Employment growth in the Rocky Mountain region slowed during the second quarter of 1997. Only North Dakota and Utah posted an annual rate of increase above the national average. Utah's 3.9-percent gain was the third highest in the Nation, but its growth in 1997 has not matched the increases in the past 3 years. Wyoming's economy was unable to duplicate the modest recovery of 1 year ago, and employment there remains practically unchanged from the second quarter of 1996. Colorado's strong first-quarter gains in 1997 were a significant improvement from the fourth quarter of 1996, but second-quarter growth in 1997 dropped back to the relatively weak pace of the fourth quarter of 1996.

Unemployment rates remain low. Montana and Wyoming matched the U.S. unemployment rate in May, but all other States in the Rocky Mountain region were well below this level. South Dakota's 2.6-percent unemployment rate was the lowest in the region and the second lowest in the Nation. Businesses continue to voice concerns about labor quality and availability. A recent Denver Metro Chamber of Commerce survey indicated that finding qualified workers was the number one concern of businesses for the coming year. A local fast-food outlet offers discounts to customers who refer new employees to the outlet as long as the employees stay on the job for 30 days.

Rental housing markets are balanced, and conditions have eased from the tightness of 12 months ago. Rent increases have slowed in most markets as concessions remain widespread, and effective rent increases have moderated. Apartment construction is slowing in the major Rocky Mountain markets. Multifamily permits for the first half of 1997 (8,202 units) were down 30 percent regionwide compared with the same period in 1996. In the Denver metropolitan area, multi-family permit activity for the first 6 months of 1997 (2,959 units) was off more than 17 percent compared with the same period in 1996. A similar slowdown has occurred in Colorado Springs. The multifamily activity in Salt Lake City in the first 6 months of 1997 is 43 percent of the level for the same period in 1996.

Single-family building has held up better than multifamily building, but permit activity in the entire region for the first half of 1997 (26,718 units) is down 6.6 percent compared with the first half of 1996. Single-family activity was actually up in the Denver and Boulder-Longmont areas, but these gains were not replicated elsewhere. In the Denver area, new homes in the $100,000 to $125,000 price range are sold quickly, but the market share for this price range has declined because builders have difficulty producing homes in this range. Affordability has become an issue for businesses looking to locate in the area as increases in the cost of housing in Denver continue to outpace increases in much of the Nation.

Existing home sales are cooling off considerably from the torrid pace of a year ago. The decrease was modest in Colorado, but double-digit declines were the rule in most other States. Sales remain above levels of the early 1990s, however. Prices have levelled off in Fargo and Salt Lake City, but Colorado Springs posted a 9-percent gain in the median existing sales price from 1 year ago.

Grand Forks, North Dakota, is on the road to a remarkable recovery from one of the most damaging natural disasters in U.S. history. The city was devastated by a Spring flood that closed the town for 3 weeks and damaged 80 percent of all properties. Damages to property are estimated to be more than $1 billion. Many of the damaged properties have already been repaired. City officials, Federal officials, and private developers have begun the task of developing new housing and rebuilding infrastructure. The recovery will be aided by $200 million in HUD Community Development Block Grant (CDBG) funds in the act recently passed by Congress and signed by President Clinton.

Boulder-Longmont, Colorado

Boulder-Longmont's economy is one of the strongest in the Rocky Mountain region. Employment in the first half of 1997 increased at an annual rate of more than 3.5 percent, compared with 3.1 percent for the same period in 1996. Although this increase is not as great as the 6-percent annual growth rates of 1993 and 1994, it is still a healthy increase. Boulder's unemployment rate has been below 3 percent for most of 1997.

The high-technology sector is an important part of Boulder's economic base and has fuelled many of the recent job gains. IBM added 600 workers over the past 12 months, regaining its position as the largest private employer in the county and reversing a trend of downsizing for most of the 1990s. Other high-technology companies such as Storage Tek, Ball Aerospace, Exabyte, and Maxtor are among the top 10 employers of the area. The dominance of high-technology employers will increase with the addition of Sun Microsystems in Broomfield. When their $204 million facility is completed, it will accommodate up to 4,000 employees. Biotech firms have also become an increasingly important source of employment. Amgen, a California-based firm, is currently building a plant in Longmont that will initially employ 200 people. Eventually employment could be as high as 1,500 people.

For several years Boulder has had growth restrictions on residential and commercial development. A recent commercial growth cap is being replaced by citywide rezoning that will reduce the capacity for commercial development within the city. This has pushed residential and commercial growth to other areas of Boulder County, where some of the communities have also proposed or adopted growth limits.

Population growth in the Boulder metropolitan area accelerated in the early 1990s but eased slightly in the past 2 years. The dramatic in-migration increase in 1992 and 1993 placed increased pressure on the housing market, causing rising sales prices and rents. The 25,000 students and 4,000 faculty and staff members at the University of Colorado (CU) also exert a significant influence on local sales and rental markets.

Homebuilding activity has been very strong in the Boulder area in recent years. In 1990 and 1991, the number of single-family building permits averaged 1,275 annually. From 1992 through 1995, the average annual activity had increased to 2,400 units. In 1996, however, the number of permits fell to 1,752, partly in response to growth limits established in Boulder and other communities and partly due to builder cutbacks resulting from increased unsold inventory. Activity appears to be increasing again. In the first 6 months of 1997, permits were issued for 1,062 homes; 23 percent greater than the first 6 months of 1996 and on pace to equal the annual activity in 1994 and 1995.

Home sales in the first 4 months of 1997 were 2 percent ahead of the strong pace of 1996. The median single-family sales price increased by 6 percent to $190,000, and the median condominium price increased to $114,000 -- a 3-percent increase over 1996. Longmont, with a single-family median sales price of $143,000, is the most affordable community in the area.

Multifamily permit activity in the Boulder area was relatively stable from 1990 through 1994 and averaged approximately 350 units annually. However, activity increased dramatically in 1995 to more than 970 units and increased again in 1996 to 1,022 units. During the first 6 months of 1997, permits have been issued for more than 500 units. Most of the recent apartment construction in the area has been in high-rent, upscale developments. The substantial increase in the supply of rental housing will help to ease the tightness of the area's rental market but will not eliminate it.

The Boulder area rental market has been tight for much of the 1990s. The vacancy rate during the school year stayed below 2 percent in the early 1990s and has stayed in the 3- to 4-percent range since 1993. Apartment complexes that were recently completed were occupied almost as soon as they became available. High rents in Boulder have resulted in increased commuting from areas outside the city, the doubling-up of households, and the return of students to dormitories.