Metro Denver close to replacing jobs lost over past yearWhile some industry sectors are still struggling, Metro Denver employers have come close to replacing the number of jobs cut over the past year, according to data compiled by the Metro Denver Economic Development Corporation (Metro Denver EDC) in its Monthly Economic Summary for December 2010.
The leisure and hospitality and professional and business services sectors reported typical seasonal layoffs, and retail trade employers began adding jobs in advance of the holiday sales rush. Other October job trends were more economic than seasonal, however. Specifically, employers in manufacturing, information, and financial activities cut jobs as business conditions in the industries remained uncertain.
"October employment for Metro Denver was just 0.1 percent shy of the employment total reported in October 2009," explained Patty Silverstein, chief economist for the Metro Denver EDC. "Even a return to the fall 2009 employment level, though, would leave a significant hole in the region’s labor market; total Metro Denver employment in October 2009 was almost 70,000 jobs shy of the employment total for October 2008."
Total Colorado employment in October was 0.5 percent lower than the October 2009 level, and U.S. employment was 0.5 percent above last year's level.
On a national level, retail sales figures for Black Friday and Cyber Monday suggest consumers are more optimistic this holiday season. Data from the Chicago-based research firm ShopperTrak report Black Friday sales at retail stores were relatively flat compared to last year’s sales, but data from the International Council of Shopping Centers show sales during the entire month of November were up more than five percent from sales in November 2009. All considered, the sales figures relay that retailers’ aggressive discounts and “pre-Black Friday” sales enticed consumers to spend more than they did last year.
Online retail sales on Cyber Monday—which ultimately became the busiest online shopping day in history—also showed promise for retail sales. The improved trends are welcome news in a sluggish economy, but they do not necessarily mean households have abandoned their concerns about debt and income. Recent consumer surveys show, for example, that fewer households are using credit cards for shopping this season and the majority of those that are plan to pay down their balances immediately. Likewise, data from the Federal Reserve show revolving consumer credit—which includes credit cards—declined for the 25th consecutive month in September.
"Ultimately, consumers’ willingness to spend and their willingness to spend within their means are positive steps towards a more stable economy," said Silverstein.
Overall, nine of 18 economic indicators moved in a positive direction in Metro Denver for the month, with 11 indicators moving in a positive direction in the previous report. Fifteen indicators moved in a positive annual direction both in this report and in the prior month’s report.
The Monthly Economic Summary provides a snapshot of metro area economic activity, as well as its relationship to national and regional economic trends. Key highlights include:
Labor and Employment
* Results from the most recent Manpower Employment Outlook Survey suggest employers in the Denver-Aurora-Broomfield MSA have mostly improved hiring expectations for the first quarter of 2011. Seventeen percent of employers surveyed planned to add jobs between January and March, compared to eight percent of employers who participated in the survey for the first quarter of 2010. While better hiring expectations are welcome news, not all employers are feeling optimistic; the share of Denver area employers planning layoffs in the first quarter increased to 13 percent from 11 percent at the same time last year. In essence, the majority of employers who were unsure about their hiring outlooks in prior surveys decreased somewhat in the first quarter survey as more employers committed to hiring and layoff plans.
* Metro Denver’s unemployment rate in October (8 percent) was more or less the same rate that has been reported since June. Local employers have been adding jobs, but the pace of job gains has been fast enough only to keep up with growing numbers of jobseekers. Colorado’s not seasonally adjusted unemployment rate was 8.1 percent in October, and the nationwide rate was nine percent.
* The average weekly number of initial unemployment insurance claims filed in Metro Denver followed a typical seasonal pattern and increased between September and October. While the absolute level of claims suggests the labor market is still in distress, the pace of filings in 2010 was more moderate than the pace of filings in 2009: the average weekly number of claims filed through the first 10 months of the year was 18.6 percent below the comparable average from 2009. Similarly, the average weekly number of claims filed statewide through the first 10 months of the year was 18.2 percent lower than the comparable 2009 average.
Consumer Sector
* August retail sales in Metro Denver were 7.2 percent higher than sales reported in August 2009. Consistent with sales gains reported nationwide, total Metro Denver retail sales through the first eight months of the year were 5.6 percent higher than sales in the same months of 2009. Sales increased year-to-date by the greatest margin in the City and County of Denver (+7.5 percent), while sales in Adams County grew by the smallest margin (+3.2 percent).
* October was the second-consecutive month in which the average room rate for Metro Denver hotels fell below last year’s level. The lower rates, though, are probably more a reflection of a price-sensitive market than of a lack of demand; the October average occupancy rate (70.2 percent) was nearly five percentage points above last year’s occupancy level.
