May 2007
Employment, consumer, and commercial real estate markets still shining
First quarter 2007 data suggests that the sluggish residential real estate market continues to restrain economic growth in the Metro Denver region. However, the employment, consumer, and commercial real estate markets are reporting solid gains according to data compiled by the Metro Denver Economic Development Corporation (Metro Denver EDC) in its Monthly Economic Summary for May 2007.
Total employment in Metro Denver increased by 7,600 positions from February to March. Employment growth through the first quarter has averaged 1.9%. The Denver-Aurora MSA reported a 1.7% year-to-date gain through March compared to a 3.5% gain in the Boulder-Longmont MSA. Local employment at both the metro and state levels continues to grow at a faster rate than the nation. Colorado posted a 2.1% year-to-date employment gain in March, exceeding the national increase of 1.5%
At a broader level, Metro Denver employers will hire new employees at a “vigorous” pace in the second quarter of 2006, according to the latest Manpower Employment Outlook Survey. An estimated 42% of Denver area employers will add workers during the April-June period while 12% will reduce payrolls and 43% expect no staffing changes. The remaining 3% are unsure of their staffing plans.
The Creighton University Business Conditions Index for the Mountain States region advanced from 65.3 in March to 75.3 in April amid brisk inflationary pressures. With a reading greater than 50, April’s results suggest a stronger economic expansion for the Colorado-Wyoming-Utah region in the coming months. The individual Colorado index surged to 80.4 in April from 69.4 in March.
“It’s reassuring to see positive changes in hiring and business conditions,” stated Patty Silverstein, chief economist for the Metro Denver EDC. “The consumer market is bound to benefit from these aspects as well.”
Metro Denver retailers began 2007 with an 11.6% increase in retail sales compared to January 2006. All seven Metro Denver counties posted over-the-year gains in January with Arapahoe County (+17.6%), Douglas County (+13.1%), and the City & County of Denver (+12.2%) leading the way. More modest gains occurred in Boulder County (+11.3%), Jefferson County (+9%), Broomfield County (+8.5%), and Adams County (+4.7%).
Metro Denver home sales rebounded in March to the highest level since August 2006, bringing total home sales through first quarter up 3.6% from first quarter 2006. A closer look reveals a 7.1% increase in year-to-date condominium sales and a 2.6% increase in single-family home sales. The 38.3% increase in home sales from February to March is the sharpest monthly gain since March 2005. In more good news, the number of homes under contract also increased in March, suggesting strong home sales in the coming months. Unsold inventory levels grew in March as spring got underway but stand 3.2% below 2006 on a year-to-date basis.
Unlike single-family attached and detached construction activity, multi-family construction activity is up compared to this time last year. The number of permits issued for multi-family construction increased from January to February and is 155.6% ahead of the minimal activity posted in 2006.
Metro Denver’s industrial market continued to exhibit strong market fundamentals in the first quarter of 2007, according to the latest Frederick Ross report. Sales activity is high, rental rates are on the rise, and speculative development is gaining momentum, especially in the Southeast submarket. The first quarter saw 1.31 million square feet of absorption, or about half of all 2006 absorption.
Additionally, the southeast submarket in Metro Denver is benefiting from tight office market fundamentals and the opening of T-REX light rail as more than one million square feet of new office space is either in the planning or construction stages.
The Monthly Economic Summary provides a snapshot of metro area economic activity, as well as its relationship to national and regional economic trends.