Forecasters see growth amid oil uncertainty

Almost every business sector to contribute to growth in jobs

Economists and market observers forecast growth in Colorado’s economy and jobs next year, although some of that growth will hinge on lower oil prices.

Colorado will gain 61,300 jobs next year, according to a 2015 economic forecast developed in part by economist Richard Wobbekind of the University of Colorado Boulder’s Leeds School of Business. The growth will come from almost every business sector, according to the forecast, and will rank the state in the top 10 states for job growth.

All business sectors will grow with the exception of the information industry, which will remain flat, according to the forecast. The strongest sector will be the professional and business services sector, which is projected to add 12,800 jobs.

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“Part of the strength in the professional and business-services sector is linked to innovation and high tech in the state, and part is attributable to infrastructure development and repair in the state,” Wobbekind said.

Other top job-growth sectors are the leisure and hospitality industry, which could add 11,200 jobs, and the education and health-services sector, which is projected to grow by 9,300 jobs.
Colorado State University economist Martin Shields has projected similar statewide job growth of “60,000 to 70,000” jobs. He expects the state’s unemployment rate to drop 0.5 percent to 3.6 percent next year from 4.1 percent.

“The big story is what happens to oil,” Shields said.

The decline in oil prices, which sank to $53.27 per barrel at the end of 2014, could lead to less hiring in the industry this year if prices continue to fall, Shields said.

However, Shields expects overall wages to grow beyond the meager gains in recent years, perhaps above 2 percent.

“We’ll finally see some wage growth, which is certainly welcome by households that have been struggling with pretty flat incomes over the last 10 years,” he said.

He expects Colorado’s gross state product to grow from 2.5 percent to 3 percent, led by economies in the Denver metro area, Boulder Valley and Northern Colorado.

In Northern Colorado, new construction, including an $86 million hospital planned by Banner Health and a $12.3 million emergency center by University of Colorado Health, will buoy the region’s economy, he said.

Otherwise, small- and midsized-firms will add jobs while larger regional employers such as CSU are not expected to see much growth.

Commercial real estate in Northern Colorado will see continued recovery next year, particularly from the energy industry, said Michael Ehler, managing broker and partner of Realtec Commercial Real Estate Services Inc. in Fort Collins. In Weld County, the industrial real estate market will remain tight, with Larimer County beginning to tighten from energy-industry demand.

“Demand is starting to exceed supply,” he said.

Retail and office real estate will expand slowly, he added. New residential development in the region faces pressure from increasing water costs because of population growth as well as demand from oil and gas development and agricultural production.

“The pressures are going to be there for some time from increasing water costs,” he said. “At what point will it be a real challenge for people to qualify for mortgages?”

In the Boulder Valley, commercial and residential real estate will continue to face challenges because of tight markets.

Lou Barnes, mortgage banker for Premier Mortgage Group in Boulder, said the lack of developable land in Boulder County has led to lower inventories of residential housing for sale.

“We have no new supply of housing,” he said. “Commuting to work in Boulder from east of I-25 is … going to become commonplace.”

Economic forecasts on tap this month

• The Boulder Economic Council will present “2015 Economic Forecast: Boulder and Beyond” from 4 to 7:30 p.m., Monday, Jan. 13 at UCAR Center Green in Boulder. Keynote speakers will be economists Richard Wobbekind of the University of Colorado and Phyllis Resnick of Colorado State University. More information online at bouldereconomiccouncil.org.

• Realtor Eric Thompson of Windermere Real Estate in Fort Collins will present a real estate market forecast for Northern Colorado from 5 to 6 p.m., Wednesday, Jan. 15 at the Marriott Fort Collins, 350 Horsetooth Road, Fort Collins. More information at windermerecolorado.com.

• BizWest Media will present its 2015 Economic Forecast luncheon from 11 a.m. to 1 p.m., Wednesday, Jan. 21 at the University Center Ballroom, University of Northern Colorado, 2045 10th Ave., Greeley. Ticket including lunch is $39. Presentations by experts in energy, water, finance and banking, real estate, health care, technology and manufacturing. More information at bizwest.com.

• Colorado State University’s Everitt Real Estate Center will present the Finance and Real Estate Summit from 7 to 9:30 a.m., Wednesday, Jan. 29 at the Embassy Suites Denver Downtown, 1420 Stout St., Denver.  More information at biz.colostate.edu.

A previous version of this article contained an error. The oil and gas sector did not add the most jobs statewide in 2014.

Steve Lynn can be reached at 970-232-3147, 303-630-1968 or slynn@bizwestmedia.com. Follow him on Twitter at @SteveLynnBW.