Colorado Economy: Forecast for 2006 (Dec. 2005)
COLORADO JOB GROWTH TO OUTPACE NATION'S IN 2006, CU-BOULDER FORECAST PREDICTS
Colorado will join other Western states at the forefront of national job growth in 2006, according to University of Colorado at Boulder economist Richard Wobbekind.
Wobbekind's announcement was part of the 41st annual Business Economic Outlook Forum hosted Dec. 5 by CU-Boulder's Leeds School of Business and Compass Bank.
"The western United States is by far the strongest section of the country for job growth right now," Wobbekind said. "And Colorado is part of a strong Rocky Mountain economy."
In 2006, Colorado will add 52,100 jobs, an employment growth rate of 2.3 percent, compared to the national growth rate of 1.8 percent, according to Wobbekind. Total state employment in early 2006 is expected to slightly exceed the 2.25 million who were employed in 2001 before the recession hit Colorado.
"While we went into a recession in 2001, that was also the year we reached a record level of employment in Colorado," Wobbekind said. "It has taken us four years to get those jobs back."
The leader in job growth in 2006 will be the professional and business services sector, which has average wages about $24,000 above the state average. This sector, which includes engineers, computer systems designers and scientific research and development groups, will add 11,700 jobs.
The information sector is the only one expected to lose jobs in 2006, shedding about 800 jobs. The sector includes telecommunications and publishing, broadcasting, Internet and entertainment industries. Industry consolidation continues to drive efficiencies within the sector, according to Wobbekind.
Coloradans' per capita income is expected to increase to $39,917 in 2006, compared to the national average of $36,635.
Colorado's unemployment rate is expected to be 4.9 percent in 2006, slightly below the 5 percent projected nationally. The unemployment rate is not expected to drop rapidly during the next 18 months because a number of workers who have not been actively seeking work will re-enter the workforce, according to Wobbekind.
The natural resources and mining sector will add only 1,700 jobs in 2006. However, the sector's primary contribution to the Colorado economy comes through the value of its production, according to Wobbekind.
"Colorado is a state that will do relatively well with higher energy prices because that means there will be more gas wells being punched in the ground," Wobbekind said. "This is very important to many areas around the state because these wells generate secondary types of income in the form of royalties and severance taxes and fees, and those on private land pay royalties to the property owners."
Record livestock prices in 2005 pushed net income in Colorado's agriculture over $1 billion for the second consecutive year. Cattle prices will decline slightly in 2006, as will net farm income, which will come in at about $950 million.
"Overall, the outlook for agriculture is pretty rosy," Wobbekind said. "Barring a drought, agriculture should have a good year in 2006. What could make it a great year would be the reopening of foreign markets to our beef."
In 2006, Colorado should see the first increase in manufacturing employment since 2000, with the addition of 100 jobs. Manufacturing jobs now account for only 6.8 percent of the state's total employment base, down from 9.8 percent in the mid-1990s, according to Wobbekind.
Colorado's population is expected to grow at a rate of 1.5 percent, adding about 72,100 people in 2006. Colorado will see a net migration of 32,000 people in 2006.
Wobbekind's presentation at the Business Economic Outlook Forum was followed by a Q-and-A session featuring some of the state's top economists and keynote speaker Thomas Petrie, co-founder of Petrie Parkman & Co., an energy investment banking firm with offices in Denver, Houston and London.
Sector-specific highlights include:
Colorado will join other Western states at the forefront of national job growth in 2006, according to University of Colorado at Boulder economist Richard Wobbekind.
Wobbekind's announcement was part of the 41st annual Business Economic Outlook Forum hosted Dec. 5 by CU-
"The western United States is by far the strongest section of the country for job growth right now," Wobbekind said. "And Colorado is part of a strong Rocky Mountain economy."
In 2006, Colorado will add 52,100 jobs, an employment growth rate of 2.3 percent, compared to the national growth rate of 1.8 percent, according to Wobbekind. Total state employment in early 2006 is expected to slightly exceed the 2.25 million who were employed in 2001 before the recession hit Colorado.
"While we went into a recession in 2001, that was also the year we reached a record level of employment in Colorado," Wobbekind said. "It has taken us four years to get those jobs back."
The leader in job growth in 2006 will be the professional and business services sector, which has average wages about $24,000 above the state average. This sector, which includes engineers, computer systems designers and scientific research and development groups, will add 11,700 jobs.
The information sector is the only one expected to lose jobs in 2006, shedding about 800 jobs. The sector includes telecommunications and publishing, broadcasting, Internet and entertainment industries. Industry consolidation continues to drive efficiencies within the sector, according to Wobbekind.
Coloradans' per capita income is expected to increase to $39,917 in 2006, compared to the national average of $36,635.
Colorado's unemployment rate is expected to be 4.9 percent in 2006, slightly below the 5 percent projected nationally. The unemployment rate is not expected to drop rapidly during the next 18 months because a number of workers who have not been actively seeking work will re-
The natural resources and mining sector will add only 1,700 jobs in 2006. However, the sector's primary contribution to the Colorado economy comes through the value of its production, according to Wobbekind.
"Colorado is a state that will do relatively well with higher energy prices because that means there will be more gas wells being punched in the ground," Wobbekind said. "This is very important to many areas around the state because these wells generate secondary types of income in the form of royalties and severance taxes and fees, and those on private land pay royalties to the property owners."
