Tuesday, December 11, 2012

November 2012 Monthly Economic Summary

Improved consumer confidence points to strong holiday season

Metro Denver continues to post strong retail sales as consumer confidence improves and stores begin to ramp up for the holiday season, according to data compiled by the Metro Denver Economic Development Corporation (Metro Denver EDC) in its Monthly Economic Summary for November 2012.

Retail sales in the metro area increased 7.3 percent through August compared to the same period in 2011, with a similar increase occurring at the state level.

Consumer confidence in the Mountain Region increased over 75 percent year-over-year, further supporting the strong retail sales trends and providing a positive outlook for the holiday sales season. Indeed, the National Retail Federation forecasts that retailers nationally may hire 585,000 to 625,000 additional workers for the season with retail activity increasing 4.1 percent over 2011 levels.

The improvement in consumer confidence over the past twelve months bodes well for the retail market in general. "Metro Denver's retail market vacancy rates, at 6.7 percent, have declined to pre-recession levels," notes Patty Silverstein, chief economist for the Metro Denver EDC. "We are seeing a notable improvement in the retail market that we expect to extend beyond the holiday season."

The residential real estate market also reflects increasing consumer confidence and growing optimism about the economy. As mortgage rates hit record lows, Metro Denver posted a 17.1 percent year-over-year increase in home sales through September. The housing market is showing strong signs of recovery with increasing median home prices and increased residential construction. PricewaterhouseCoopers and the Urban Land Institute ranked Denver as the nation's 14th top real estate market to watch in 2013, and Interest.com ranked the area 12th for home affordability.

The apartment market remains active as vacancy rates continue to drop and rental rates increase. Several large-scale apartment complexes broke ground recently: including a 297-luxury unit complex in Broomfield, a 374-unit luxury apartment development at the future Broomfield Business Center, a 353-unit apartment complex at the Belleview Station, and a 20-unit luxury complex in downtown Boulder, the first new apartment complex in downtown Boulder in 25 years.

The retail sales and home sales indicators were among 16 Metro Denver indicators that moved in a positive annual direction in this report, up from fifteen indicators in the previous report. Seven of the indicators moved in a positive monthly direction, compared to 14 indicators in the previous report.

The Monthly Economic Summary provides a snapshot of metro area economic activity, as well as its relationship to national and regional economic trends.

Labor and Employment

Metro Denver employers added 2,100 jobs between August and September. Employment increased 2.5 percent in September year-over-year and rounded out a strong third quarter with a 2.7 percent increase over the third quarter of 2011. Education and health services (4.2 percent) and leisure and hospitality (4.8 percent) posted the largest gains over September 2011 of the supersectors. In total, nine of the eleven supersectors increased compared to the same period the previous year, with only the transportation, warehousing, and utilities (-1.1 percent), and government (-0.05 percent) decreasing.

Employment also increased at the state and national levels for September. Colorado employment increased by 4,900 compared to August, or 0.2 percent, and increased by 1.6 percent compared to September 2011. U.S. employment posted similar trends with an increase of 0.4 percent month-over- month and 1.4 percent on an annual basis.

The Metro Denver unemployment rate decreased 0.4 percentage points to 7.2 percent on a monthly basis in September, the lowest rate since December 2008. The year-to-date average unemployment rate also decreased 0.5 percentage points over the same period in 2011. County unemployment rates in Metro Denver all decreased month-over-month between August and September, ranging from -0.2 percent in Broomfield County to -0.4 percent in Arapahoe, Boulder, Denver, and Jefferson Counties. The Colorado unemployment rate was slightly higher than Metro Denver at 7.4 percent in September, but was lower than the national rate of 7.6 percent.

The weekly average number of claims filed for unemployment insurance in Metro Denver declined month-over-month by 2.7 percent in September, and fell 7.7 percent compared to claims filed in September 2011. The statewide numbers posted mixed trends, as September claims increased by 2 percent compared to August, and decreased 3.6 percent year-over-year. While claim numbers in Metro Denver remain elevated, the pace of new filings has slowed and is 55.7 percent lower than the peak number of claims in November 2008. State numbers have decreased significantly as well, dropping 55.6 percent since the peak in December 2008.

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