Tuesday, June 4, 2013

Employment in Colo. metros: Employment totals now above prior peak levels in northern Colorado

Total employment growth in Colorado continued at a solid pace during April according to the most recent employment data Employment trends in various regions of the state differ, however, so this article looks at which regions of the state have the highest unemployment rates, and which regions have recovered the most in their labor markets. 

Regional employment trends can also provide us with some insights into local housing demand since, all things being equal, those areas with the most robust labor demand will also have the strongest demand for housing. This would be reflected in apartment vacancy rates and in median home price and home sales transactions, among other indicators. 

The first graph compares unemployment rates in Colorado's metro areas.

The regional unemployment rates (not seasonally adjusted) for April 2013 are:
Colorado Springs, 8.1%
Denver-Aurora, 6.7%
Fort Collins-Loveland, 5.5%
Grand Junction, 8.2%
Greeley, 7.5%
Pueblo, 9.5%
Statewide, 6.8%

Since mid-2009, The Fort Collins-Loveland area has consistently shown one of the lowest unemployment rates with the metro Denver area coming in with the second-lowest unemployment rate among metro areas in the state. Not surprisingly, the Greeley area has now shown some big declines in the unemployment rate over the past year as growth in oil extraction in the region began to drive new employment. Pueblo and Grand Junction, on the other hand have shown less robust job growth in recent years. Nevertheless, all areas have shown declines in the unemployment rate from April 2012 to April 2013. 

Changes in the labor force can have a significant impact on the unemployment rate, and in these numbers, the only metro areas with a labor force size back at what it had been before the financial crises are Greeley, Denver metro, and Ft. Collins-Loveland. These three metros show growth in both labor force size and total employment, which suggests more solid conditions in those job markets than in the other metros. The weakest job market is possibly Grand Junction where the recent drop in the unemployment rate masks an ongoing decline in the labor force size there, with the labor force dropping to a six-year low in Grand Junction during April. Here's the labor force size for each month in GJ: 

To provide some additional context, we can look to see how far below total employment levels are below the most recent peak in employment in each region. The peak time differs in each region. For example, the labor market peaked in mid-2007 in the Colorado Springs area, but it did not peak until late 2008 in the Grand Junction area. 

The following numbers reflect how far below the most recent peak are the April 2013 employment totals: 

Colorado Springs MSA, 5.7%
Denver-Aurora MSA, 1.9%
Fort Collins-Loveland MSA, 1.1%
Grand Junction MSA, 11.9%
Greeley MSA 0.9%
Pueblo MSA, 2.3%
Statewide, 2.8%

All things being equal, the areas further below the peak have recovered the least from initial job losses.  In general, all areas have shown some movement back toward peak levels in recent months. 

However, if we adjust for seasonal changes, we find that total employment, as of April 2013, was above peak levels in Ft. Collins-Loveland and Greeley. 

(Note: If we include the Boulder-Longmont MSA, we find that the Boulder area has consistently been among the areas with the lowest unemployment rate. In April 2013, the rate in the Boulder-Longmont area was 5.1%.)