The Colorado Springs area’s unemployment rate jumped to a 3½-year high of 4.5 percent in December, even as payroll growth was the nation’s second-highest, the U.S. Bureau of Labor Statistics reported Wednesday.
That’s because more than 3,100 people joined the area’s job market in December, the fourth month last year at least 3,000 people decided to look for work. Nearly 21,000 people were added to the area’s labor force last year and nearly 80 percent of them found work.
But the number out of work grew by more than 4,400 and pushed the area’s jobless rate nearly a full percentage point higher from 3.6 percent in December 2017.
The unemployment and payroll numbers come from separate surveys of households and employers, respectively, but both show a booming local economy. The area’s 5.6 percent job growth rate from December 2017 was the second highest among the nation’s 388 metropolitan areas behind Midland, Texas, the federal agency said in a news release.
However, those numbers sound too good to be true for many economists. The agency’s quarterly numbers — considered more reliable because they come from unemployment insurance reports most employers file — show the area’s employment in the second quarter of 2018 was growing at a much slower 2 percent rate on a year-over-year basis. The bureau in March will release an annual revision of the monthly job growth numbers that incorporates the quarterly data.
“It is hard to imagine we are having employment growth even close to 5 percent. Until we see the quarterly numbers for the third and fourth quarters of 2018, we won’t have a real accurate employment picture,” said Tom Binnings, a senior partner in Colorado Springs economic research and consulting firm Summit Economics . “But it is believable our labor force is growing significantly faster than employment.”
Binnings speculated that the area’s booming economy is drawing people back into the labor market who “had been on the sidelines,” including workers who retired early but found they didn’t have enough savings and other financial resources to live comfortably. As a result, some have returned to work in a part-time role to supplement their Social Security and other retirement income. The labor force is growing more quickly among older workers than younger job seekers, he said.
Tatiana Bailey, director of the University of Colorado at Colorado Springs Economic Forum, said she expects the job market to soften “quite a bit” this year since the supply of labor has exceeded the demand for labor by a widening margin for the last few months of 2018.
Just more than half of the more than 16,000 jobs added in the area during 2018 came in the professional and business services sector — which includes defense contractors — and leisure and hospitality — mostly in restaurants and bars. The health care and government sectors also added 1,600 and 1,500 jobs, respectively, during the same period, while the information sector was the only sector to shed jobs — just 100.
Unemployment rates in all of Colorado’s seven metropolitan areas and statewide moved significantly higher in December from November, ranging from 3.3 percent in Boulder and Fort Collins to 5.8 percent in Pueblo. Colorado’s jobless rate rose from 3.3 percent in November to 3.5 percent in December, the highest monthly rate in nearly three years.