Tag: Employment

Colorado Economy Remains Strong

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National Economy

The Colorado economy is outperforming the U.S. economy. Recent strength in the U.S. economy is a positive sign for Colorado.

Nationally, employment remains strong. The non-seasonally adjusted data shows that an average of 230,000 jobs have been added each month through seven months. Most likely the U.S. will add about 2.5 million jobs this year.

On a positive note, the labor force participation rate appears to have bottomed out.

Real GDP increased by 4.0% in Q2. The reasons for the increase in the real GDP were:

  • Stronger personal consumption.
  • Greater private inventory investment.
  • Increased residential fixed investment.
  • Stronger non-residential fixed investment.
  • Improved state and local government spending.
  • Greater demand for exports

Factors that offset the growth were:

  • Increased demand for imports.
  • Decreased federal government spending.

An area of potential concern is construction. Hopefully the industry is taking a breather after its recovery from the Great Recession. The number of building permits issued over the past year has been flat.

In addition, the housing market is cooling off. The rapid appreciation in housing prices is tapering off.

Both manufacturing and services have been solid since the second half of 2009. At least this is being reflected in the growth of the GDP.

Implications of the National Economy on Colorado

These indicators have several implications for Colorado. The short-term outlook points to stronger personal consumption, which bodes well for retailers and tourism, particularly if Mother Nature cooperates by bringing early and frequent snow for the ski season.

Stronger retail sales will add to the coffers of the state and local governments, which should point to continued increases in government spending. This would benefit everything from schools to infrastructure.

On the downside, lower or constrained government spending could impact the military and federal facilities and laboratories. This has the potential to impact the universities and federal facilities in Colorado Springs, Denver, Boulder, and the Northern Colorado metro areas.

The unemployment rate and the number of unemployed continue to trend downward; however, critical labor shortages are developing in many occupations. This is particularly critical to high-tech industries.

Labor shortages are impacting all industries in Northern Colorado which is experiencing rapid growth as a result of the extractive industries boom. Workers are being raided from other companies and industries, which will ultimately drive wages up.

The Colorado construction market still appears to be solid and the value of residential housing is growing, albeit at a slower rate than last year. At the same time the Dow Jones Industrial Average is about where it was at the end of 2013.

Appreciation in the housing and equity markets play into consumer confidence. If consumers feel their house and investments have appreciated, their wealth on paper is greater, and they are more likely to purchases goods and services.

Colorado Economy

The following five sectors account for about 45% of total jobs in the state, yet they are responsible for almost 75% of the jobs added this year.

  • Accommodations and Food Services
  • Health Care
  • Construction
  • Professional and Scientific Services
  • Retail Trade.

All of these jobs are important to the state for various reasons.

  • About 10% of all jobs are in the Accommodations and Food Services sector. AFS has accounted for about 20% of the jobs added this year. As a major component of the tourism sector, AFS is an important part of the economy in all 64 counties.
  • Just under 11% of the state’s s jobs are in the Health Care sector. This category has accounted for about 15% of total jobs added this year. The Health Care sector affects our quality of life and plays a key role in the economy in all 64 counties.
  • The Construction industry is small by comparison, with about 5.0% of total state jobs. Approximately 12% of the job growth is in this category. A segment of the Construction jobs are tied to the growth of the extractive industries.
  • A portion of the Professional, Scientific, and Technical jobs are a key part of the state’s advance technology industries. They account for about 8% of the jobs and 11% of the job growth.
  • Finally, Retail Trade jobs account for almost 11% of total jobs and 11% of total job growth. The retail sector is critical to most local governments because a majority of their revenue is derived from retail sales taxes.

Through seven months of 2014, the average job growth is about 67,300 greater than the same period in 2013.

Strong U.S. Economy Bodes Well for Colorado

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The U.S. economy got off to a horrendous start with weak employment in January and -2.6% real GDP growth in Q1. There has since been enough improvement in Q2 for the Federal Reserve to announce it will end QE3 in October. As well, interest rate hikes are likely to occur in 2015, which is good news for some and bad news for others.

