In June, unemployment in Archuleta County fell by more than half a percentage point from May, the Colorado Department of Labor and Employment (CDLE) reported last week, indicating that the area economy continues showing improvement after unemployment hit 24-year highs two years ago.
According to the CDLE, June unemployment fell to 8.5 percent from May’s 9.1 percent figure. Furthermore, over-the-year unemployment numbers improved, down from 8.9 percent in June 2011.
In fact, more area employees are working, based on last week’s CDLE data. Over the year, the area’s Civilian Labor Force (CLF) grew by 3.24 percent, with 213 more residents available for work than was reported the same month last year.
The area’s CLF increased 6.67 percent from May, with an additional 424 workers in the labor force.
In June, the CDLE reported 579 unemployed in the county.
While that number is high by any estimate, it is only the so-called U3 number. As such, the official U3 number does not represent an accurate picture of unemployment in Archuleta County. The real number of unemployed in the area is almost certainly much higher than the U3 index suggests.
U3 unemployment figures represent only new or active unemployment claims in the county. The U6 number (an alternative measure which includes part-time workers and people who have given up looking for jobs) provides a clearer picture of the number of unemployed workers or workers with part-time jobs who would prefer full-time work. Unfortunately, neither the CDLE nor the Bureau of Labor Statistics (BLS) provide U6 figures at the state or county level, making a broader look at local unemployment almost impossible.
With anywhere from 7-8 percentage points difference between national U3 and U6 numbers, it could be assumed that Archuleta County also has a U6 number that is significantly higher than the reported U3 figure.
If that assumption is valid, real unemployment in the county could be close to 15 percent.
Nevertheless, when examining historical BLS unemployment data over the past four years, June’s 8.5 percent figure represents significant improvement in the area’s jobless numbers. In fact, June unemployment numbers are the best for that month since 2008, when unemployment was just 4.7 percent — what statisticians normally term “full employment.”
That improvement became apparent last July as jobless numbers began to show a positive trend relative to the previous three years, when several months during that period set 24-year records for unemployment.
Although unemployment for the county remains higher than the state’s 8.2 percent average for June, things improved locally while the statewide average increased one-tenth of one percentage point over the month. However, the county has not outperformed the state in employment since late 2009.
Over the year, the state’s unemployment rate is down two-tenths of one percentage point from 8.4 percent in June 2011.
Statewide unemployment numbers match the national unemployment rate which remained unchanged at 8.2 percent from May to June. Over the year, the national unemployment rate declined from 9.1 percent in June 2011 to 8.2 percent last month.
Unfortunately, many economists have expressed concerns that the U.S. economy, which grew at a 1.9 percent rate in the first quarter, has since lost momentum. Negative economic data reported over the past few months have led some analysts to forecast second quarter growth to have slowed to a 1.5 percent pace.
Given that dim view of growth prospects, many analysts expect another round of monetary easing from the Federal Reserve in the near future.
However, the slowing U.S. economy has not just been the result of domestic policies. Just as economic conditions on the national level effect what happens locally, the global economy (especially the recession in Europe) has made a big impact on the nation’s hope for recovery.
On Tuesday, it was reported that U.S. manufacturing in July grew at its slowest pace since December 2010, hobbled by a decline in overseas demand, with new orders for exports falling for a second straight month — the first back-to-back decline in nearly three years.
Many analysts have placed the blame on imposed austerity measures as the reason for the euro zone’s continued economic slide. That economy shrank 0.3 percent in the second quarter, and another quarter of contraction would tip it into its second recession since 2009.
Unfortunately, indications of a recovery in euro zone economies are pessimistic. A report on Tuesday released by Markit’s Eurozone Composite PMI (Purchasing Managers Index) suggested a significant slowdown in the broader European economy.
That PMI, which combines the services and manufacturing sectors and is regarded as an accurate gauge for overall growth, held steady at 46.4, with a reading below 50 indicating contraction. The euro zone composite index has been below that mark for half a year, with no reprieve in sight.
Given the recent data, Markit forecasts a quarterly GDP decline of 0.6 percent in the euro zone. That decline, compounded by an almost certain second recession in the euro zone, will only serve to hurt U.S. manufacturing output even more.
In response, the European Central Bank — the euro zone’s version of the U.S. Federal Reserve — slashed its main refinancing rate to a record low 0.75 percent and the deposit rate to zero, with many analysts expecting the ECB to do more to stimulate the economy by most likely offering more cheap loans for banks.
With prospects for another euro zone recession on the horizon, not all news for the U.S. economy has been negative.
On Monday, housing market analysts Zillow, Inc. reported that home values posted their first year-over-year increase since 2007. On Tuesday, the Federal Housing Finance Agency reported that house prices rose 0.8 percent on a seasonally adjusted basis from April to May, doubly exceeding price expectations set by analysts earlier this year.
With the housing sector apparently having turned a corner, durable goods manufacturers were handed a welcome piece of positive economic news.
Furthermore, if demand in the housing sector continues to increase, other sectors should receive a boost in the near future.
Ultimately, that is also good news for the local economy. With most indications suggesting that the local real estate market has bottomed out and is beginning to rebound, the area could see increased demand for homes and construction during the next year .
In fact, county permits for new construction have shown a marked increase from last year (see related story).
A more muscular housing and construction sector in the local economy will most likely result in a boost for other sectors, as demand for goods and services increase due to more paychecks circulating through the area.
The ultimate effect should be a continued improvement in the area’s unemployment numbers.