* Denver International Airport (DIA) officials say September passenger traffic was the highest ever reported for the month. The total number of travelers that passed through DIA in September was 8.6 percent higher than the total reported one year prior, and total passenger traffic through the first nine months of the year was 3.1 percent higher than traffic in the same months of 2009.
* Stock analysts say investor concerns over Europe’s debt crisis were behind the market’s November slump. Each of the major national indexes declined between October and November, but the indexes still showed positive annual returns. The NASDAQ was up the most (+10.1 percent) year-to-date in November, followed by the S&P 500 (+5.9 percent) and the Dow Jones Industrial Average (+5.5 percent). The Bloomberg Colorado Index posted a much stronger year-to-date return in November (+36.7 percent) partly because precious metal and natural resource stocks have performed well.
Residential Real Estate
* The decline in Metro Denver existing home sales between September and October (-3.9 percent) was typical for this time of year. More striking, however, was the fact that the October sales total was the lowest reported for the month since 1991. The number of Metro Denver homes placed under contract in October was slightly higher (+1.7 percent) than the number under contract in September, but the October number of homes under contract was down 24.5 percent from the number placed under contract at the same time last year. While the sales statistics show a weak market, some of the large percentage declines occurred because sales figures last fall were inflated by tax credits available to new home buyers.
* The National Association of Realtors’ quarterly median home price measure for the nation fell 0.2 percent over-the-year in the third quarter. Third quarter home prices also declined over-the-year in 76 of the 155 metro areas with median price data. The geography of metros with home price declines varied, although many were located in Florida, the Northwest, and the Midwest.
* Metro areas in Texas, California, and the Northeast dominated the group of 79 metros that reported a third quarter median home price equivalent to or higher than last year’s median. The Denver-Aurora-Broomfield MSA was among this group with a third quarter median home price ($238,500) that was 4.1 percent above the previous year’s price level. The median price for the Boulder MSA ($363,300) increased by 1.4 percent over-the-year.
* The Mortgage Bankers Association’s most recent National Delinquency Survey suggests Colorado’s rate of loan delinquency and foreclosure moderated during the third quarter. About 6.3 percent of Colorado mortgages were past due in the third quarter, compared to 6.7 percent one year prior. The share of Colorado loans in foreclosure fell to 2.4 percent in the third quarter from 2.8 percent in the third quarter of 2009. While mortgage delinquency in the state is still considerably more prevalent than it was before the recession, Colorado mortgages are generally healthier than loans in other states.
* The pace of foreclosure filings in Metro Denver remains steady, although public trustees are reporting fewer new cases than they did at this time last year. The total count of foreclosure filings reported by all Metro Denver public trustees through the first 10 months of the year was 12 percent lower than the count reported during the same months in 2009. Filings in the City and County of Denver were down the most year-to-date in October (-17.9 percent), followed by filings in Adams County (-14.4 percent) and Arapahoe County (-10.9 percent).
* The total volume of Metro Denver building permits pulled through the first 10 months of the year was 58.7 percent higher than the volume pulled in the same months of 2009, and more than one-third of the total increase was due to higher permit issuance for apartment buildings. The number of Metro Denver permits issued for single-family detached homes was up 46.8 percent year-to-date in October, and the count of permits for condominiums and townhomes was up 29.4 percent.
* The weak housing and credit markets are supporting steady demand for Metro Denver apartments. Data from the Denver Metro Apartment Vacancy and Rent Survey show the region-wide average vacancy rate in the third quarter (5.3 percent) was the lowest reported since the third quarter of 2007.
Commercial Real Estate
* The third quarter Market Trends report for Metro Denver suggests the region’s office market is recovering and could end the year with slightly better fundamentals. The report – which is written by Newmark Knight Frank Frederick Ross Co. (NKF Frederick Ross) – says office leasing activity is beginning to revive, and owners of Class A and mostly-leased property are beginning to withdraw the discounts and concessions they needed to keep tenants during the recession. Slow job growth and the potential for more issues with commercial loans will keep market improvements modest in 2011, but the report suggests the worst of Metro Denver’s office market correction has definitively passed. '
* NKF Frederick Ross Co.’s third quarter Market Trends report for Metro Denver suggests vacancy in the region’s industrial market has remained relatively low due to rent concessions and a favorable balance of property supply and demand. Conditions in the flex market are slightly more volatile as flex space often caters to small business, many of which are still facing financial constraints.
* NKF Frederick Ross Co.’s third quarter Market Trends report for Metro Denver suggests the region’s retail market is slowly stabilizing. The report shows vacancy above 10 percent in just two of the region’s submarkets, and retail vacancy is considerably lower in markets including Cherry Creek, Midtown, and the Central Business District. Looking ahead, the report notes that a sustained improvement for the retail sector will rely heavily on better income and job growth.
