Phil Castle, The Business Times

The Colorado economy is expected to continue expanding in 2019, but at a moderating pace, according to the latest results of an annual forecast compiled by the University of Colorado at Boulder.

“Growing, but slowing,” said Richard Wobbekind, executive director of the research division at the Leeds School of Business at CU.

Wobbekind discussed the forecast in an interview with the Business Times and presentation hosted by the Grand Junction area Chamber of Commerce.

Nonfarm payrolls in Colorado are forecast to increase 53,200 in 2019, That’s 11,800 less than the gain expected for 2018, but still a jump of 2 percent that will keep Colorado among the top 10 states for job growth.

What’s notable, Wobbekind said, is employment growth is forecast for each of 11 industry sectors. “We feel pretty good about this picture overall.”

Professional and business services are expected to add the most jobs at 11,300, followed by the trade, transportation and utilities sector with 8,700 new jobs. Payrolls are expected to increase 7,500 in leisure and hospitality, 6,500 in education and health services and 5,000 in construction.

Low unemployment rates have created a tight labor market that hampers growth, Wobbekind said. But the labor force participation rate has increased in Colorado to one of the high levels in the country as people previously discouraged from looking for jobs have rejoined the work force.

The Colorado population is expected to continue to grow, but at a slower rate with a net in-migration of about 50,000 people in 2019.

Continued growth is forecast for retail sales and in turn the retail sector and retail employment, Wobbekind said. The tourism industry is expected to do well with additional growth at Denver International Airport as well as record-level visits to public lands in Colorado.

The construction sector in Colorado will continue to grow as well, Wobbekind said, driven by increased residential and industrial building. Demand for housing, especially along the Front Range, outpaces supply and drives up prices.

Payrolls are expected to grow in the natural resources and mining sector, although the overall value of oil production could drop in 2019 on softer prices, he said. Demand for natural gas should remain strong as a fuel for home heating and, increasingly, electrical production.

Coal production will remain flat in Colorado in 2019, but at about half the level of a decade ago, he said.

Colorado ranks as a leading producer of oil, natural gas and coal as well as gold and molybdenum. The state also ranks high as a producer of wind and solar energy.

The outlook is less upbeat for the agricultural sector, he said, because of lower commodity prices and drought conditions in Colorado. “Ag has had a tough run.”

One bright spot could be the increasing production of industrial hemp in Colorado as a material for clothing, building materials, medical products and other uses, Wobbekind said.

Federal farm legislation approved by Congress includes a provision to legalize and regulate hemp under the U.S. Department of Agriculture. Hemp production already is legal in Colorado.

A skilled and educated work force continues to attract businesses to Colorado  as the state fares well nationally for its economy, employment and income.

Some headwinds could blow in 2019, though, he said, including a tightening labor market, lower commodity prices and drought.

Moreover, Colorado ranks No. 1 for the biggest gain in home prices over the past 10 years. “This is one of the troubling subtexts for the state.”

Nationally, the question is how long one of the longest economic expansions in the United States since World War II will continue, Wobbekind said.

Employment and wage growth combined with strong consumer confidence will continue to drive personal consumption, which accounts for about 70 percent of the U.S. economy, he said.

Meanwhile, though, tight labor markets, rising interest rates, stock market volatility and trade policies pose risks to growth, he said.