The annual rate of employment growth in the Rocky Mountain States was down to 1.8 percent as result of weak performance in August, and is the lowest annual rate for the region since June 1991. Utah leads the region with a 2.5-percent growth rate. Montana's growth rate was back up above 2 percent, while Colorado's slipped below 2 percent. A sharp drop in August pulled South Dakota's rate below 1 percent for the first time since February 1997.

Despite slower job growth, unemployment rates remained low. With the exception of Montana and Wyoming, unemployment rates in Rocky Mountain States remain below the national average. Colorado and South Dakota recorded unemployment rates of less than 3 percent. The tight labor market conditions are forcing some businesses to offer higher wages. A statewide council of Colorado high-technology industry leaders was told recently to expect compensation costs to rise dramatically to keep qualified employees. A high-technology consultant informed the group that information technology companies in the western part of the Nation have seen their compensation costs rise to 40 percent of their total budgets, up from 30 percent only last year.

Farmers throughout the region continue to feel pressure as a result of abundant harvests and low commodity prices. Livestock producers have gotten some relief from low grain prices, but still face low prices for their products. Farm equipment purchases are being postponed and major equipment sales have plummeted. In response, some State and local governments have moved to help ease the burden on farmers and ranchers. Colorado eliminated its sales tax on farm equipment, and several counties in the southern portion of the State have followed suit. Farmers in the Dakotas with several hundred thousand acres of land that has become unusable due to flooding are still searching for ways to cope.

In the first 9 months of 1999, single-family building permit activity was up nearly 6 percent from a very strong 1998 period to 46,669 homes. The continued strong demand in Colorado's major markets pushed activity up 9 percent in that State. Multifamily building activity declined 33 percent in Colorado and 28 percent in Utah. The decline reflects builder adjustments to the slowdown in the growth of rental demand and the increased difficulty of finding good building sites.

The rental markets in the Rocky Mountain's major metropolitan areas remain balanced. Denver's 4.5-percent vacancy rate reflects a very steady market. In the Salt Lake City area, the vacancy rate has dropped to 5.1 percent.

Spotlight on Colorado Springs, Colorado

The annual rate of wage and salary employment growth in the Colorado Springs metropolitan area in the 12 months ending in August was a strong 2.6 percent, although it was well below the average annual rate of nearly 5 percent for the decade. The unemployment rate in August was down more than one percentage point from a year ago to 3.5 percent. The area's population surpassed 500,000 in 1999, and El Paso County is soon expected to have the largest population of any county in the State.

Employment gains during the past 12 months in high-technology manufacturing, financial services, and telecommunications more than made up for a 2,500-person cut in military strength levels, the closure of the Western Pacific Airline's reservation center, and layoffs in the semiconductor industry that occurred during 1997 and 1998. One of the largest recent expansions by an existing employer was Quantum Corporation's hiring of several hundred new workers to increase computer disk drive production. New companies recently locating in Colorado Springs include Oracle Corporation, a software manufacturer; Ford Credit; and T. Rowe Price financial services. Spending for infrastructure, such as new roads and schools, has helped the local economy expand. In addition, construction projects and computer systems at local military installations are bringing increased economic growth. The U.S. Air Force's Space Command at Shriever Air Force Base continues to attract new missions. As a consequence, aerospace industry employment is increasing after declines for much of the 1990s.

The outlook during the next few years is for continued steady growth of the area economy. Local employment levels in the semiconductor industry appear to have stabilized, and military expenditures and strength levels will likely hold steady. The military's influence on the economy has lessened as the civilian economy grows. However the U.S. Department of Defense (DoD) is still a major factor, employing more than 32,500 military and civilian personnel and accounting for more than $825 million in expenditures in the local economy. In the near future, the low unemployment rate and labor shortages for some trades will hold employment growth in the area down somewhat.

New home construction is at its highest level since the mid-1980s. Single-family permits through September totaled more than 3,400 homes, 6 percent above last year's strong pace. The largest segment of the new home market is in the $150,000 to $200,000 price range. Sales of existing single-family homes are also well ahead of last year's record-breaking level. Through September 1999, sales are up almost 8 percent compared with the first 9 months of 1998, and the average sales price is up almost 6 percent to $167,300. Active listings are down by nearly 13 percent compared with year-earlier levels.

The rental housing market has tightened during 1999 following the successful absorption of more than 4,000 units since 1995 and cutbacks in construction during the past 2 years. As of the second quarter of 1999, the apartment vacancy rate had declined to 4.3 percent. With the tighter conditions, very few developments are offering concessions, and modest rent increases have been recorded in the past year. Rental market conditions should begin to ease late next year as construction is expected to begin shortly on several major apartment developments. The largest housing project in the Nation under DoD's Military Family Housing Privatization Initiative is underway at Fort Carson. The U.S. Army is expected shortly to announce the contractor that will build and manage 840 new family housing units and renovate the post's existing family housing stock of 1,824 units. Construction is scheduled to begin in 2000 and take 4 to 5 years.