Job growth flatlines in Pueblo and Grand Junction

Although job growth has slowed in Colorado, the year-over-year change is still positive. That is, new jobs are still being created, according to the Establishment survey. The situation is a bit different in Grand Junction and Pueblo, however, where the latest Establishment employment survey shows that in December, total payroll employment actually went down, year over year.

Practically speaking, though, jobs were simply flat in both cases. In Grand Junction, for example, payroll employment was flat at 62,000 jobs with no change to speak of from December 2014 to December 2015. We do see a general trend of decline since early 2014:

In Grand Junction, payroll employment growth hit 3.2 percent (a gain of nearly 2,000 jobs) back in March of 2014, but it's been declining since, and has been flat over the past four months. In fact, total employment in Grand Junction hasn't much budged from the 62,000 jobs mark for the past six months. 

In Pueblo, payroll employment was also essentially flat at 61,000 jobs in December. Employment growth had reached 3.9 percent (a gain of more than 2,000 jobs) in February of 2015, but has been falling since (this is YOY change):

The employment situation in GJ and Pueblo reminds us that the happy economic data we've been hearing about Colorado for the past couple of years has largely been driven by developments in northern Colorado and the metro Denver area. Oil employment in northern Colorado has helped push up overall job growth in the state, but southern and western Colorado have different experiences.

Historically, at least over the past 30 years, Pueblo has tended to have weaker  job growth than metro Denver and the state overall.

It's harder to generalize about Grand Junction, however, as GJ experienced enormous booms in the late 70s/early 80s, and also again from 2006 to 2008. GJ has seen lackluster growth ever since the 2008 financial crisis, however, and has in some ways not shared in the benefits of the expansion that has occurred in Colorado and the US since 2010.

(All data from the "Establishment Survey" which measures payroll employment for larger employers. This measure counts, jobs, not employed persons.)

Colorado in top ten of states in well being index

Every year, Gallup releases its "Well Being Index" which measures the following: 

• Purpose: liking what you do each day and being motivated to achieve your goals
• Social: having supportive relationships and love in your life
• Financial: managing your economic life to reduce stress and increase security
• Community: liking where you live, feeling safe and having pride in your community
• Physical: having good health and enough energy to get things done daily

Out of all US states, Colorado comes in fourth, behind first place Hawaii, then Alaska and Montana. Wyoming rounds out the top five for fifth place. 

Colorado is in the top ten list, yet again. In fact, according to Gallup, "Hawaii and Colorado are the only two states that have made the list of the 10 highest well-being states each year since 2008."

The Western US in general is notable for having high well being scores: 

Why does the West do so well? Well, the stereotypes about Colorado and west are often true. There is a lot of entrepreneurship, physical fitness activity, and community involvement among Westerners. Moreover, homicide rates are low in Colorado (and also in Wyoming, Utah, and Montana) adding to the "community" measure contained within the index for those states.

Climate may be a factor as well. For example, New Mexico, in terms of statistical data, is nearly as unhealthy and low-income as Mississippi. So why does New Mexico rank so much higher by this measure? It may have something to do with perceptions of how much control one  has over one's economic life and physical well being. 

See here for more on this from Gallup.

Home prices: Denver Case-Shiller index still near 15-year highs

Employment growth in metro Denver may be tapering off, but as of November, home prices certainly weren't.

According to Case-Shiller's report for November, released last week, the Denver home price index was up 10.8 percent, year over year. That's down slightly from September's 10.9 percent YOY increase, which was the largest increase seen in the Denver index since 2001 at the end of the dot-com boom.

While the highest YOY increase recorded in the past 20 years was 14 percent in 2001, November's growth rate of 10.8 percent is nevertheless a very large increase.

Denver's home price growth is outpacing the nation overall as measured in Case Shiller's 20-city index, which showed a year-over-year increase of 5.8 percent for November.

In thsi graph, I've compared Denver to the 20-city index, and you can see Denver's been outpacing the larger index for a while:

As Colorado has had stronger job growth than the nation overall, it is not shocking that home price growth has also exceeded the nation overall. A better job market has brought more demand both from people who were already here, and from new residents relocating for work.

Based on median income data, though, it's safe to say that home prices have indeed been outpacing incomes, which creates an affordability issue, and a question as to how sustainable the home price growth can be.

Payroll employment growth in Metro Denver hits 4-year low

According to the Establishment employment survey, total year-over-year payroll employment growth fell to 1.7 percent during December 2015. This was the lowest growth level seen since October 2011, when the growth rate was 1.6 percent.

Growth rates in payroll employment have been generally falling over the past 11 months, and the growth rate had been 4.1 percent during February 2015:

Growth rates have not fallen off this quickly since 2008, although the growth rate itself remains at relatively robust levels compared to the last economic expansion between 2003 and 2008.

In terms of employment totals, there were 1,398,000 payroll jobs in December 2015, compared to 1,374,000 payroll jobs one year earlier. That's an increase of 24,000 jobs over the year.

So, we're still looking at increases, but the rate of increase in each month has been falling.

Unless this trend reverses itself, of course, we will be facing negative job growth by the end of 2016.

(This data is for the Establishment survey which measures total payroll jobs, and not the number of persons. A person with two or more jobs could potentially show up as three jobs in this survey.)

The measure I'm using here is total nonfarm employment for the Denver-Aurora-Lakewood MSA, not seasonally adjusted.

Statewide Colorado

The metro Denver numbers show a bit more of a downward trend although the overall percentage increases are pretty similar at this point. As of December 2015, the YOY growth rate was at 1.8 percent, which translates to a gain of about 47,000 jobs from December 2014 to December 2015. In total, there were about 2,559,000 payroll jobs in December.