It appears the Fed has satisfactorily unwound the quantitative easing program, something many economists feared might not happen at the time it was put in place. Today, most members of the Fed are bullish on the economy, at least for the remainder of 2014. Several members have expressed short-term concerns because retail sales, healthcare spending, and residential construction are underperforming.

A strong U.S. economy bodes well for Colorado.

The equity markets have been volatile in 2014, but the Dow has passed 17,000 and continues to establish new record – highs. Improved equity markets have increased the personal wealth of Coloradans and given them reason to remain optimistic about the growth of the economy.

Through the first half of 2014, U.S. wage and salary jobs have been added at a slightly faster pace than 2013. On average 188,000 jobs were added each month during 2013. By comparison, an average of 194,000 jobs have been added for the first six months of 2014 compared to the first half of 2013. (Source: non-seasonally adjusted data).

Nationally, the unemployment rate continues to drop. It has declined from 6.7% at the end of 2013 to 6.1% at the end of June. A year ago it was 7.5%.

In addition, the number of unemployed continues to decline, dropping to 9,474,000 in June. This is down significantly from 11,747,000 a year ago. By comparison, there were 15,333,000 unemployed in April 2010 at the height of the Great Recession. On the other hand there were 6,731,000 in March 2007 just prior to the Great Recession. Despite the improvement, there are still a number of people struggling to find work.

A similar situation exists in Colorado. Unemployment continues to trend downward, but the number of unemployed remains higher than desired. It has decreased from 6.2% at the end of 2013 to 5.5% in June. Unfortunately, about 150,000 workers remain unemployed. While this number is decreasing at a painfully slow rate, it is about 60,000 greater than the low point in April 2007, the low point prior to the recession.

While the decrease in unemployment is a positive sign, some industries such as construction, manufacturing, and segments of high-tech are struggling to find trained workers. In smaller metro areas such as Weld County there will be a domino effect as higher paying jobs in the oil and gas industry may pull workers from local manufacturers, hotels and restaurants, and construction companies.

The situation is slightly different for some rapidly expanding high-tech industries that require specialized talent (software, technicians, machinists, etc.). Talent attraction is a necessary option for supplying trained workers for these rapidly growing companies. This can be a challenge because there are national shortages in key occupations for the high-tech industry. It is important for Colorado to “train their own” but at the same time Colorado must continue to attract workers from other states.

Through the first six months of 2014 Colorado has added 67,000 jobs compared to the same period last year. Looking ahead, Colorado will continue to see strong growth through the remainder of the year. In certain parts of the state, that growth will occur as an indirect result of the extractive industries and agriculture. In the metro areas, it will be driven by broad-based growth across many industries. The leading areas of growth will continue to be tourism, construction, health care and sectors that are related to advanced technology.

 

Colorado Job Growth Will Exceed Projections

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In January, cber.co released its economic forecast for Colorado. U.S. employment was projected to increase by 2.3 million jobs in 2014 and the state would add 68,000 to 74,000 jobs. The cber.co forecast is more aggressive than all other state forecasts.

After five months, it appears that U.S. and Colorado job growth will exceed cber.co projections. Through five months, U.S. jobs are being added at an average rate of 213,600 per month (or more than 2.5 million jobs per year) and the state is projected to add 67,100 jobs this year.

To digress for a moment…The most recent QCEW data published by BLS suggests the wage and salary data for Colorado will be higher than the current 2014 estimates. These projections are expected to be bumped upwards by as much as 10,000 in the March 2015 revisions.

In other words, the current wage and salary job growth estimates are not fully capturing the magnitude of job growth in Colorado.

There is a downside to the rapid rate of growth. In 2013, the Consumer Price Index for Colorado rose by 2.8% versus 1.5% for the U.S. Major contributors to the higher rate for Colorado was higher rental and home prices, significant increases in heating utilities, and higher medical costs. Higher housing prices are a function of Colorado’s strong housing market and decreased inventories, while increased utility costs may be related to state energy policy.

