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2016 economic outlook shows growth but some sectors slowing

While Colorado’s economic picture next year will be highlighted by continued job growth, Weld County could see some slight dips that could put some stress on employment, according to an annual business outlook published Monday by the University of Colorado Leeds School of Business.

In the college’s annual business outlook, the 2016 state economy will slow somewhat, though there still will be growth.

All industries but natural resources and mining are expected to grow in employment next year across the state. The oil and gas segment is expected to decrease by about 1,300 people next year, the study revealed.

Overall, the forecast calls for a gain of 65,100 jobs, or growth of 2.6 percent, in Colorado in 2016.

Weld, however, will continue the trend of a sagging oil and gas industry and slight downturn in agriculture after some good years.

“We’re not predicting a good year for agriculture, especially with depressed cattle prices,” said Richard Wobbekind, senior associate dean for academic programs at the Leeds School.

“The two sectors we think will have the toughest years are natural resources and mining … and agriculture. Those two areas are obviously significant to Weld County,” Wobbekind said. “Frankly, when ag is down, it’s still OK.”

For the past two years, cattle prices peaked, which will lead to “significant declines” in 2016, the report stated.

“Farmers and ranchers will need to keep expenses in check to compensate for lower prices for everything from cattle to corn,” the report advises. “… The current financial position of most producers should be good, but how they react to this cyclical decline will determine whether they are able to generate profits and operate in the black.”

Farmers are going to be careful with any business activities next year, said Kent Peppler, a Mead farmer and Rocky Mountain Farmers Union member. That caution only will increase if commodity prices keep trending lower. Nothing indicates commodity prices will rebound soon, he said.

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“I don’t hear a lot of optimism out there,” Peppler said.

Weld is diversifying. According to the report, the county added more than 12,800 jobs in the two years preceding September 2015. Larimer County in that time added 8,700.

Manufacturing is expected to perform well next year, and housing also will remain strong, he said.

The construction sector is expected to add 9,700 jobs in 2016. Colorado is poised to record the highest value of construction since 2006, according to a news release about the economic outlook.

Many construction companies in northern Colorado already have their calendars booked up through 2016, said Rich Werner, president and CEO of Upstate Colorado Economic Development.

Across Weld, a number of communities have experienced an uptick in subdivision applications.

Oil and gas gets a lot of attention in Weld, but the area has diversity — with a lot of activity in food processing for example, he said.

The NoCo Manufacturing Partnership has done a lot to bring together the smaller manufacturing companies in Larimer and Weld counties and show other companies the value of doing business in northern Colorado, Werner said.

Small manufacturing companies have started looking at northern Colorado after being priced out of Denver when the marijuana industry snapped up much of the metro area’s industrial space, he said.

While Weld’s oil production continues on an upward trajectory, the rest of the state’s production is sagging, bringing down the state’s overall numbers.

The report states the value of oil, gas and carbon dioxide production for 2015 is projected to be between $9.5 billion and $10.5 billion, a 40 percent decline from 2014. Next year, Colorado production is expected to remain flat or increase only modestly, based on an assumed stabilization of crude prices ranging from $50-$60 per barrel.

Of bigger concern at the state level is the available work force, Wobbekind said. The workforce is lagging.

“If the job forecast is anywhere close to accurate, we’ll really be depending on percentage of jobs by people migrating in from other states,” Wobbekind said. “There will be a continued reliance on additional workforce; we’ve continued to have population growth rates twice the rate of nation.”

He said the report forecasts 62,000 more people moving to Colorado to help fill that growing workforce need. Wobbekind said Colorado is seeing a lack of workers skilled in specific areas, such as science and technology, construction or manufacturing. The state’s aging population also is showing a growing group of people no longer participating in the workforce.

“Colorado is now staring at full employment,” said Wobbekind in the release. “With such a low unemployment rate and a decreasing labor participation rate, continued in-migration will be integral to supporting economic growth across the state.”

This article was written by Sharon Dunn from Greeley Tribune, Colo. and was legally licensed through the NewsCred publisher network.