and employment in Boulder County and Larimer County. (Boulder County is also the Boulder MSA and Larimer County is the Fort Collins MSA).

• How do organizations in Boulder and Fort Collins find qualified workers when the regional unemployment rate is lower than the state and other MSAs? Do they have established training programs? Do they recruit workers from other companies (in-state or out-of-state)? Do they provide their workers premium compensation packages?
• Why is the rate of growth for the Boulder population lower than Fort Collins and the state? Is this a result of a lack of affordable and attainable housing in Boulder? Will the completion of improvements to the 36 corridor make it easier for workers to commute to Boulder? Can commuters afford to use it?
• Why are the number of new business establishments in Boulder growing at a slower rate than Colorado and Fort Collins? Is there a lack of adequate commercial space? Is commercial real estate too expensive in Boulder? Why are other areas more attractive? Is it too expensive to operate a business in Boulder? Is it necessary to export innovative ideas out of Boulder so companies can be successful? Why do companies stay in Boulder
• Why is the employment growth rate for Boulder lower than the state and Fort Collins?

This analysis of data for Larimer, Boulder, and Colorado shows that communities have varied business development policies and priorities that have been successful in different ways.