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No change in local unemployment

Unemployment for April was flat in Archuleta County relative to March numbers, according to a report released by the Colorado Department of Labor and Employment (CDLE) last week.

In April, the official U3 number for Archuleta County stalled at 12.4 percent, exactly where it was in March. Furthermore, the Civilian Labor Force (CLF) remained virtually unchanged in the county.

The U3 unemployment figures represent new or active unemployment claims in the county.

The state fared somewhat better than the county in April. Based on a CDLE household survey, the unemployment rate dropped four-tenths of a percent to 8.8 percent from 9.2 percent in March.

April’s unemployment numbers represented the first time since January that state unemployment rates did not exceed the national average. In April, the national unemployment rate increased from 8.8 percent to 9 percent.

With employers adding 2,200 new jobs in the state last month, cuts in government workers were offset by private sector jobs.

April saw most private sector gains in leisure and hospitality, trade, transportation, utilities and other services. The largest decline was in construction.

Unfortunately, most analysts agree that unemployment will remain high at the state and national level for the next several years.

On Tuesday, a number of reports indicated mixed news for the U.S. economy and prospects for ongoing recovery from over three years of recession.

In one report, the U.S. Commerce Department reported that purchases of new houses rose in April for a second straight month, with sales climbing 7.3 percent to a 323,000 annual pace. That was a significant increase from February when the rate was 278,000, tying August 2010 as the lowest rate since that data was first collected in 1963.

While low prices and prospects for a brighter employment situation in the country probably helped boost April’s numbers, those low prices have been driven by ongoing foreclosures — a situation that could hamper a continued increase in new housing sales.

In fact, the Commerce Department’s report on Tuesday also showed that housing starts fell 11 percent in April to a 523,000 annual pace, the second-weakest reading since the record low in April 2009.

Indeed, a report released late last week from the National Association of Realtors indicated that investors were pursuing distressed properties, with April down just slightly from the prior month. However, the same report showed that distressed properties (including foreclosures and short sales) comprised 37 percent of all sales last month.

With distressed transactions playing a bigger role in the housing market, new-home sales have shrunk as a share of total sales, accounting for just under 6 percent of the market in March.

During the housing boom (which many economists attribute as a contributing factor to the recession), new house sales captured a much larger share of the housing market, peaking at 16 percent in July 2005.

In Archuleta County, permit technician Sherrie Vick said that “There’s a huge drop off (in new housing permits) since 2007.”

Vick added that while building permits for the county are slightly up from the same time period last year, “The majority of those permits are for remodels or improvements on previously owned homes.”

Vick also said that many of the permits for remodels have gone to previously foreclosed properties. However, Vick added that currently stalled financing on some projects could provide slightly improved numbers on new home construction in the next month or so.

The Town of Pagosa Springs has not seen any improvement in the number of building permits this year relative to 2010. According to the town’s building official Scott Pierce, “We’ve seen no commercial starts and probably won’t see any in the near future due to the number of vacant properties out there.”

Pierce said that the town traditionally has not experienced a great deal of construction relative to building in the county.

As reported last month in The SUN, the homes that have been selling in the county are mostly from the numerous stock of short sales and foreclosures available in the area with a dearth of new builds in the local market.

While construction has done little to add jobs to the economy, both locally and nationally, the good news is that a few jobs have been added at the state and national level.

Although the private sector added 268,000 jobs to U.S. payrolls in April, unemployment rose two-tenths of a percent from March. However, many analysts believe that bump in unemployment figures was due to the increase in the number of jobs, prompting previously discouraged workers to attempt to reenter the labor market.

With that in mind, Tuesday’s Commerce Department report also indicated mixed news regarding manufacturing (which led the economy out of the recession), which could be shrinking after a year of expansion.

American manufacturers added nearly 200,000 jobs from April 2010 to April 2011, according to the Commerce Department, the most since the Clinton administration in 1998.

While housing-related industries (such as furniture and construction materials) continue to show a decline in employment, other sectors in manufacturing (primarily machinery, transportation equipment and the metals industry) accounted for the addition of 180,000 jobs over the last year.

However, Tuesday’s report from the Commerce Department included numbers from the Federal Reserve Bank of Richmond’s factory index which showed a a drop of 16 points in May, suggesting a decrease in manufacturing activity over the past month and a potential slowdown in hiring.

Nevertheless, analysts believe May was only temporarily stalled and remain optimistic regarding prospects for the remainder of the year.

Manufacturing as an economic factor in Archuleta County has grown significantly — from one percent in 2007 to almost five percent last year — and those companies have added several jobs in the past few years. However, it could be some time if additional manufacturing jobs are added to the local economy (either through convincing light manufacturing companies to relocate to the area of through expansion of geothermal resources — see related article).

Like much of the U.S., it is the lack of construction jobs in Archuleta County that has appeared to up unemployment numbers. Unfortunately, also like much of the country, continuing numbers of foreclosures have dampened the drive to build new homes, decreasing the number of construction jobs in the area.

Most likely the unemployment situation will not change locally unless the area economy diversifies with added manufacturing jobs or unless a miraculous will to build new homes and businesses during the next few months.

jim@pagosasun.com

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