Employment gains were widespread in the Rocky Mountain region through the second quarter of 1998. Nonagricultural wage and salary employment as of June 1998 was up 2.8 percent, or almost 118,000 new jobs over June 1997. Growth was particularly strong in Colorado, North Dakota, South Dakota, and Utah. Montana reported a 1.4-percent gain in employment, and Wyoming's annual job growth remained under 1 percent. Colorado and Utah reported very strong annual growth rates of 3.4 and 3.2 percent, respectively, between June 1997 and June 1998. The unemployment rates were down in North Dakota, South Dakota, Utah, and Wyoming in June, compared with last year at this time. North Dakota's unemployment rate of 2.2 percent as of June remains the lowest in the region and the second-lowest in the Nation.

Construction activity is driving the current expansion in the Rocky Mountain economy, especially in downtown Denver. More than $750 million is being spent on projects that are under way, including more than 1,000 residential units, the Pavilions retail complex, the Pepsi Center sports arena, and the Ocean Journey Aquarium. Nonresidential construction in Utah topped $1 billion last year, pushing total construction volume to a record high despite the slowdown in the residential sector. Rebuilding of flood-damaged areas in Grand Forks, North Dakota, is pushing the construction industry in that State to a high level of activity.

The population of the region continues to grow faster than the Nation as a whole. Recent 1997 population estimates place Douglas County, Colorado -- a Denver suburb -- as the fastest growing county in the United States (among counties with populations of at least 10,000 persons). Four of the 10 fastest growing counties in the country are also in the Rocky Mountain region.

A surge in residential building activity in Colorado in the second quarter of 1998 pushed the total for the region up considerably. Regionwide in the first half of 1998, permits were issued for 28,566 single-family homes and 10,612 multi-family units. Multifamily activity in Colorado was up 35 percent and Utah reported a 38-percent increase in permit activity. Multifamily activity in the Denver-Boulder-Greeley area was 39 percent ahead of 1997's record pace. If this level of activity continues in the second half of the year, overbuilding is a possibility. Salt Lake City's multifamily activity has peaked, but the actual number of units remains low. Denver and Colorado Springs have seen strong gains in the single-family sector in 1998, while Salt Lake City has stayed close to last year's level.

Denver's existing sales market has not paused after last year's record level of sales activity. Sales in May were up over the 4,000 level again, a level achieved in only 3 of the previous 24 months. Some buyers have expressed frustration with a lack of available units, but total listings are very close to the level of a year ago. The average condominium price is up more than 20 percent, while the average price for a single-family detached home is up almost 9 percent. The recent acceleration of price increases is disconcerting for future homebuyers, because price increases slowed to slightly more than 6 percent in 1996 and 1997.

Spotlight on Salt Lake City-Ogden, Utah

Salt Lake City's economy is growing at a slower rate than in previous years. Contributing to the slowdown is the extremely tight labor market and a decline in in-migration, which is partly attributed to the improved economy in California. The tight labor market has made it harder for businesses to expand or relocate to the area. Net migration declined from an estimated 8,000 persons in 1994 to 1,600 persons in 1997. The unemployment rate has been less than 3 percent since the beginning of 1997.

Employment growth is expected to remain in the 3- to 3.5-percent range for the next few years. Growth will be stimulated by construction expenditures hurried along by the 2002 Winter Olympics. Several Olympic sites have already been completed, including the bobsled/luge runs, the hockey arena, skating ovals, and new alpine ski runs. The reconstruction of Interstate 15, a new light rail transit system, the University of Utah's football stadium, and other projects worth hundreds of millions of dollars have started construction or are scheduled to begin soon. A blighted area just west of downtown will also benefit from these infrastructure improvements. The 600-acre redevelopment area will eventually contain a mix of residences, restaurants, galleries, and shops.

Single-family building permit activity in the first half of 1998 is down slightly compared with the same period in 1997. This trend is expected to continue during the remainder of 1998. Conversely, multifamily permit activity through May has increased more than one-third. This new wave of permit activity is for more affordable projects than the preponderance of high-rent projects built earlier in the decade. The vast majority of these projects is being built in areas of west Salt Lake County, as well as in Davis and Weber Counties.

Homebuyers now have more choice than they had during the past few years. Active listings and average days on market have increased substantially from 1 year ago, giving buyers more bargaining power. Slower in-migration and higher prices have contributed to the slight cooling off of sales activity. The Salt Lake area is one of the least affordable markets in the United States, as moderate family incomes have lost ground to surging home prices. The average price of an existing single-family home in the Salt Lake Valley reached more than $168,000 in May 1998, up approximately 5 percent from a year earlier. Homes priced higher than $400,000 have the most difficulty selling. The largest segment of the new homes currently being built is in the $150,000 to $200,000 price range.

The rental housing market tightness has eased during the past year as the large number of new developments entered the market. Many are high-rent projects located on the south Interstate 15 corridor, where ongoing reconstruction of the major traffic artery has created some accessibility problems for new projects. The apartment vacancy rate as of June 1998 was 6.4 percent, compared with 4.7 percent in June 1997. Rents have flattened or declined in some submarkets and the number of projects offering concessions has doubled from a year ago.