Employment in the Rocky Mountain region during the first 9 months of 2002 remained 1.1 percent below its level of a year ago. Wyoming led the region with a 1.1-percent increase; at the other end of the spectrum, Colorado posted a 2.1-percent decline. Employment levels in Montana, North Dakota, and South Dakota have changed little from last year, but Utah’s job level fell by 1.3 percent. Compared with a year ago, unemployment rates for September 2002 fell in Montana, South Dakota, and Wyoming and rose in Colorado, North Dakota, and Utah. However, all States in the region recorded rates well below the United States’ average rate of 5.6 percent as of September 2002. Although North Dakota’s rate increased from 2.6 to 3.5 percent, it is still the third lowest in the Nation; at 2.6 percent, South Dakota has the lowest State unemployment rate in the Nation. Rates in Montana and Wyoming also remained low. Colorado and Utah rates fell to 5 percent from their levels of close to 6 percent early in 2002 but still remain well above levels of recent years.

Colorado has been hit particularly hard by telecommunications and high-technology layoffs over the past 18 months. The State faces even more telecommunications layoffs as both AT&T Broadband and WorldCom have announced cuts of 1,700 jobs and 500 jobs, respectively, over the next several months. Tourism and agriculture, both important sectors in the State’s economy, have been hurt by the drought. In a United States Conference of Mayors’ report Denver showed an 8.5-percent decline in tourism business revenue through September 2002 compared with the same period in 2001. Small grain crops and livestock production are expected to be down substantially from last year, and sugar beet yields are at a 7-year low because of a shortage of irrigation water. New defense orders for aircraft and high-technology equipment and the military buildup at Peterson Air Force Base will help offset some of these losses, but a return to employment growth is not expected until next year. Increased coal production, natural gas mining, and pipeline and power plant construction boosted Wyoming’s employment level, but these sectors are highly volatile and could go in either direction over the short term. Utah’s economy is still feeling the aftereffects of high-technology layoffs and the end of Olympics-related activity, which exaggerated job losses for the year, especially in the construction sector.

New home construction continued to increase in all States except Colorado, but Colorado’s decline brought total single-family permit activity for the region down by 1.1 percent during the first 9 months of 2002 compared with the same period a year ago. The other five States posted gains ranging from 4.2 percent in South Dakota to 33 percent in North Dakota. Almost 80 percent of the region’s multifamily activity is in Colorado and Utah. Compared with the same period in 2001, cutbacks in these two States resulted in a 22.4-percent reduction in year-to-date permitting through September 2002, led by a 35.6-percent decline in Colorado.

The single-family foreclosure rate for the region increased again in the second quarter of 2002, spurred by increases throughout the region, especially in Colorado and Utah. The region’s overall foreclosure rate of 0.97 percent is up from the 0.58 percent recorded during the second quarter of 2001 but remains below the U.S. rate of 1.23 percent. Colorado’s rate is still the lowest in the region at 0.6 percent, although it is nearly double its rate of a year ago. Utah came in with the region’s highest rate at 2.03 percent. The region’s foreclosure rate, although increasing, is still well below the 2.5- to 3.0-percent rates recorded in the late 1980s.

The Colorado Springs economy has slowed compared with a stronger showing earlier in 2002. Although unemployment resulting from layoffs in the high-technology sector has subsided, new jobs have been slow in coming and have not compensated for positions lost over the past 18 months. For the 12-month period ending in August 2002, average nonagricultural employment declined 0.4 percent. The long-term outlook for the area is positive, but until the U.S. economy recovers and demand for the area’s high-technology manufactured products is renewed, the economy will remain sluggish over the next 3 to 6 months.

The Pikes Peak Regional Building Department of the Colorado Springs area reported that single-family construction in the first 9 months of 2002 declined by 9.5 percent. At the same time, multifamily building increased by 37 percent. Housing market conditions are mixed: The sales market has held steady but the rental market has weakened since the second quarter of 2002. In an area apartment survey by Doug Carter LLC, the third-quarter vacancy rate of 8.1 percent represented an increase over the 7.2 percent posted in the previous quarter. The report also noted that average rents remained flat between the two quarters but were still down by nearly 5 percent from the third quarter of 2001. The north submarket, which improved substantially in the second quarter, also weakened in the third quarter. The current vacancy rate for new projects in the north area is 12.5 percent. This high-rent submarket was the most affected by layoffs, yet it received the bulk of the metropolitan area’s apartment construction. With 1,800 apartment units under construction in the Colorado Springs area, including 1,200 in the north submarket, vacancy rates are unlikely to decline measurably over the next 12 months.

Wage and salary employment in the Salt Lake City area continues to decline. In August 2002 employment was 1 percent below the 12-month average recorded for the same period in 2002. The area is still feeling the lingering effects of high-technology layoffs and the conclusion of Olympic games. Low interest rates have kept the single-family market steady; activity and average sales price through September 2002 remained virtually the same as those for the same period a year ago. The rental market remains highly competitive because of low interest rates and the release of several hundred rental units held for the Olympic games. The most recent Hendricks & Partners survey for large rental projects, for the second quarter of 2002, shows a vacancy rate of 8.0 percent. This is up from the 6.7 percent recorded in the first quarter. Local housing officials indicate that conditions in the third quarter have changed little from the second quarter. Rents are flat and concessions are common for most projects. Concessions are deepest in Salt Lake City’s downtown area, where much of the Olympics-related economic and housing activity was located. The general market should start to see some improvement by the first quarter of 2003 as a result of continued population growth and the relatively modest number of additional rental units currently being completed.