After a rugged start to the year at the national level (-2.6% Real GDP Growth in Q1), the nation will see solid growth in the economy for the remainder of the year. What is good for the U.S. is also good for Colorado. All indications are that the state will likely record accelerating job growth for the fourth consecutive year.

 

The Decline in Colorado’s Unemployment Rate – Good and Bad News

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The Bureau of Labor Statistics released their latest job numbers for Colorado earlier today and there were no surprises. Growth continues to be solid and the unemployment rate is trending downward.

It is great to see the overall rate of unemployment drop; however, there is a downside. Barring a recession, the rate is likely to continue to drop to the 4.0% range over the next couple of years and remain at that level for an extended period of time. We have very quickly shifted from an employer’s market to a job seekers market.

The rate of unemployment for some occupations is now below 3.0%, for example, the management and professional occupations. It is good news that business is strong; however, it is bad news because it is not possible to find enough qualified workers to produce goods or provide services.

Since all industries require managers, the shortage of people to fill management occupations crosses all industries. The shortage in some professional occupations is in Colorado’s high-tech sector. It is good news there is growth, but bad if it hurts the local economy.

Nationally, the food preparation industry is another example where there is a substantial decrease in the unemployment rate. Over the past year the rate has dropped from 8.8% to 7.1%. This means it will be more difficult for many of the state’s restaurants to find an adequate number of workers.

As the construction industry has improved, the unemployment rate in the construction and extraction occupations have fallen from 14.3% to 9.8%.

While that is good news, it is estimated that 700,000 construction workers have left the industry. In other words, there is a shortage of trained workers.

The good news that is associated with the declining unemployment rates means there will be greater competition between industries for workers.

Eventually this will result in increased wages. That is good for the workers, but may cause the price of goods and services to increase.

Such is the case in economics, it seems that every story has an upside and a downside.

Colorado is on track to add 71,000 jobs in 2014.

Colorado Manufacturing Employment Stronger than U.S.

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Since 1990 Colorado manufacturing employment has fared better than U.S. manufacturing employment. This has occurred in part because Colorado has grown off a much smaller base. Also the mix of companies in Colorado has not included some of the industries, such as textiles, that were hit hardest by outsourcing.

Colorado’s strength in manufacturing is beverages such as Coors/Miller and Budweiser. As well, the state has competencies in select high-tech sectors.

The bad news for Colorado is that the industry’s location quotient, or concentration, is well below 1.0 and trending downward.  In other words, Colorado has a lower concentration of manufacturers than the U.S.

U.S. vs. Colorado Manufacturing Employment
U.S. vs. Colorado Manufacturing Employment.

 

 

Colorado Remains on Track to Add at Least 71,000 Jobs in 2014

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The state remains on track to add at least 71,000 jobs this year.

The BLS released their monthly employment report for Colorado earlier today. Rather than prepare a sector-by-sector analysis, the following comments evaluate the situation from 30,000 feet.

Colorado has had the perfect winter – snow in the mountains, but not so much that people couldn’t get to there to spend their money and ski. The state has had an excellent ski season which bodes well for hospitality industry employment. Good snow also means good rafting for the summer season.

A strong ski season also bodes well for the construction industry. Nationally, hotels and resorts had delayed repairs and expansions because of the recession. Upgrades and new construction that have been on hold are likely to occur in the months ahead.

A trip to DIA shows the importance of tourism to the state. Progress is being made on the Westin hotel located at the south end of the terminal. As well there are signs the light rail will soon be a reality. That will make it easier for travelers to connect to the metro area, which will further enhance Denver’s image as a place to hold conventions and conduct business.

It also appears the Gaylord project has cleared its latest set of hurdles and will begin construction soon. Shuttle drivers are anxiously telling their passengers where the project will be located.

The fact that Denver is on the short list for the Republican National Convention speaks to the increased reputation Denver is gaining as a place to host conventions. The fact that Colorado is a blue/purple state makes it an even more attractive destination. Wouldn’t the Republicans love to unseat the Democrats at a convention held in the Democrat’s backyard?

