Revisions to the state's employment numbers, fueled by big gains in the Denver metro area, helped move Colorado from a laggard to a leader last year. (Photo by Helen H. Richardson/The Denver Post)
According to an update from the Colorado Department of Labor and Employment on Monday, Colorado's economy did much better than initially thought in terms of job creation last year, and hiring is off to a good start in 2024.
The U.S. Bureau of Labor Statistics initially reported that Colorado employers added 24,100 non-farm jobs between December 2022 and December 2023, with the private sector adding just 1,100 jobs and the public sector adding 23,000. This resulted in a growth rate of 0.8%, which lagged behind the U.S. rate of 1.7% and was one of the slowest of any state.
However, reviews as part of a so-called benchmarking process showed that 57,900 new jobs were added in the same period. On an annual average, the state added 72,700 jobs last year, a growth rate of 2.5%, higher than the national rate of 2.3%.
Colorado ranked the 11th best state in average annual growth rate and was not in the bottom 15, according to initial reports.
“Job growth in Colorado was comparable to that in the U.S. and was similar to pre-pandemic rates,” said Ryan Gedney, senior labor economist at CDLE, during a news call Monday morning.
The state added an average of 4,867 new jobs per month last year, compared to the 2,145 originally reported. The biggest revision occurred in June, when 12,500 new jobs were added instead of the 1,800 originally reported. There were three months of downward revisions, with the largest occurring in October, which saw a decline of 2,300 jobs.
Gedney said about 80% to 85% of the upward revisions were concentrated in the Denver metro area, reversing the initially reported losses and bringing the growth rate more in line with other metro areas in the state. According to the BLS, the initial job losses were bad enough to rank Denver 385th out of 396 metropolitan areas last year.
Revisions saw the state's unemployment rate rise to 3.2% from an annual average of 3%. In January, the unemployment rate was 3.4%, up from 3.3% in December. Colorado tied with Maine for the 24th lowest unemployment rate.
One explanation for Colorado's relatively high unemployment rate is that a larger portion of the adult population is working or looking for work. The state's labor force participation rate was 68.1% in January, which is much higher than the U.S. rate of 62.%.
Colorado employers added 8,000 nonfarm jobs in January compared to December, with the private sector adding 5,600 and government jobs adding 2,400.
The industry sectors with the largest monthly gains were professional and business services, up 4,800 jobs, and manufacturing, up 1,700 jobs. Trade, transportation and utilities reported a loss of 1,800 jobs. Weaker consumer spending could lead to a decline in hiring in this sector, which includes both brick-and-mortar retail and warehouses used for online commerce.
Last year, the number of nonfarm jobs increased by 57,900, with 33,500 of those increases in the private sector and 24,400 in the public sector. The largest annual increases were in education and health services, with an increase of 15,300; Professional and business services increased by 10,600, leisure and hospitality increased by 9,600.
Annual job losses were reported in trade, transportation and utilities, down 3,800; Information, down by 2,000; construction, minus 1,000; and manufacturing decreased by 900.
In January, Colorado's job growth rate of 2% annually exceeded the U.S. rate of 1.9%.
“It is good news to start 2024 with a strong increase in employment; “But this is much stronger job growth than expected given the weaknesses in some sectors and the anomalies in others that were evident in 2023,” said Broomfield economist Gary Horvath.
Horvath expected hiring momentum to slow later in the year, and Gedney also predicted that job gains in 2024 are likely to be below the revised 2023 numbers.
“It looks like a recession and rate hikes are not in sight, but it also looks like there will be a slowdown and 2024 will be a bumpy ride,” Horvath said in an email.
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