Amid current uncertainty in the national and state economies, one anticipated bright spot will be a modest employment increase in most sectors of the Colorado economy in 2003, according to CU-Boulder economist Richard Wobbekind.
Wobbekind's announcement Monday was part of the 38th annual Business Economic Outlook Forum hosted by CU-Boulder's Leeds School of Business at 1:15 p.m. at Denver's Marriott City Center.
State unemployment is expected to fall from 5.3 percent in 2002 to 4.9 percent in 2003. Although higher than the rate of the late 1990s, Colorado's unemployment rate will be one point below the national rate.
"We expect a modest 1.0 percent increase in employment in 2003," said Wobbekind, director of the Business Research Division at the Leeds School of Business. "Colorado will remain an attractive place to conduct business because of our well-educated and versatile workforce."
Wage pressures have decreased and allowed companies to hire high quality workers at lower wages. In addition, office space is available at lower rates.
"Since 1950, the Colorado economy has experienced negative job growth only three times, with 2002 being one of those years," said Wobbekind. "On both of the two previous occasions the economy rebounded the following year with positive job growth. We expect that to happen in 2003."
The increase of 22,300 jobs will not include the construction and manufacturing sectors, which will experience decreases in employment. This level of job growth is significantly below the 1991 to 2001 annual average of 68,840 new jobs created.
The minimal growth rate is due to weak business investment at the national level and a lower rate of net migration. Net migration is expected to drop from 68,000 to 20,000.
The state's growth is significantly affected by the national and international economies. As the national economy has evolved from focusing on goods to a services focus during the 1990s, the services and trade sectors have been the leading growth sectors.
The services sector experienced difficulty in 2002, particularly the business and tourism-related service areas. "The loss of 22,000 jobs in the manufacturing and the transportation, communication and public utilities sectors reduced the demand for outsourcing, which really hurt the business services area," Wobbekind said.
September 11, forest fires and drought all contributed to the tourism decline. The services sector is expected to rebound, adding 10,100 jobs in 2003.
Retail trade sales are expected to recover from 2002 lows and grow at a rate of 3.9 percent in 2003. Although the retail trade market is saturated in the metro area, sales are expected to increase at a rate slightly above the metro area consumer price index. This will result in an increase of 9,100 new jobs in the wholesale and retail trade sector.
Wobbekind's presentation at the Business Economic Outlook Forum was followed by a Q&A session featuring the state's top economists and a keynote presentation by Tom Shane titled, "Rocky Mountain Retail . . . Rocky Global Times."
The program concluded with a series of industry discussion sessions on the following topics:
* Will High-Speed Internet Speed High-Tech Growth in Rural Colorado?
* Population, Labor Force, and Personal Income in 2003
* Grow Your Own: Bottom Up Approaches to Economic Growth in Colorado
* Drought 2002: Implications for the Future
* Health Care: Economic Impacts
Sector-specific highlights include:
*Employment - The goods-producing sectors of the economy will again have negative growth in 2003, with job losses totaling 2,100. These declines will be offset by growth in all of the service-producing sectors. In 2003, 24,400 new jobs are expected to be added.
*Agriculture - Colorado just experienced the worst drought in recorded history and the impact may be felt more in 2003 than in 2002. The value of crop sales in Colorado established a record in 2002 as increased prices offset lower production. While 2002 appears to be a banner year for crop and livestock sales and farm income, it came at the cost of selling millions of bushels of crops in storage and thousands of head of breeding livestock.
*Oil, Gas, and Mining - The oil, gas and mining sector is projected to experience employment growth of 6.7 percent, or 1,000 jobs, reaching a total of 15,900 jobs in 2003. This growth will be driven by increased production of coal and natural gas, while crude oil and carbon dioxide production are expected to remain flat.
*Construction - The slowing of construction activity in 2003 will result in a drop in employment to 159,000 workers, a 1.9 percent decline from 2002. Both single-family and multi-family permits are projected to decrease in 2003, by 17 percent and 27 percent, respectively.
*Manufacturing - After losing 6 percent of the manufacturing workforce in 2002 - 12,000 jobs - employment is expected to continue to decline by an additional 100 jobs next year. Nondurable goods employment is anticipated to increase by 400 jobs on the strength of printing and publishing, while durable goods employment is expected to decline by 500 jobs.
*Transportation, Communications, and Public Utilities - This sector lost 10,000 jobs in 2002, a decrease of 6.9 percent. It is projected to gain 500 jobs in 2003. The combined transportation subsectors will gain 1,300 jobs, while the combined communications and utility subsectors will lose 800 jobs. The bankruptcy filing of United Airlines could potentially lower the forecast.
*Finance, Insurance, and Real Estate - Historically, this sector has accounted for 6 percent of total Colorado employment and contributed 9 percent of total wages. After experiencing a decrease of 2,500 jobs in 2002, employment growth is expected to remain flat in 2003. Slight increases in real estate and the other financial subsectors will be offset by declines in insurance subsectors. Employment in the depository institution subsector is expected to remain unchanged.
*Wholesale Trade and Retail Trade - The trade sector will continue to drive the economy in 2003, adding 9,100 jobs, an increase of 1.8 percent. This growth includes a 3.9 percent increase in retail trade sales, a rate slightly more than one point above the metro area CPI-U (2.6 percent), and the employment effect of Colorado Mills.
*Services - After losing 18,000 jobs in 2002, Colorado's largest sector is expected to rebound in 2003, showing growth of 1.5 percent, or about 10,000 jobs. Approximately 4,300 jobs will be added in the health services and 900 jobs added in business services.
*Tourism, Outdoor Recreation and Conventions - The combination of drought, wildfires and the lasting impact of the terrorist attacks of September 11 have negatively impacted tourism, both nationally and in Colorado. The state's travel, tourism and outdoor recreation economy will grow 1 percent to 2 percent during the first half of 2003 and as much as 3 percent to 4 percent in the second half.
*Government - As the state's population has grown, so has the need for government services. The government sector was one of two sectors to increase employment in 2002 as 11,100 jobs were added. The sector will increase by 1.3 percent, or 4,700 jobs, in 2003, with most being local government positions.
*International Trade - Colorado's economy is greatly affected by factors such as the stagnant global economy, terrorism and regional conflicts. The struggling economies of Europe and Japan impact exporters in manufacturing and agriculture.
The global slowdown in the technology sector has continued to negatively affect Colorado exports. The top eight exports from Colorado were all technology related. Coupled with decreased commodity prices and lower demand for agricultural products, Colorado exports declined for the second year in 2002.
Despite the fact that economists are not forecasting a major turnaround in the global economy next year, Colorado exports are forecast to increase by a modest 2 percent in 2003.