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Colorado Springs unemployment rate falls to 5 1/2-year low, but news isn’t all rosy

Wayne Heilman | The Colorado Springs Gazette

The Colorado Springs area job market took another big step forward in June as the area’s unemployment rate fell to 6.8 percent, the lowest in 5 1/2 years and the biggest month-to-month drop since at least 2000, the U.S. Bureau of Labor Statistics reported Wednesday.

Colorado Springs area unemployment rate, June 2013-June 2014

June 2013: 8.1 percent

July 2013: 8 percent

August 2013: 8 percent

September 2013: 7.9 percent

October 2013: 7.8 percent

November 2013: 7.7 percent

December 2013: 7.6 percent

January 2014: 7.5 percent

February 2014: 7.5 percent

March 2014: 7.6 percent

April 2014: 7.4 percent

May 2014: 7.2 percent

June 2014: 6.8 percent

Source: U.S. Bureau of Labor Statistics

June was a banner month for the local job market by almost any standard. The number of area residents looking for jobs last month fell by more than 1,400 from May, more than doubling the largest decline in the unemployed during the past 14 1/2 years. The previous largest drop — 655 — took place from April into May.

Nearly all of the job seekers — nearly 80 percent — presumably found jobs, since total employment grew by more than 1,100, the most since September 2012 and the second-highest monthly gain in more than 11 years.

“This is the best report we have had in years,” said Fred Crowley, a local economic consultant who retired earlier this year as senior economist of the Southern Colorado Economic Forum. “Overall, it is a very favorable report that is a nice reversal from what we have seen in recent months.”

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The area’s job market has been slow to recover from the recession, and Colorado Springs still has the second-highest jobless rate among the state’s seven metropolitan areas. The rate is also higher than both the statewide average of 5.5 percent and the national average of 6.1 percent. The area’s unemployment rate, which is calculated from a survey of households, was 8.1 percent in June 2013 and peaked at 10 percent at the end of 2010, but has declined nearly a full percentage point as the number of people looking for work has dropped by more than 2,500 during the past three months.

“This recovery has been the most sluggish in U.S. history. Employers have been reluctant to hire because of uncertainty about health care costs from the Affordable Care Act, but we are now seeing the number of discouraged workers dropping sharply as they come back into the labor force,” said Tatiana Bailey, the economic forum’s new director.

The news isn’t all good, however, as a different measure reflects a less optimistic view of the local economy. Local payrolls, which are calculated from a survey of employers, grew in June by just 0.4 percent from a year ago to 257,700, the slowest growth rate in 3 1/2 years. Those numbers are prone to major revisions — May’s local payroll growth rate was revised upward to 0.7 percent from 0.4 percent, and the Bureau of Labor Statistics has made major annual revisions to its local payroll numbers during each of the previous three years.

Much of June’s sluggish payroll growth resulted from declining employment by both the state and federal governments as well as the tourism industry, offsetting some of the surging gains in the health care, finance and professional and business services industries, all of which pay wages that are higher than El Paso County’s average. The report also doesn’t indicate whether employment is full time or part time.

Tom Binnings, a senior partner in Summit Economics LLC, a local economic research and consulting firm, said unemployment may be dropping despite sluggish payroll growth because many of those now counted as employed have started their own businesses. Self-employed residents are not included in the payroll numbers. That reflects a nationwide trend of more people starting businesses to escape unemployment, though there is little evidence of the trend in statewide numbers that show payroll growth over the past year exceeding 3 percent.

“The good news is that locally we continue to see job growth in the private sector despite cutbacks by both the state and federal governments,” Binnings said. “I don’t see anything halting this momentum other than the Fed cutting back on economic stimulus faster than the economy can withstand.”

 

 

This article was written by WAYNE HEILMAN from The Gazette (Colorado Springs, Colo.) and was legally licensed through the NewsCred publisher network.

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