Job growth in Rocky Mountain States slowed in the third quarter of 2000. The region's annual gain dropped below 3 percent early in the year and slid below 2.5 percent by June. In September, nonagricultural employment in the region as a whole was only 2.3 percent above the level of 1 year ago. Colorado continues to lead the region with a 2.8-percent annual gain. Growth rates in South Dakota and Wyoming were below 2 percent. Utah recorded a 2.4-percent increase after several quarters of slower growth. Tight labor markets remain the rule; unemployment rates in all six States during September were below their levels of 1 year ago. South Dakota's 2.3-percent rate placed it in a tie for the lowest rate in the Nation.

Tight labor market conditions are supporting wage increases above the overall rate of inflation. A recent survey by the Mountain States Employers Council found that its members expect to increase wages by an average of 4.5 percent in 2001. Resort area employers anticipate a need to offer increases of almost 6 percent, while Western Slope, Wyoming and Pueblo, Colorado employers expect to keep wage gains under 4 percent.

The blistering pace in Colorado's multifamily housing sector continued through August, and the total for the year should approach the decade high of more than 15,000 units reached in 1998. Increased activity overshadowed declines in most of the other Rocky Mountain States and pushed the region's multifamily building permit total though September almost 30 percent above the same period last year. The region's single-family building permit activity through September fell 3 percent.

Denver's economy is not yet participating in the slowdown. Annual job gains remain in the 3.5- to 4.0-percent range. However, with the recent surge in construction employment and an increasing reliance on the high-technology sector, the area's economic picture could change rapidly if either of these sectors takes a downturn. Total residential building permit activity in the Denver metropolitan area through September 2000 is up 11 percent, propelled by a surge in multifamily activity. Single-family permit activity is down 11 percent from this time last year.

Denver's rental housing market remains relatively tight. The Apartment Association of Metro Denver's second quarter survey reported a vacancy rate of 4.9 percent, essentially unchanged from the previous two quarters. Rents continue to climb, particularly in suburban Douglas County, where the average rent has been $1,000 or more since the third quarter of 1999. This county still has a large number of units under construction, most of them aimed at the luxury market.

Existing home sales through September, tracked by the Denver Board of REALTORS®, are slightly ahead of last year's pace. Price increases continue unabated; the average existing home price for the first three quarters of 2000 is up more than 15 percent from the same period 1 year ago. Inventory is up only slightly; active listings are up approximately 7 percent from last September. A local consulting firm, The Genesis Group, indicates that new home sales were off in the first half of the year. In response, homebuilders have kept the new inventory at less than a 2-month supply.

The Salt Lake City economy has stabilized at a more sustainable level of growth following the boom years of the mid-1990s. As of August 2000, nonfarm employment in the area is 1.8 percent above that in August 1999. Residential building activity has followed the slower rate of economic growth. Total residential building permits through September 2000 are down approximately 15 percent, compared with last year at this time. The number of single-family and multifamily permits are both lower than in 1999. Multifamily permits are down over 30 percent. However, existing home sales activity during the first three quarters of 2000 changed little from the same period in 1999, and the average sales price increased by a modest 3.4 percent. The rental vacancy rate in the second quarter of 2000 declined to 4.3 percent, down from the 5.2 percent recorded in the second quarter of 1999. Rents have increased only slightly over the past year. The market should continue to tighten given the cutback in construction and the small number of projects in the pipeline over the next year.

Spotlight on Colorado Springs, Colorado

Over the past 10 years, growth in advanced-technology manufacturing, tourism, business services, and other activities helped bring some diversity to the Colorado Springs economy. The Pikes Peak Area Council of Governments estimates that direct and indirect military expenditures account for approximately 40 percent of the economy, down from 60 percent a decade ago. Military payrolls and expenditures still bring in more than $2 billion annually to the economy. More than 32,500 military and civilian personnel are employed at installations in the area, including Fort Carson, Peterson Air Force Base, the U.S. Air Force Academy, and Shriever Air Force Base.

Colorado Springs' economy continues to grow at a strong pace. Wage and salary employment during the 12-month period ending August 2000 was 4 percent above the level recorded during the previous 12 months. The unemployment rate as of August was 3.1 percent. Growth in software development, systems research, and information-processing firms, such as MCI, Electronic Data Systems, Compaq, and Current, Inc., contributed to the strong performance. According to the Software & Information Industry Association, Colorado Springs has become a software center, ranking among the highest in job concentration per capita of cities in the United States. The recovery in the semiconductor industry and the opening of a large Intel chip manufacturing plant are expected to help maintain employment growth at a strong but slower pace.

A substantial increase in population has paralleled the strong economy. Since 1990, the population of El Paso County has increased by more than 2.5 percent annually. In mid-1999, the population surpassed 500,000. Inmigration since 1990 has totaled approximately 55,000 people and more than 20,000 new households. The rate of growth is expected to continue in the near future, and some expect El Paso County to be the largest county in the State within the next 10 years.

The Pikes Peak Association of REALTORS® reports that sales of existing single-family homes in 2000 have not slowed from last year's record pace. Sales activity in the first 9 months of 2000 is approximately equal to that of the same period last year. Reflecting the strong demand, the average sales price jumped by more than 10 percent to $185,200. Active listings are down 12 percent from 1 year ago, and homes priced below $200,000 are in short supply, despite competition from new construction. At prices above $300,000, the market is strong, although homes take longer to sell.

New homes constitute 32 percent of the total sales market, and construction is on track to exceed last year's decade-high level. Through September, permits were issued for more than 3,800 homes, 12 percent ahead of this time last year. The average sales price for a new home is almost equal to that of existing home sales, $185,000. Approximately 60 percent of new homes sold during the first 9 months of this year were in the $125,000-$200,000 price range. Less than 6 percent is below $125,000, and homes above $300,000 make up slightly more than 13 percent of the total.

The rental housing market remains tight. Few newly opened apartment projects offer concessions. Most lease up quickly, and many are achieving higher than anticipated rents. The average rent for a new two-bedroom/two-bath unit is approximately $950. In a survey conducted by Hendricks & Partners, the apartment vacancy rate as of the second quarter 2000 had fallen to 3.9 percent, and rents had increased an average of 7 percent. A cutback in apartment construction in 1998 and 1999, coupled with the large number of new households migrating to the area, has kept pressure on the market. However, with 1,350 units currently under construction, conditions are expected to be more balanced by the second half of 2001. The first phase of the U.S. Department of Defense's Military Family Housing Privatization Initiative recently broke ground at Fort Carson; this project will add 840 new units to the on-base housing stock over the next 4 years.