The first quarter of 1999 brought mixed results for job growth in the Rocky Mountain States. Colorado led the region with an annual growth rate of almost 3 percent. Utah's growth has slowed from a year ago, although annual gains in that State and in Montana were still above the national average. South Dakota posted a modest gain, while Wyoming's growth rate remained at less than 1 percent after slipping below this level last summer. North Dakota began the year with no gain in employment from a year ago and actually posted a small loss by March.

Low prices continue to depress farm income in the region. Colorado farmers have been battered by the commodity markets and are looking to the spring planting season with some trepidation. Below-average snowpack in the mountains has raised the specter of water rationing. Similarly, low oil prices have stalled exploration activity. The energy industry outlook has brightened with recent OPEC limits on production, but it is too early to tell whether those limits will have a measurable impact on activity in the region. A lack of snow and an early spring have dampened Colorado's skier visits, but fewer skiers have not meant fewer buyers at resort developments. A recent offering of 80 units at Copper Mountain was sold out in 80 minutes.

Despite the recent slowing, Colorado, Montana, South Dakota, and Utah remain beneficiaries of the surge in employment in the West during the 1990s. All were among the 10 fastest growing States during the 1990-1998 time period. Colorado's job gain of almost 570,000 workers during this period placed the State in the top 10 for job growth. The Denver suburbs have been dramatically affected by the strong job gain in Colorado. More than half of the net in-migration to the State in the 1990s has occurred here. Suburban Douglas County recently slipped to the second fastest growing county in the Nation after several years in the number-one spot.

Colorado's unemployment rate declined to 2.7 percent in March, a new record low. Rates in the Dakotas remain below 3 percent, while Montana's rate remains above 5 percent. Utah posted a 3.4-percent rate in March, and Wyoming's rate improved moderately during the quarter and finished at 4.3 percent. Tight labor markets in most of the region and a high level of building activity have produced moderately strong wage increases in the construction industry. Builders still report difficulty retaining qualified workers.

Multifamily homebuilding got off to a slow start for the year in Colorado Springs and Salt Lake City, but Denver's activity is still equal to last year's record pace. Single-family activity is off slightly in Colorado Springs and up in the other two major markets. Total permit activity in the region for the first 2 months of 1999 was up only 4 percent from a year ago. Contractions in apartment building in Colorado and Utah pulled the region's multifamily total down almost 17 percent. An 11-percent gain in single-family activity more than offset the multifamily decline.

Existing home sales activity in the Denver area continues to climb. Total sales activity in the first quarter of 1999 was 11 percent higher than the first quarter of last year, and the average sales price was up 9 percent. Local headlines noted that the average single-family price was more than $200,000 in February.

Rental housing vacancy rates were up in the fourth quarter of 1998 in all three of the region's major markets, but conditions remain balanced to tight. Rates climbed to almost 7 percent in Salt Lake City and to almost 6 percent in Colorado Springs. Denver's market has been remarkably stable; the rate was only 4.4 percent, up from the third quarter of 1998 but actually below the rate of a year earlier. A recent State of Colorado survey found that tight market conditions were easing in the rental markets in many medium-size metropolitan areas of the State. Vacancy rates in mountain communities still remain below 1 percent.

The market for assisted living for the elderly has recently received a great deal of attention throughout the region. Many of the medium-size metropolitan areas have reached capacity. Although the markets in the Denver and Salt Lake City areas remain healthy, both face major increases in inventory over the next 12 months. Both markets are expected to become considerably more competitive in 1999, and the market prospects for any additional projects in the short term are limited.

Spotlight on Pueblo, Colorado

Pueblo's economy has displayed considerable resilience in the past year. Nonagricultural wage and salary employment in 1998 averaged 55,719, a 2.9-percent increase over 1997. Despite major layoffs by two local employers, net employment gains in 1998 totaled 1,600 jobs. After a 3-month strike, employment at Rocky Mountain Steel (formerly Colorado Fuel & Iron) dropped by 300 from its previous level of 1,200 workers. In addition, after a rapid employment buildup in recent years, QualMed Health Insurance company recently laid off 200 employees (approximately 25 percent of its workforce) and will close its Pueblo operation by the end of 1999.

Tourism and convention activity have begun to increase following completion of the Pueblo Convention Center and a San Antonio-style riverwalk. The riverwalk was created following the diversion of an Arkansas River channel through downtown Pueblo, opening opportunities for commercial and residential development. Several small businesses, including manufacturing firms, have announced their intentions to locate in the Pueblo area. The area will continue to grow as a regional trade and service center for much of southern Colorado, far northern New Mexico, and the panhandle of Oklahoma.

New home construction has steadily increased from a low of 188 homes in 1990 to more than 1,100 in 1998. Most of the new construction is in subdivisions outside the city limits. New homes make up about 40 percent of the total market and typically sell for $120,000 to $150,000.

Conditions in the sales housing market are now relatively balanced. Resale activity and the stock of existing available homes have held steady during the past 12 months. The average sales price for existing homes increased a modest 4 percent to $102,000 during the 12 months ending in March 1999.

Multifamily housing production has increased during the past 4 years compared with earlier in the decade. From 1995 through 1998, permits were issued for 822 units, compared with only 125 units from 1990 through 1994. Several tax-credit projects broke ground last year, and construction on a large, market-rate apartment project recently began. The new supply of rental housing is expected to increase market competition in the coming year.

The market for private-pay assisted living for the elderly is improving, following the slower-than-anticipated lease-up of three new facilities that opened in 1998. Two of the facilities accepted Medicaid-reimbursable tenants in order to fill up. The third project was designed as a mixed-income development. A 44-bed facility specializing in the care of Alzheimer's and senile dementia patients and a 40-unit assisted-living facility financed with Low Income Housing Tax Credits are expected to begin construction soon. The units in the tax-credit project will be for residents with incomes at or below 40 percent of the area's median family income, and all units will be Medicaid eligible.