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format version of this newsletter. The leading index of the metro Denver economy remained unchanged for the fourth consecutive month, according to Development Research Partners, while the historic index posted its second consecutive declines. In Colorado Springs, five of the eight indicators tracked by David Bamberger worsened. The Front Range Purchasing Managers Index declined in August, falling below the 50 mark to a level indicating economic contraction. The service economy index also fell into negative territory. Both indexes rebounded sharply in September, to 60.5 and 57.1 respectively. The Creighton University Index remained well above 50, although it also declined in September for the third consecutive month. Vectra Bank’s Small Business Index rose to 105.2 in September, based on the expectation that unemployment increased. This is considered a positive factor for business since it makes workers easier to hire. However, unemployment actually declined, so the index will likely be revised down. Economists who forecast economic activity in Colorado are generally pessimistic about the 2007 outlook, although some describe situation as slowing growth, and others as the onset of a recession. Forecasts for job growth range from 1.2% to 2.6%, with all but two of the eight reported forecasts at 2.0% or above. Single-family housing permits are expected to fall between 1.0% and 11.2%, while retail sales growth will average only 4.8%. Through the first seven months of 2006, sales surged 9.8%. A record number of immigrants applied for citizenship in Colorado in the year ending September 30. Applications increased 28% to 8,121, while approved application rose 23.9% to 5,700. The arts in metro Denver contributed $1.4 billion to the economy in 2005, according to the Colorado Business Committee for the Arts. About 14.2 million people spent $785 million, operating expenses totaled $597 million and capital expenses were $44 million.
Employment: Colorado’s seasonally adjusted unemployment rate fell to 4.4% in September, from 4.8% in August. Employment by place of work declined, however, and is up only 1.7% through the first three quarters. This is a 0.5 percentage point drop from the 2.2% increases of recent months. There were seasonally adjusted declines relative to August in Natural Resources, Construction, Manufacturing and Trade/Transportation/Utilities. The Information Sector has lost 1,600 jobs since September 2005. Job Changes 2006
Energy: Higher oil prices are boosting interest in less traditional energy sources. A solar plant is due to open near Alamosa in 2007. The power output will be sold to Xcel Energy, which must generate at least 10% of its electricity with renewable sources by 2015. Chevron will resume experimental oil shale work in Colorado after a 30-year hiatus. An estimated 1 trillion barrels of oil is contained in Colorado oil shale.
Health insurance premiums have increased 87% nationwide, according to the Kaiser Family Foundation. Hewitt Associates estimates and U.S. workers’ contribution to health insurance premiums and out-of-pocket costs will increase almost 8% next year, to $3,305. Workers pay about 16% of premium costs for single coverage and 27% for family coverage.
Venture financing in Colorado totaled $195 million in the third quarter in 17 transactions. Year-to-date, 45 deals have raised $368.2 million, down 28.4%, according to an Ernst & Young survey. The PricewaterhouseCoopers MoneyTree report, which looks at a broad range of venture financing, reported that venture financing rose 18.8% in Colorado in the third quarter to $209.8 million, but was down 15.5% for the year. Payday lenders made almost $500 million in short-term loans to 250,000 Coloradans in 2005, up 34% and more than double what they were in 2004. Traditional subprime consumer loans, those with rates above 12%, also increased. Payday loans carry an average interest rate of 345%. On a more positive note, the A.G. Edwards Nest Egg Index, which looks at 12 statistical factors including participation in retirement savings plans, home ownership and personal debt levels, found that Colorado, with an index of 106.2, ranked 10th in among the 50 states. Edwards was the Colorado community with the highest rating, 116.24, followed by Boulder and Silverthorne, both slightly above 113. Latin American and Caribbean-born immigrants contribute $6.53 billion to the Colorado economy, according to as study by the Inter-American Development Bank. In 2005, they remitted about $646 million to family outside of the U.S., spending the other 90% here. Remittances have risen 18.8% since 2004. Slightly over half of immigrant workers send money home. Total retail spending in Colorado in 2005 was $122.9 billion. Tourism: The occupancy rate in Colorado