June 16, 2013 Updated: June 16, 2013 at 11:05 am
Slowly but surely, the Colorado Springs economy is getting better.
A report from the Colorado Department of Labor and Employment shows that the Colorado Springs economy gained strength late last year, continued to improve in the first four months of this year, and had much stronger job growth than previously reported from monthly surveys.
The report from the Colorado Department of Labor and Employment showed that area payrolls grew by an average of 2 percent during the final quarter of 2012, compared with a year earlier. That is twice the payroll growth rate that the U.S. Bureau of Labor Statistics reported for the same period, and it likely will trigger a major upward revision in the area's employment numbers in March as part of an annual process, said Alexandra Hall, the department's chief economist.
"The recovery has been slower to develop in the Colorado Springs area, but it has arrived," Hall said in an interview this month about the quarterly data, which is based on unemployment insurance reports from employers. The U.S. Bureau of Labor Statistics report is based on data from employer surveys.
Hall predicted that the federal agency's revisions will add 2,300 jobs to area employment numbers for each month from October 2012 through April.
Statewide payroll growth has been much stronger than payroll growth in the Colorado Springs area since the end of 2011, exceeding 2 percent every month since November 2011. Growth in the Springs area hasn't reached that level since 2006 and remained at less than 1 percent throughout 2012. The revisions Hall anticipates, when applied to the first four months of the year, would put the area's job growth rate at more than 2.5 percent for every month but March, nearly equaling the state's growth rate for the first time since the recession began in 2007.
"This shows that the recovery is spreading from the Denver area and northern Colorado down the Front Range to Colorado Springs and beyond," said Tom Binnings, a senior partner in Summit Economics, a Colorado Springs-based economic research and consulting firm.
Binnings attributes the stronger growth to troops returning to Fort Carson from deployments in Afghanistan, the arrival of an aviation brigade at the mountain post and strong growth in housing construction and new vehicle sales resulting from easing credit conditions.
Much of the job growth in the fourth quarter came from the health care, call center and construction industries, likely the result of several factors: increased hiring after University of Colorado Health leased Memorial Health System from the city of Colorado Springs; expansions at call centers operated by Alorica, Comcast and Progressive; and surging housing construction.
Nearly every major industry added jobs in the Colorado Springs area during the October-to-December quarter. Only the information, government and professional and technical services sectors shed jobs from a year earlier.
Fred Crowley, senior economist for the Southern Colorado Economic Forum, said the broad-based job growth results from a widespread recovery across much of the area's economy - a trend reflected in the forum's business conditions index that, in recent months, reached its highest levels since the beginning of the recession.
The only exception has been the tourism industry, which has struggled to regain momentum since last summer's Waldo Canyon fire and now faces fallout from the Black Forest fire. In the first four months of the year, hotel occupancy was down to 50.7 percent from 52.9 percent a year ago, according to the Rocky Mountain Lodging Report.
Other economic indicators reflect a strengthening area economy:
- Housing construction in the first five months of the year is up 51.1 percent from a year ago and has increased from the same month a year earlier for 17 consecutive months.
- Housing sales in the first five months of the year are up 23.8 percent from a year earlier and have risen for 11 consecutive months.
- Sales tax collected by the city of Colorado Springs, adjusted to subtract one-time collections from merchant audits, so far this year is up 7.8 percent from a year ago and has posted 16 consecutive monthly gains.
- New vehicle registrations for the first five months of the year are up 14.7 percent from a year earlier and have increased for nine consecutive months.
"Almost all of the indicators for the U.S. economy continue to point to a strong job market - first-time claims for unemployment benefits and long-term unemployment are both down and people are re-entering the job market because they believe the economy is getting better," Crowley said.
But he warned that the local recovery might hit a plateau this summer as federal agencies start furloughing civilian employees to comply with automatic federal budget cuts that began in March. Those cuts, part of a process called sequestration that imposes $1 trillion in cuts split between defense and entitlement programs, likely will slow consumer spending and erode job growth later this year, Crowley said. The one-day-a-week furloughs start next month for up to 9,000 area workers and will reduce incomes of affected employees by 20 percent, he said.
"I expect sequestration will result in modest erosion in the job market. We will still see growth, and it might even continue at close to the current level if the impact of sequestration is not as bad as we fear, or if the cuts are offset by corporate relocations and expansions later in the year," Crowley said.