The snow and the cold of the winter season have not stymied construction along the Front Range. The state added over 10,000 construction jobs in 2013. Job growth has continued to be strong in 2014. Moving forward, the industry may be challenged to find sufficient workers, as unemployment in the industry has decreased substantially.

The construction industry will remain strong, with most of the growth coming from private sector investment. Despite improvement in tax revenues, the public sector is still not in a position to fund construction – such as schools or institutions.

Road construction has been held back by limited tax collections. One downside to improved fuel efficiency is less fuel is being consumed. The tax rates have not increased to support maintenance and repairs to our transportation infrastructure.

Residential construction will continue to improve, but will not approach the rates of growth that occurred prior to the Great Recession. For a variety of reasons, multifamily growth will remain strong. For example, young buyers prefer to live in the metro areas vs. the suburbs and many of them have high debt levels.

Obamacare enrollment has finally come to a close. For better or worse, the program is officially moving forward and healthcare organizations have greater clarity about how they can operate. They will be challenged by thin margins and will have to constantly be on top of their operations to remain profitable.

The industry continues to evolve rapidly. For example a focus for many organizations is bringing health care to local neighborhoods through urgent care and emergency facilities. The ACA will drastically impact the way healthcare organizations deliver services.

The oil and gas industry will continue to be extremely strong in Northern Colorado. In 2013 the state produced 64 million barrels of oil and about 80% was produced in Weld County. Colorado is one of the country’s top 10 states in terms of oil reserves. There are smaller counties that have enjoyed growth in oil production because of the Niobrara oil field, i.e. the industry is benefitting many parts of the state. Finally, the natural gas industry is strong on the western slope.

The state remains on track to add at least 71,000 jobs this year.

 

Grand Junction and Greeley – Boom and Bust

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Energy is a mixed blessing (boom and bust) to local economies in Colorado, specifically Grand Junction and Greeley.

Since 1991, the Grand Junction MSA has added jobs at an annualized rate of 2.4% compared to 2.0% for the state.

Mesa County enjoyed strong growth in the first part of the 2000s because of the oil and gas industry. Unfortunately, it also experienced a bust in 2009.

The Grand Junction MSA employment has not returned to the peak level of 2008.

 boom and bust

 

Since 1991, the Greeley MSA has added jobs at an annualized rate of 2.9% compared to 2.0% for the state.

Similar to Mesa County it experienced a boom as a result of exploration in the Niobrara gas fields.  As well, the local economy benefitted from a Vestas turbine factory. While the county experienced a downturn in conjunction with the Great Recession, Greeley MSA employment returned to the peak level of 2008 in January 2012.

Despite the boom and bust cycles, both communities have experienced a stronger rate of growth over the past two decades than the state.
boom and bust

 

©Copyright 2011 by CBER.

ADP Report – Mid-Size Companies Adding The Most Jobs

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ADP announced that the U.S. private sector added 175,000 jobs in January. The data shows mid-size companies adding the most jobs.

Since the official end of the Great Recession the ADP data shows the private sector has added 7,418,000 jobs.

The number of jobs added by company size category follows.

1 to 19 employees

  • 1,477,000 jobs added.
  • 19.9% of total jobs added.
  • 25.9% of private sector jobs.
  • 5.2% growth since the end of the recession.
    (See chart below for jobs added since the end of the recession).

20 to 49 employees

  • 1,191,000 jobs added.
  • 16.1% of total jobs added.
  • 15.9% of private sector jobs.
  • 7.0% growth since the end of the recession.

50 to 499 employees

  • 2,674,000 jobs added.
  • 36.0% of total jobs added.
  • 35.6% of private sector jobs.
  • 7.0% growth since the end of the recession.

500 to 999 employees

  • 474,000 jobs added.
  • 6.4% of total jobs added.
  • 6.9% of private sector jobs.
  • 6.4% growth since the end of the recession.

1,000+ employees

  • 1,602,000 jobs added.
  • 21.6% of total jobs added.
  • 15.8% of private sector jobs.
  • 9.7% growth since the end of the recession.