hotels and motels averaged 67.8% in September, up from 64.6% a year ago, according to the Rocky Mountain Lodging Report. Year-to-date, the occupancy rate of 65% is 2.2 percentage points above the first nine months of 2005. Average room rates have risen 11.5% to average over $74. Aspen has the highest room rates in the state and Grand Junction has the lowest. Gambling revenues in Colorado were $58.7 million in August, down from the record set in July but 7.7% above August 2005. Year-to-date, over $7.9 million in taxes were paid on $142 million in adjusted gross proceeds. There are 47 casinos operating in Colorado’s three communities with limited stakes gambling. August was the 16th record month for passenger traffic at Denver International Airport. Traffic rose 5.1% for the month and was up 9.6% year-to-date. In Colorado Springs, enplanements fell 2.4% in September and were down 0.6% through the first three quarters. A $255 per passenger subsidy under the Essential Air Service program keep commercial flights into Pueblo, Colorado, according to a New York Times story. In fiscal 2005, Pueblo’s two daily subsidized flight to Denver draw a combined five passengers a day. Overnight stays in the nation’s national parks fell 20% between 1995 and 2005, with the biggest declines in RV camping. Visits to Rocky Mountain National Park fell10.5% and to Mesa Verde were down 19.5%. The Colorado Division of Wildlife estimates that hunters and fishermen spent $800 million in Colorado in 2002 and generated an additional $700 million in secondary job creation and spending. The industry employed an estimated 18,500. Nonresidents accounted for 45% of the direct spending. Arapahoe Basin was the first ski area in the country to open on October 13. Loveland Basin, which opened first last year, was a day behind. The Denver Metro Convention and Visitors Bureau projects record tourist visits over the next several years. It has booked 842 future conventions valued at $2.2 billion. Housing: There was little good news in the housing market in Colorado in September. Year-to-date, housing permits are down 10.5%, with single-family permits declining 17.7%. Multifamily permits continue to increase, up 38.3%, despite a sharp decline in sales. Only Grand Junction and Pueblo have posted permit increases over the first nine months. The Denver Board of Realtors reported that sales of existing single-family home in metro Denver were down 25.2% relative to a year earlier in September, with 20%-40% declines in all price ranges except under $140,000. Both the median and average price declined relative to 12 months ago. Through the first three quarters of 2006, sales were down 4.0% and the inventory of homes on the market was up 23.7%. Condo/townhouse sales were down 30% for the month, with 17%-54% declines in all price ranges. Sales fell 4.0% for the first three quarters and both average and median price declined. Fast growing areas in Colorado, Texas and California had the highest percentages of people carrying a heavy housing burden, according to the American Community Survey conducted by the Census Bureau as reported in the Denver Post. About 47% of renters in Boulder spent at least half of their income on rent, the highest in the country. Fort Collins was 26th with 36.3%. Both are college towns. Other data from the survey showed that 72.6% of whites in Colorado owned their home, 63.5% of Asians, 51.4% of Hispanics and 42.3% of blacks. Home ownership rates have declined over the last five years for blacks and Hispanics but rose 8.2 percentage points for Asians and 1.5 percentage points for whites. A separate study by the Center for Housing Policy found that low to moderate income workers in Denver spend 29% of their income on housing and another 29% on transportation. Of these workers, 87% drive to work and 6% take public transportation. The other 8% either walk/bike to work or work from home. Research by RealFacts Inc. found that apartment rental rates rose 0.8% in metro Denver in the third quarter from a year earlier, but fell in Colorado Springs, Boulder and Fort Collins. Declines in Highlands Ranch, Castle Rock, Golden and Denver were offset by gains in Aurora, Lakewood, Northglenn and Westminster. Nonresidential: The value of nonresidential construction contracts in Colorado increased 22.7% through September. Half of the increase is in El Paso County, where contracts are up 114%. The value of contracts in metro Denver is flat. Statewide, the value of hotel/motel contracts has more than tripled. Turner Commercial Research reports that commercial vacancy rates in Colorado Springs fell in the third quarter. The office vacancy rate averaged 7.7%, The Class A rate was a bit higher at 10.7%. Both the retail and the industrial vacancy rates were 6.6%.
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