July 2007
National data sets reveal strength of Colorado’s economy
Several national data sets reveal a strong state and regional economy, according to data compiled by the Metro Denver Economic Development Corporation (Metro Denver EDC) in its Monthly Economic Summary for July 2007.
Colorado reported the eighth fastest growth in gross domestic product (GDP) in 2006 of 4.9% compared to a 3.4% growth nationally, and is the seventh largest state economy in the nation. On a per capita basis, Colorado produced $41,798 in economic output per resident in 2006, also the seventh highest rate.
Colorado was the only state in 2006 to rank in the top ten for both GDP growth and per capita output. Further, personal income in Colorado increased 2.1% from fourth quarter 2006 to first quarter 2007, the 14th fastest quarter-to-quarter gain.
Total employment in Metro Denver increased by 12,600 positions from April to May, according to the latest data from the Colorado Department of Labor and Employment. The May increase resulted in a 1.9% year-to-date employment gain for the region. The Boulder-Longmont MSA posted stronger year-to-date employment growth of 3.3% through May compared to the 1.7% increase in the Denver-Aurora MSA. Statewide employment growth through May is up 2% while the nation trails with a 1.5% increase.
“These key economic factors alone are impressive, but the fact they all rank above the national average, it is apparent the region is benefiting from a sustainable and competitive economic environment,” stated Tom Clark, executive vice president of the Metro Denver EDC.
Labor market conditions in the Metro Denver region tightened for the fourth consecutive month in May, with the unemployment rate decreasing from 3.4% in April to 3.3% in May. The May unemployment rate is the lowest monthly rate since May 2001 when the unemployment rate dropped to 2.9%. Metro Denver’s unemployment rate stands at 3.9% through the first five months of the year, compared to the 2006 year-to-date rate of 4.6%.
Metro Denver’s low unemployment rates were reflected in the strengthening office market during the second quarter of 2007, according to the latest data from CoStar Realty Information, Inc. The second quarter direct vacancy rate decreased to 11.9% from 12.5% in the first quarter of 2007. Compared to a year ago, the direct vacancy is a full percentage point lower. The total vacancy rate, which includes sublet space, also improved from the first to second quarter and stands below second quarter 2006.
Metro Denver’s existing or previously-owned home market is reporting mixed conditions with strong home sales but soft home price appreciation. Previously-owned home sales strengthened in May for the third consecutive month. The 15.5% increase in home sales from April to May brings year-to-date sales up 2.8% over the first five months of 2006. Home sales under contract, a forward-looking indicator, also increased in May for the fifth consecutive month-to-month gain. Home sales under contract are 1.1% ahead of this time last year on a year-to-date basis. Unsold inventory levels increased from April to May as the busy summer season got underway, although unsold inventory levels are down 4.4% on a year-to-date basis through May.
New home construction in the Metro Denver region gained momentum in April with a 51.7% increase in building permits. The April increase is largely due to strong activity in the single-family attached category, which experienced a 228.9% month-to-month increase in April compared to a 22.6% increase in the single-family detached category. No permits were issued in April for multi-family or apartment units. Despite the April surge in building permits, new home construction in Metro Denver remains below 2006 levels in all categories except multi-family.
Recent economic data for Metro Denver reveals that 9 of the 18 indicators moved in a positive direction for the month, the same number as last month. Annualized activity also remained at the same level as last month with 13 economic variables posting positive changes for the year. Consumer and tourism spending is strong and modest employment growth continues to bolster the commercial real estate markets. While increasing home sales bode well for the region, most residential real estate indicators remain sluggish with minimal to negative appreciation in home values, rising foreclosure activity, and constrained new development.
The Monthly Economic Summary provides a snapshot of metro area economic activity, as well as its relationship to national and regional economic trends.