Total nonagricultural employment in the Rocky Mountain region during the second quarter remained below its level of 1 year ago, but individual States’ performances varied considerably. As of June 2002, employment in Montana, South Dakota, and Wyoming was 1.1 percent above the levels of last June. In contrast, Colorado’s June total was 2 percent below the total 1 year ago, and Utah’s total was down by 1.7 percent. North Dakota posted a small (0.3-percent) loss for the same period. Unemployment rates in Colorado and Utah are down from earlier 2002 peaks but remain well above the levels of last June. Labor markets remain tight in the Dakotas; South Dakota posted the lowest unemployment rate in the Nation in June 2002. Rates in Montana and Wyoming are holding steady and have stayed below the national average in recent months.

The worst of the telecommunications and high-technology layoffs appear to be over, but their effects on the housing market are still being felt, particularly in Colorado and Utah. Tourism is on the mend in most areas of the region, but drought and wildfires in Colorado have postponed a rebound there. There is even some concern about the upcoming ski season because most areas depend on stream water for snowmaking. The drought also adversely affected agricultural production, with winter wheat and hay being the first crops affected. Increased natural gas exploration and production have bolstered Wyoming’s employment level, but recent price declines do not portend a long-run expansion in this sector. Utah’s economy is still feeling the aftereffects of Geneva Steel’s “temporary closure” and the construction sector’s adjustment to pre-Olympics levels of activity.

A major cutback in Colorado’s residential permit activity in the second quarter pulled total regional building activity during the first half of 2002 down 7 percent from the first half of 2001. The other five States in the region posted increases, but these gains were offset by Colorado’s 14-percent drop. Multifamily permits for the region were down 16 percent, led by a 25-percent decline in Colorado and a 12-percent drop in Utah. Single-family permits were off 4 percent for the region because a 10-percent decline in Colorado offset the gains of other States. Despite the cutbacks in production, demand for homes remains high. The annual rate of existing home sales for the region as of the second quarter of 2002 was down only 1 percent to 284,900 homes, according to NAR data.

In Colorado Springs, unemployment resulting from layoffs in the area’s high-technology sector, which began in early 2001, has begun to subside. For the 12-month period ending in June, average nonagricultural employment was down by just 0.3 percent compared with the same period a year ago. Other signs that the economy is turning around are the strong advances since November in local leading economic indicators such as employment and sales and use taxes, as reported by the Southern Colorado Economic Forum. Contributing to the improvement have been increased defense-related spending and contracting, primarily at Peterson Air Force Base (AFB), Cheyenne Mountain Air Station, and Schriever AFB. The recent announcement that the Northern Command for Homeland Defense will be located in Colorado Springs is a positive development for the area’s economic outlook.

The sales market also shows signs of continued strength. The Pikes Peak Association of REALTORS^® reports that home sales activity through June is 2.7 percent ahead of last year’s pace at this time, and the average sales price of single-family homes increased by 4.5 percent to $206,400. In an apartment survey by Doug Carter, LLC, the second-quarter vacancy rate was 7.2 percent, an improvement from the 8.4 percent recorded the previous quarter. The survey also noted that the market was better for newer products in the north submarket, where the vacancy rate declined from 14.4 percent to 9.7 percent. With 1,500 apartment units under construction and another 1,000 units likely to start over during the next several months, the rental market will be competitive through the end of 2002 and well into 2003.