Revised data reveal stronger employment growth in Metro Denver in 2012 than initially estimated
Revised data for employment shows annual growth was even stronger than estimated in Metro Denver, with 37,300 jobs added in 2012. The annual benchmark revision of the employment data reflects an increase of 2,800 more jobs than the previous estimate, according to data compiled by the Metro Denver Economic Development Corporation in its Monthly Economic Summary for April 2013.
In addition to employment, retail sales and residential building permit annual data were also revised and show continued or stronger growth during the year. Revised retail sales for Metro Denver showed strong growth for 2012, and residential building permits increased more than originally estimated.
"We are not surprised at the upward revision in employment growth for 2012 given the number and quality of deals that we were engaged with and that closed last year," noted Tom Clark, CEO of the Metro Denver Economic Development Corporation.
While consumer confidence remains low, consumer incomes continue to improve, which should help to bolster confidence going forward. Further, many businesses are reporting improving conditions. The Leeds Business Confidence Index reported an encouraging increase, as the economy showed more resilience and stability despite political and international uncertainties. However, business confidence is somewhat moderated by the results of the Manpower Employment Outlook Survey, which indicates that a slightly smaller percent of companies intend to hire during the second quarter.
Employment, retail sales, and residential building permits were a few of the 16 Metro Denver indicators that moved in a positive annual direction in this report, down from 17 in the previous month. Twelve of the indicators moved in a positive monthly direction, compared to nine indicators last month.
Labor and Employment
The annual benchmark revision of the Current Employment Statistics showed an upward adjustment to Metro Denver's annual employment in both 2012 and 2011. The revision resulted in a larger increase in 2012, pushing employment growth to 2.7 percent, up from the previous estimate of 2.5 percent. This means that a total of 37,300 jobs were added in the Metro Denver area in 2012, compared with the preliminary estimate of 34,500. The new data suggest the economic recovery was proceeding at a faster rate than previous estimates showed.
Job growth was stronger than initially estimated in six of the eleven supersectors. The supersectors with a slower rate of growth using revised data were natural resources and construction, wholesale and retail trade, education and health services, leisure and hospitality, and other services. The growth differences can be attributed to employment growth in the sector being lower than preliminary estimates in 2012, 2011 growth being larger than preliminary estimates, or a combination of the two effects.
Similar to changes in Metro Denver data, data for statewide employment suggest growth was higher than initially estimated. Revised benchmark data show employment growth in Colorado was 2.3 percent, 0.5 percentage points higher than previous estimates. The state gained 10,300 more jobs than previously estimated between 2011 and 2012 for an annual increase of 51,800 jobs. The national employment growth rate also rose as a result of upwardly revised data. Prior estimates showed growth of 1.4 percent, and new data showed a rate of 1.7 percent.
Metro Denver employment increased by 3.2 percent (43,500 jobs) over-the-year in February and by 0.7 percent (10,200 jobs) compared with last month. Employment in one supersector declined between February 2012 and 2013 - information decreased 1.7 percent (-900 jobs). The largest percentage increase was reported in natural resources and construction, which rose by 5,000 jobs or 7 percent. On a monthly basis, four supersectors declined: manufacturing (-0.1 percent), wholesale and retail trade (-0.6 percent), financial activities (-0.8 percent), and leisure and hospitality (-1.1 percent). The government supersector reported the largest monthly increase in jobs of 3.6 percent (7,500 jobs).
Employment in Colorado rose 2.9 percent (66,700 jobs) in February on an annual basis and 0.8 percent (19,500 jobs) over-the-month. U.S. employment increased slightly less than the state by 1.5 percent compared with February 2012 and 0.7 percent compared with January 2013.
The second quarter results from the Manpower Employment Outlook Survey suggest hiring is down slightly, but the percent of companies planning to lay off workers has also decreased. The Denver-Aurora-Broomfield survey results suggest hiring is stronger in the area than nationally. The percent of companies planning to hire is 3 percentage points higher than the same period in 2012, and year-to-date totals show a similar trend with the 2013 average 5 percentage points higher than the 2012 average. The percentage of companies that expect no personnel changes increased 3 percentage points over-the-quarter, but decreased 9 percentage points compared with year-ago data.
U.S. results for the second quarter show a slightly higher percent of companies planning to hire compared with first quarter results. Companies planning to decrease personnel levels fell 3 percentage points over-the-quarter and 1 percentage point compared with year-ago results. The survey suggests that fewer companies find it necessary to decrease employee numbers as the economy improves, and more companies are maintaining or increasing their current staffing levels.
Metro Denver's unemployment rate was unchanged between January and February at 7.2 percent. Compared with February 2012, the unemployment rate declined 0.7 percentage points. Over-the-year, each county in Metro Denver posted a decreased unemployment rate. The highest decrease reported was in Adams County where the unemployment rate declined 1 percentage point. Arapahoe County and the City and County of Denver rates decreased 0.9 percentage points. Broomfield and Douglas Counties declined the least by 0.2 percentage points. The Colorado unemployment rate declined 1.1 percentage points over-the-year while remaining unchanged between January and February.
The weekly average number of first-time unemployment insurance claims declined 32.3 percent in Metro Denver over-the-month. February claims were also 4.6 percent lower than claims in February 2012. Statewide, claims filed followed a similar trend decreasing 38.5 percent on a monthly basis and 4.1 percent compared with year-ago data.