Jobs have been added across all size categories. The data show the following:

  • Well-established large companies (1,000+ workers) have added jobs at the fastest rate, 9.7%.
  • The 50 to 499 category has added the highest percentage of jobs 36.0%.
  • The 50 to 499 category is the largest category, 35.6% of private sector jobs.
  •  The 50 to 499 category has added the greatest number of jobs, almost 2.7 million.

The most encouraging news is the recent increase in the growth of smaller companies.
Mid-size companies adding the most jobs

©Copyright 2011 by CBER.

cber.co Colorado Economic Forecast for 2014 – 68,000 to 74,000 Jobs to be Added

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In 2013 the state experienced natural disasters and self-inflicted political wounds, yet Colorado employment grew at a faster than expected rate. The cber.co economic forecast points to continued expansion  for 2014.

On a Positive Note…

  • The state population grew at a higher rate than expected in 2013. Stronger growth is on tap for 2014.
  • The story is the same for employment. In 2013, the state added approximately 68,000 workers and will add another 68,000 to 74,000 in 2014. This represents job growth in the rage of 2.9% to 3.1%.
  • Unemployment will continue to decline, and will be in the range of 5.5% to 5.8% at the end of 2014.
  • In 2013 consumers were delighted that gasoline prices declined. At the moment there is no reason to believe they will rise precipitously (knock on wood).
  • Colorado new car registrations have risen steadily for the period 2010 to 2013. A decline is unlikely in 2014.
  • Colorado’s general fund, particularly sales and income taxes, has been a benefactor of increased population, employment, and wages. Likewise the revenue for city and county governments has improved.

Some Mixed News…

  • Per Capita Personal Income will increase by 3.7% in 2014.  This is slightly less than the rate of growth for the U.S. Over the past two decades the gap between the U.S. PCPI and the state PCPI has closed significantly.
  • In 2014, Colorado inflation will be 3.0%, well above the rate for the U.S.
  • In Colorado, housing prices have increased at a faster rate than the nation. That is great news for home owners, but not so good news for people wanting to enter the housing market.
  • The Construction Sector is slowly improving.  Increased building activity supports growth in multiple sectors and causes greater congestion on the highways. For some, the latter is not desirable.
  • Although the state returned to 2008 peak employment, it will be a long time before the state returns to the 2007 peak number of establishments.

Looking ahead, the economy will build on the foundation established in 2013. Hopefully the state’s leadership will be less dysfunctional.

Click here to review the cber.co forecast and other economic reports.

cber.co forecast

©Copyright 2011 by CBER.

Jobs and Output Data Point to Stronger Growth for Colorado

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Earlier today, the Bureau of Labor Statistics released November jobs data for Colorado. As measured by increased jobs and decreased unemployment, the update showed the improvement in the economy is geographically broad-based. Most states are enjoying the recovery!

Specifically the highlights from the jobs data are:

  • Wage and salary employment increased in 43 states and decreased in 7 states and the District of Columbia.
  • Decreased unemployment rates were recorded in 42 states and the District of Columbia compared to a year ago, 1 state was flat and 7 states were higher. Nationally, November unemployment registered 7.0%, down 0.8 percentage points from a year ago.
  • In Colorado the November unemployment rate was down 1.1 percentage points from the same time last year (7.6% compared to 6.5%).

A stronger national economy bodes well for Colorado.

Earlier in the month the Bureau of Labor Statistics indicated its projection models had understated the rate of job growth in the state in 2013. Latest estimates project the state will actually add 60,000 to 65,000 jobs this year.

More good news came today when the Bureau of Economic Analysis revised Q3 GDP upward to 4.1%. Exports and business and consumer spending were stronger than anticipated.

The stronger jobs and output data suggest the impacts of sequestration, the partial government shutdown, and the fallout from the earlier budget and debt ceiling debates may have had less of a net impact than originally thought.

For the first time in 6 or 7 years, Colorado and the U.S. will be entering a new year with a solid foundation for growth. If that foundation remains in place, there is reason to believe that Colorado will add at least 65,000 jobs in 2014.

©Copyright 2011 by CBER.