Record livestock prices in 2005 pushed net income in Colorado's agriculture over $1 billion for the second consecutive year. Cattle prices will decline slightly in 2006, as will net farm income, which will come in at about $950 million.
"Overall, the outlook for agriculture is pretty rosy," Wobbekind said. "Barring a drought, agriculture should have a good year in 2006. What could make it a great year would be the reopening of foreign markets to our beef."
In 2006, Colorado should see the first increase in manufacturing employment since 2000, with the addition of 100 jobs. Manufacturing jobs now account for only 6.8 percent of the state's total employment base, down from 9.8 percent in the mid-
Colorado's population is expected to grow at a rate of 1.5 percent, adding about 72,100 people in 2006. Colorado will see a net migration of 32,000 people in 2006.
Wobbekind's presentation at the Business Economic Outlook Forum was followed by a Q-
Sector-
Agriculture - Strong livestock sales along with rising fuel and fertilizer costs will be the major determinants of profitability in Colorado's agricultural industry in 2006. Total livestock sales in Colorado will reach nearly $3.9 billion in 2006, the state's third-highest sales level. After fielding bumper crops of corn and wheat in 2005, total crop sales should increase slightly to $1.4 billion in 2006. Total farm and ranching revenues will decrease slightly to $6.25 billion in 2006. With production expenses of $5.3 billion, net farm income will be $950 million.
Natural Resources and Mining - Colorado's energy sector is experiencing a boom, despite increased volatility in the marketplace. Increased demand for energy products has resulted in growth in employment, output and total sales. This demand is expected to continue in most energy sectors through 2006. About 1,700 workers will be added in 2006, for a total of 18,500 jobs next year. This growth will be driven primarily by increased production of natural gas. Crude oil is expected to show a slight increase and coal production will remain at 40 million tons, with output growth being constrained by limitations in Colorado's rail infrastructure.
Construction - The construction sector will add 9,500 jobs in 2006, after losing about 16,300 jobs between 2001 and 2004. The total value of construction is expected to increase by 8.8 percent on the strength of residential and nonresidential construction.
Manufacturing - After losing 36,700 jobs between 2000 and 2004, the decline in manufacturing employment slowed in 2005. And for the first time in six years Colorado manufacturers are expected to add jobs in 2006, with the sector growing by 100 jobs. This growth is spurred by increased business equipment and overseas demand of the types of goods manufactured in Colorado. Nondurable goods employment is expected to decrease by 200 positions, while 300 durable goods jobs will be added. The largest decline is expected in the computer and electronics sector, where 500 jobs will be lost. Other sectors are relatively stable.
Trade, Transportation and Utilities - Between 1995 and 2004, a total of 46,700 jobs were added to the trade, transportation and utilities supersector, the largest provider of jobs in Colorado. About 33,700 of those jobs were added in the retail trade area. In 2006, retail trade is expected to add 6,200 jobs. This employment growth is based on projected retail sales growth of 10.5 percent in 2006. In addition, 1,200 jobs will be added in wholesale trade. With an improving economy, the addition of Southwest Airlines and record traffic at Denver International Airport, the transportation sector will add 300 jobs in 2006. The final sector, utilities, is expected to grow by 100 jobs in 2006.
Overall, the trade, transportation and utilities sector will increase by 1.9 percent, or 7,800 jobs.
Information - After shedding an additional 5,000 jobs in 2005, the decline in employment in the information sector appears to be bottoming out. The sector is expected to lose about 800 jobs in 2006. On a positive note, publishing companies are expected to add 200 jobs. Despite a positive outlook for Qwest and Time Warner, the telecommunications area will lose about 600 jobs. Additionally, 400 jobs will be lost in other information areas. Overall employment in the information sector will decline by 0.8 percent.
Financial Activities - Between 1995 and 2004, nearly 10 percent of all jobs added, or 33,900 jobs, were in the financial activities supersector. A majority of recent growth has occurred in the credit intermediation sector. In 2006, about 2,200 jobs will be added in the finance and insurance sectors, with an additional 1,100 jobs being added in the real estate and rental and leasing sector.
Professional and Business Services - As the economy has continued to improve, demand has grown and will remain strong for services such as engineering, computer systems design and other professional or technical business services. In 2006, 5,800 jobs will be added in the professional and technical services area of the sector. The administrative and support services area will grow by 4,400 positions and the management of companies and enterprises area will gain 1,400 jobs. This supersector will lead Colorado in absolute employment growth, with an increase of 3.7 percent, or 11,700 jobs, in 2006.
Education and Health Services - This supersector includes private education and health care services. Declines in public education budgets should boost demand for services provided by private education organizations. As a result, private education employment will increase by about 800 jobs in 2006. Between 1995 and 2004, the health care sector has accounted for 15.4 percent of all jobs added, or a total of 53,100 workers. The health care sector is expected to grow by 5,900 jobs in 2006. Job growth will continue to be limited by the supply of certified labor and much of the growth will be for support staff. Overall, the supersector will increase by 3 percent, or 6,700 jobs.
Natural Resources and Mining -
Construction -
Manufacturing -
Trade, Transportation and Utilities -
Overall, the trade, transportation and utilities sector will increase by 1.9 percent, or 7,800 jobs.
Information -
Financial Activities -
Professional and Business Services -
Education and Health Services -