The Conference Board's U.S. Consumer Confidence Index for March fell 12.3 percent from the February number. Economists attribute the decline to consumers' lowered expectation of the future due to uncertainty surrounding the recent sequester and loss of confidence. The sharp decline is also shown in a year-over-year comparison, as the March index was 14.1 percent below the March 2012 index.
The Consumer Confidence Index for the Mountain Region, which includes Colorado, declined even more than the national index, dropping 35 percent between February and March. The index was also 46.3 percent lower than a year ago. The index was at its lowest point since April 2009.
Revised annual data for retail sales reflect a 6.7 percent growth rate between 2012 and 2011 for Metro Denver. Colorado sales also grew at an annual rate of 5.2 percent.
Metro Denver retail sales increased in December by 1.3 percent over-the-year. Adams County, the City and County of Denver, and Jefferson County were the only areas to report an increase. Adams County retail sales rose 4.9 percent, the City and County of Denver reported a sales increase of 6.2 percent, and Jefferson County sales increased slightly by 0.5 percent. The remaining counties posted decreases between 1.3 percent (Boulder County) and 8.4 percent (the City and County of Broomfield). Statewide retail sales also declined by 2.3 percent when compared with year-ago sales.
The S&P 500 rose to an all-time high during March to reach 1,569. The milestone led to a return of 10 percent for the year-to-date. Each index surpassed its respective peak from October 2007 and showed both an over-the-year and monthly increase in March. The Dow Jones Industrial Average is the only index that posted a greater year-to-date return in 2013 over 2012, but each index showed a positive return for 2013.
The hotel occupancy rate in Metro Denver increased 4 percentage points between February 2013 and February 2012. The average hotel room rate also increased 4.8 percent. Year-to-date totals show 2013 rates have improved over 2012 for the first two months of the year. The occupancy rate is 4.7 percent higher in 2013 and the room rate is 4.2 percent higher.
Residential Real Estate
Home sales closed rose 19.2 percent through the first two months of 2013 compared with the same time last year. The number of homes on the market continued to decrease through February, as inventory levels declined 32.7 percent over year-ago levels. In fact, inventory levels have decreased by at least 30 percent over-the-year for each month since August 2011. Prices also continue to increase, with the median prices of both condominiums and single-family homes rising over-the-year for 12 consecutive months. The median price for condominiums rose 19.8 percent and single-family homes rose 15.9 percent compared with February 2012.
Metro Denver foreclosure filings declined 22.6 percent between January and February. Filings were also down 46.7 percent compared with the year-ago number. Each county in Metro Denver reported a similar over-the-year decline, the largest drop occurring in Arapahoe County (-53.9 percent), followed by the City and County of Denver (-52.1 percent). A monthly comparison shows five of the seven counties reported a decline, with Boulder (7.3 percent) and Douglas (26.2 percent) Counties reporting an increase between January and February.
Revised data indicated that residential building permits in Metro Denver increased 29 percent in December over November. Permits for apartments surged by 63.6 percent over-the-month, an increase of 376 permits. Annual totals for 2012 grew 51.3 percent over 2011, rising in each of the permit categories. The largest increase occurred in the apartment category, with permits rising 66.7 percent. Vacancy and rental rates of apartments have improved in 2012, and builders are trying to meet demand.
Commercial Real Estate
According to data from CoStar Realty Information Inc., the direct office vacancy rate declined 0.4 percentage points between the first quarter of 2013 and the fourth quarter of 2012. The rate was also 0.8 percentage points below the year-ago rate. This rate was the lowest quarterly rate since the second quarter of 2008. The direct average lease rate for office space has slowly begun to improve as the vacancy rate declines. The average lease rate increased 1.6 percent over-the-quarter and 5.9 percent compared with the year-ago rate. New office construction is ramping up, with an additional 290,000 square feet of new office space under construction compared with last quarter.
Industrial market data from CoStar Realty Information Inc. suggest that the vacancy rate is in its lowest range since 2001. Despite the 0.1 percentage point increase over-the-quarter, the rate continues to be near its lowest point in more than a decade. These low vacancy rates have not yet pushed the direct average lease rate up. The lease rate held steady at $4.66 per square foot between the fourth quarter of 2012 and the first quarter of 2013 but was improved by 2.2 percent compared with year-ago data.
Industrial construction has increased over-the-quarter, with 100,000 square feet more being built compared with last quarter. The amount of new construction complete was more than 86 percent less than the fourth quarter of 2012, but is the most completed in the first quarter of a year since 2009.
CoStar data show the direct vacancy rate for flex space in Metro Denver has declined. The rate is 0.3 percentage points below the fourth quarter rate in 2012 and 1 percentage point below the first quarter of 2012. The direct average lease rate for flex space also improved, rising 4.8 percent over the fourth quarter 2012 and 3.6 percent over the year-ago rate. Completed construction was at its highest point for a first quarter since 2009, but current construction declined by 20,000 square feet over-the-quarter and 140,000 square feet over-the-year.
Retail market data also show a decreased vacancy rate. According to CoStar Realty Information Inc., the retail market direct vacancy rate decline 0.2 percentage points compared with the fourth quarter of 2012 and 0.7 percentage points compared with the first quarter of 2012. The direct average lease rate for retail space rose 2.1 percent between the fourth quarter of 2012 and the first quarter of 2013 and 2 percent over-the-year. As incomes improve and consumers begin spending more, the need for new retail space is increasing, leading to an increase in construction of 5.9 percent over-the-quarter and 143.2 percent compared to last year.