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:
oAgriculture - 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.
oNatural 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. 暗网禁区 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.
oConstruction - 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.
oManufacturing - 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.
oTrade, 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. 暗网禁区 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.
oInformation - 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.
oFinancial 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.
oProfessional 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.
oEducation 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.
oLeisure and Hospitality - In many areas it is difficult to secure reliable data that reflect activity within the industry. For areas where data are available, such as casino revenues, ski lift tickets, park visits and DIA passengers, growth is expected for the upcoming months. This sector is expected to add 5,600 jobs in 2006, an increase of 2.3 percent. 暗网禁区 3,800 of these jobs will be added in food services.
oOther Services - This supersector is comprised of private businesses that provide personal services such as auto repair shops, Laundromats and beauty salons. Because they fulfill many basic needs, growth often depends on population growth as much as it relies on the state of the economy. This supersector will experience higher growth rates than population in both 2005 and 2006, and will add 2,000 jobs in 2006.
oGovernment - As the state's population has grown, so has the need for government services. As a result, all sectors of the government are expected to grow in 2006, with the exception of the federal government. 暗网禁区 100 federal jobs will be lost, while 1,200 state government and education jobs will be added. As has been the case in the past, the largest growth will occur at the local level where about 3,100 jobs will be added. Most of that growth will occur in the K-12 education sector. Total government growth will be 4,500 jobs.
oInternational Trade - Colorado has not been able to sustain the record level of export growth that occurred in 2004. The glaring weak spot in 2005 was semiconductor exports. Overall, total exports will increase by 2.4 percent in 2005 and 3 percent in 2006. A stronger dollar may dampen foreign demand for U.S. goods and services. High oil prices, concerns in Asia and Europe about avian flu and an ongoing ban on beef exports to Japan and Korea will impact trade in the year to come.
Regional and Area Economic Forecast Highlights:
oAcross the West - Despite improved economic conditions in Colorado, the state is expected to be tied for sixth place in population growth out of 10 Western states. Similarly, it will finish in a tie for fourth place in terms of employment growth for 2006.
oNorthern Colorado - More than $1 billion in new capital construction projects over a two-year period will bring 2,000 new job opportunities to northern Colorado in 2006. A survey of the region's largest primary employers indicated that over the next three years they plan to expand their businesses by about 1.2 million square feet. Areas of strong development include the Centerra development in Loveland, the 2534 development in Johnstown and the Crossroads Business Park in Loveland.
oLa Plata County - The La Plata County economy is highly seasonal, with most tourism occurring during the summer months. A mitigating factor to this seasonality is Fort Lewis College. Per capita income has improved over the last few years, both in absolute terms and relative to the national average. In 2003, La Plata County ranked 21st out of 64 counties with per capita income of $29,807. Population growth in the county has been about 3 percent for the last eight years.
oPueblo County - Although the Pueblo economy has been volatile recently, this year's unemployment is down and will continue to improve in the months ahead. Job growth for the Pueblo area is expected to be 2.3 percent in the months ahead. 暗网禁区 1,000 jobs will be added for Xcel Energy's proposed Comanche power-generating facility. Population in the area is expected to grow at the same rate as the state, about 1.5 percent. Pueblo is a regional center for medical care and retail consumption, which serves as a stabilizing factor on the economy.
oSouthern Colorado (El Paso County) - Aggregate and specific economic evidence points to March-April 2003 as the turning point in El Paso County's economic recovery from a two-year downturn. The average unemployment rate for El Paso County dropped from about 5.6 percent in 2004 to 5.4 percent in 2005. A modest improvement is expected in 2006 as the rate will drop to 5.3 percent. Additional gains in employment are expected as the economy continues to strengthen, particularly among technology-based, primary employers and in the finance, health care, retail and construction fields.
National Economic Forecast Highlights:
oGross Domestic Product (GDP) - The GDP is expected to remain at 3.5 percent growth in 2006, a rate greater than the annualized average, 3.3 percent, from 1995 to 2004. The GDP deflator will drop slightly, registering 2.4 percent in 2005 and 2.3 percent in 2006.
oConsumption - Nationally, growth will be driven by a 3.2 percent increase in real personal consumption and an increase of 7.2 percent in retail sales. Light truck and auto sales, a major component of retail sales, will drop from 16.9 million to 16.6 million as a result of "spent-up" demand from creative financing programs from the last three years.
oInvestment - Real business investment is expected to decrease, but remain solid in 2006, at a rate of 5 percent, as replacement investment and expansionary investment drive growth. Industrial production rates will remain strong at 3.3 percent.
oGovernment Spending - The federal deficit is expected to increase from $333 billion to $394 billion in 2006. Costs associated with assistance to the hurricane cleanup and the war in Iraq are factors that will drive the deficit higher.
oNet Exports - The trade deficit took a sharp jump at the end of 2005 in reaction to higher prices for imported oil. The deficit will likely decline as oil prices drop; however, a strengthening dollar may decrease the demand for U.S. goods and services in foreign markets.
oPrices - Concerns about inflation will continue to dictate the monetary policy decisions of the Federal Reserve Board. The change in the U.S. Consumer Price Index, or CPI, is expected to be 3.3 percent in 2005 and fall slightly to 3 percent in 2006. Inflation rates for Colorado are projected to be 1.7 percent for 2005 with an increase to 2.2 percent in 2006. The state CPI remains lower than the national rate because of artificially low prices for housing and automobiles. Producer prices, as measured by the Producer Price Index, are expected to register 2.7 percent in 2006 as energy prices stabilize or decrease slightly. Employment costs, which include average wage and salary levels, grew at a rate of 3.2 percent in 2005 and are forecast to rise to 3.6 percent in 2006.