Phil Castle, The Business Times
After experiencing the largest proportional, year-over-year gains among metropolitan areas in Colorado in payrolls and housing prices, Grand Junction is poised to continue to outperform other areas of the state, according to an economist with Wells Fargo.
The overall outlook for the state is less upbeat, however, with the prospect of economic growth losing momentum.
“We expect Grand Junction to continue to outperform the state in most economic measures, but are generally more cautious about our view for the U.S. and Colorado economies over the next year,” said Mark Vitner, a senior economist with Wells Fargo Securities.
Vitner and Ed Kashmarek, another economist with Wells Fargo, recently released a 15-page report on their economic outlook for Colorado. In addition to analyzing various industry sectors, Vitner and Kashmarek also detailed their forecasts for metropolitan areas in the state.
In Grand Junction, nonfarm payrolls grew 4.3 percent during the year ending in May. That’s the largest proportional gain among seven metropolitan areas analyzed in the report.
During the same span, Grand Junction experienced an 11.9 percent increase in home prices, also the largest proportional gain among the seven metro areas.
“The stronger job growth reflects broad-based improvement across a broad assortment of industries,” Vitner said.
Employment grew 6.6 percent in the construction and mining sector thanks in part to labor demand related to higher oil prices. Government payrolls grew 5.7 percent.
The pace of hiring has slowed more recently, however, Vitner said.
“Some of the slowing likely reflects concerns about the worsening European financial crisis as well as the growing awareness of the threat from the fiscal cliff here at home. Energy and mining are beginning to be impacted by the slowdown in global economic growth, which has led to lower oil prices.”
Job growth and smaller housing inventories have helped boost home prices.
Vitner also attributed the rebound in part to changes in the composition of home sales. “Foreclosures, short sales and bank sales, which typically sell at a discount, now account for a smaller proportion of overall sales, which has boosted measured home prices,” he said. “We expect the foreclosure sales to increase later this year, when non-distressed sales tend to slow.”
Statewide, economic growth appears to be losing a bit of momentum going into the second half of the year, although Colorado should continue to outpace the nation, Vitner and Kashmarek reported.
The labor market is recovering faster in Colorado than the United States, while a budding housing recovering has driven gains in construction payrolls and helped the financial services industry regain its footing. Even as increased oil exploration and production have bolstered growth in the mining sector, falling prices have curbed natural gas development. Exports rose during the first quarter, although exports to the European Zone were down compared to a year ago.