To compare to Denver, we might say that metro Denver was humming along with more growth than the state overall for much of 2014 and 2015, but both are now seeing growth around a little under 2 percent. Denver's growth rate has come down to match the state's rate.

Employment growth for the state is also down near 4-year lows:

Statewide, growth is being helped along by Northern Colorado economies while it's being dragged down by sluggish job growth in Grand Junction and Pueblo.

(This is the nonfarm payroll employment data for Colorado, not seasonally adjusted.)

All data used in this article is from the BLS.

Colorado continued to outperform nationwide job market in late 2015

Colorado's unemployment rate has been below the national rate since 2012. As the Colorado economy has begun to outpace the national economy in recent years, this gap has grown.

As of December 2015, the national unemployment rate was 4.8 percent, while it was 3.3 percent in Colorado.

Indeed, unlike the US unemployment rate, the Colorado rate has returned to its pre-crisis levels last seen in 2007.

Oil extraction activity has certainly been a factor here, and we have not yet seen any effects of closing oil operations as the price of oil has fallen. We may know more after we've seen February's employment data.

How Colorado performs compared to the nation overall, and to other states will also continue to affect the decision of out-of-state residents to migrate to Colorado. As I noted here, Colorado has outpaced most states in in-migration in the past year.

With job trends like these, it's not surprising that many have elected to recently move to Colorado from other states:

Home loan payoffs in Colorado up 40 percent through third quarter of 2015

The number of mortgage loans paid off in Colorado was up 37.7 percent during 2015’s third quarter compared to the same period of 2014. Payoffs also rose rose 13.6 percent from the second quarter of 2015 to the third quarter of the same year. 

Public trustees in Colorado released a total of 89,618 deeds of trust during the third quarter of 2015, up from 2014's third-quarter total of 65,094.  

Typically, a "release of a deed of trust" occurs when a real estate loan is paid off whether through refinance, sale of property, or because the owner has made the final payment on the loan. Release activity generally rises as refinance and home-sale activity increases, and thus can be viewed as an indicator of real estate loan activity, including home refinance activity. 

Release activity rose to a nine-quarter high during the third quarter, and was the third quarter in a row during which release activity increased. 

Comparing the first three quarters of each year combined, we find there were 166,205 releases during the first three quarters of 2014, compared to 233,135. That's a year-over-year increase of 40.3 percent. 

Looking at annual totals, we find that 2015, as of the third quarter, is on pace to exceed 2014's totals by a comfortable margin:

Trends in release activity varied by county, however. For the first three quarters of 2015, compared to the same period of 2014, percent changes in release totals ranged from a 92 percent increase in Douglas County to a drop of 4.5 percent in Alamosa County:

Although there are exceptions, the counties with the highest-income households and the most expensive real estate have traditionally experienced some of the highest levels of growth in release activity since those areas contain more households and real estate that will qualify for refinance deals. 

The significant increases in release totals in 2015 point to continued increases in home refi activity and, to a lesser extent, home sales activity as well. Moreover, release activity tends to increase as mortgage rates fall.  In 2013, we saw release activity surge following a period in which mortgage rates fell below 4 percent. We are now seeing a similar surge in the wake of mortgage rates again falling below 4 percent in late 2014:

Some other issues of note: 

The third quarter of 2015 showed the largest total for the third quarter since I began collecting this data in 2008.  I break it out this way to identify any seasonal issues:

County comparisons: 

Colorado foreclosures fell 8.4 percent in 3rd quarter

During the third quarter of 2015, Colorado public trustees reported 2,058 foreclosure filings and 1,089 sales at auction (completed foreclosures).  During the third quarter of 2014, there were 2,246 filings and 1,433 sales. Comparing year-over-year for the third quarter, foreclosure filings fell 8.4 percent and completed foreclosures fell 24.0 percent.

Comparing the third quarter of 2015 to the second quarter of 2015, foreclosure filings fell 9.8 percent from 2,282 to 2,058. Foreclosure sales rose 2.4 percent from 1,063 to 1,089 during the same period.

During the first nine months of 2015, there were 6,212 filings and 3,297 sales. For the same period of 2014, there were 8,505 filings and 4,760 sales. Comparing year over year, filings fell 27 percent and sales fell 30.7 percent.

Below is a time series showing quarterly totals in foreclosure filings and sales. The large dip in sales shown during the second quarter of 2008 can be attributed to a change in the foreclosure time line that took effect on January 1, 2008 and led to a large temporary dip in the number of foreclosure sales during March, April, and May of that year.

There are not large seasonal changes in foreclosure activity in Colorado, although the third quarter tends to be the most active quarter for foreclosure sales in Colorado.

Statewide, there was approximately 1 completed foreclosure (foreclosure sale) per 1,897 households for the third quarter of 2015. The map shows that there are few hot spots for foreclosure left in Colorado, and those that remain, such as San Juan County, are very small markets where a single foreclosure can move foreclosure rates up quickly.

No metropolitan county was found among the top ten counties for foreclosure sales rates. Most of the counties in the top ten were mountain and rural counties including Delta, Las Animas, and Fremont counties.

Pueblo and Mesa counties reported the highest foreclosure rates of the metropolitan counties. Pueblo County reported a foreclosure rate of one foreclosure per 665 households while Mesa County reported a rate of 1 foreclosure per 654 households. See Table 3 for full listing.

Boulder County reported the lowest foreclosure rate among metropolitan counties with 1 completed foreclosure per 10,435 households.

For a detailed list of each county, see the full report:  

2015_3rdQ Foreclosure Report