June 2008
Weak consumer confidence poses a significant risk to the U.S. and Metro Denver economies. However, many of Metro Denver’s economic indicators are favorable according to data compiled by the Metro Denver Economic Development Corporation (Metro Denver EDC) in its Monthly Economic Summary for June 2008.
Still, the Mountain Region Consumer Confidence Index declined to a recent low in April, as did the U.S. Index. The confidence readings suggest high prices for gasoline, food, and other essentials are discouraging consumers and challenging businesses.
“Our local labor market is relatively healthy, home sales have increased as the spring selling season continues, and the region’s commercial real estate sector is solid,” explained Patty Silverstein, chief economist for the Metro Denver EDC. “While Metro Denver businesses and households will face continued price pressures in the coming months, the fundamentally solid regional economy should help provide some counterbalance.”
Metro Denver nonfarm employment increased by 10,900 jobs between March and April, and year-to-date job growth was essentially unchanged at 1.9 percent. Year-to-date employment trends were positive in each of the region’s 11 industry supersectors except manufacturing and financial services, where job losses measured 0.9 percent and 2.4 percent, respectively.
In Denver, job growth through April was strongest in education and health services and leisure and hospitality (+4 percent each), while growth in Boulder was strongest in natural resources and construction (+5 percent). Year-to-date job growth in Colorado was unchanged from March at two percent, and U.S. job growth was essentially unchanged at 0.5 percent.
“Even as the overall national economy slows, Metro Denver continues to attract large multi-national and domestic companies which will certainly keep the region competitive for job growth in the coming months,” said Silverstein.
Health insurance provider Kaiser Permanente, for example, plans to relocate its customer service operations from Fort Worth to Denver, employing 200 people in the region.
The region will be the home of a wind turbine research center, with Siemens Energy recently announcing plans to build a facility in Boulder. The new research center will employ about 50 workers.
In addition, Lockheed Martin plans to renovate and expand part of its Waterton Canyon campus in Jefferson County to accommodate work on a $1.4 billion contract with the U.S. Air Force to develop GPS III, the newest military and civilian navigation technology.
And on the commercial real estate front, a first quarter report by Fuller Real Estate describes positive expectations for Metro Denver’s industrial market. Market vacancy rates have increased due to consolidation of existing tenants and a small amount of new construction. Still, lease rates have risen slightly and the report claims strong fundamentals will keep the industrial market stable until lending conditions return to normal.
A strong apartment sector and increased home sales have helped offset foreclosures and weak construction activity, and tourism is stabilizing trends in retail and hospitality. Overall, data for nine of 18 economic indicators showed positive monthly trends, compared to 10 positive indicators in the May release. The indicators are stable on an over-the-year basis, as six indicators showed positive annual trends in both May and June.
The Monthly Economic Summary provides a snapshot of metro area economic activity, as well as its relationship to national and regional economic trends.