The annual employment growth rate for the region dropped back to 2.4 percent as of November 1997. Although growth rates varied widely among Rocky Mountain States, they all had slowed at year-end. Utah's 4.4-percent annual gain was among the highest in the Nation, while the meager 0.2-percent increase in Wyoming was one of the lowest. Oil drilling continued to pick up in parts of the region, but this activity may be short-lived as the price of oil plummets. The importance of the energy industry in the regional economy continued to decrease.

The construction sector remained extremely active, although the annual rate of employment gain has slowed from the rate of 2 to 3 years ago. Residential construction employment is expected to slow further as in-migration eases, but nonresidential building and highway construction will continue at a strong pace. Recent in-migration put increased pressure on local school districts, and Colorado voters responded by passing $565 million in bond issues in November. Salt Lake International Airport will soon begin a $1.7 billion building program that includes a new $189 million main terminal building. Ski area expansions continue; the Park City resort in Utah recently announced approval of a $150 million expansion and modernization project. The pace of activity in Utah is certain to pick up as preparations begin for the Winter Olympics in 2002.

Labor markets have tightened over the past year in all Rocky Mountain States except Montana. With an extremely tight market, North Dakota's 1.9-percent rate in November 1997 tied Nebraska's rate as the lowest in the Nation. South Dakota and Utah also posted rates below 3 percent. Colorado's rate was 3.2 percent.

Booming apartment markets in Fargo and Bismarck pushed North Dakota's multifamily housing sector well ahead of last year's tepid pace. In Colorado, multifamily building permit activity totaled 10,910 units in 1997 -- approximately 6 percent below the record level in 1996. The 5,911 units permitted in the Denver metropolitan area were a record high for the 1990s and offset a slowdown in other areas of the State. Multifamily permit activity through December was down from 1996 levels in both the Colorado Springs and Salt Lake City metropolitan areas. Single-family permit activity for the region in 1997 (52,173 units) was off by 4 percent from last year's level. Colorado was the only Rocky Mountain State to post a gain over last year, with the Denver area once again outperforming the rest of the State.

Existing home sales for 1997 totaled 173,600 only slightly less than a strong 1996 level, despite a 15-percent decline in sales in Utah. Colorado, South Dakota, and Wyoming all reported increased sales for the year.

The sales market in the Denver area was very strong in 1997. A boost in condominium sales in the second half of the year pushed total sales for 1997 to an all-time high of more than 40,000 units. Sales price increases slowed in the first half of 1997, but the average gain for the year was 6.2 percent, which was equal to the rate of increase in 1996. The average sales price for single-family homes was up to almost $170,000, and the price for condominiums exceeded $100,000 for the first time.

Rental markets in most of the region remain balanced. Vacancy rates in most major markets have settled in the 4- to 5-percent range. Many areas are facing a substantial increase in their inventory of assisted-living housing for the elderly, which will provide the first real test of the depth of this market. It is too early to tell if the assisted-living segments market will soften materially or will simply become more competitive, but these markets bear watching in the coming year.

Spotlight on Grand Forks, North Dakota/Minnesota

Grand Forks is a regional trade and service center for parts of North Dakota; Minnesota; and Manitoba, Canada. The economy grew last year despite the Spring flood that closed the town for 3 weeks and damaged 80 percent of all properties. Property damage from the flood has exceeded $2 billion.

The exodus of people and businesses that many expected did not occur, and labor shortages persisted due to the need for construction workers. Wage and salary employment grew by 2 percent despite the flood. The unemployment rate declined to nearly 2 percent between January and November 1997, putting upward pressure on wages. There are still nearly 1,500 unfilled jobs listed with the Job Service of North Dakota, most of which are in the retail trade, services, and construction sectors.

The prospects for future economic growth are good, reflecting the positive impacts of rebuilding and the city's strategic location near Canada. Although these are not likely to reverse the net out-migration of the 1990s caused by the loss of rural population, there will be new workers coming into the area. By the time reconstruction is complete, total Federal relief funding will be well over $1 billion. This includes more than $200 million in HUD grants, which will be used primarily for infrastructure repair and improvement.

Several public and private construction projects are planned or under way, including construction of a $200 million dike to prevent a reoccurrence of the devastation of the central business district and nearby residences. Construction on the $80 million Aurora Conference Center is expected to begin this year, along with the construction of three large office complexes in the downtown area. The location of the dike will soon be decided, and this will pave the way for additional business and housing development. The University of North Dakota is expected to return to its normal enrollment level of approximately 11,000 students because many of the part-time students will resume school after their high-paying temporary jobs end.

After the flood, the lack of available housing forced many households to seek housing in rural communities -- some as far as 100 miles away. Approximately 7 percent of the single-family homes and 4 percent of the multifamily housing stock in the area were destroyed or condemned. By the Fall of 1997, however, most of the damaged housing units had been repaired. Nearly all of the condemned single-family units will be purchased by the city to make way for the dike.

As a result of the flood losses, single-family construction in 1997 was more than double the level in 1996. Two city-sponsored subdivisions (totaling 230 units) accounted for most of the increase. Thirty of these units sold for between $95,000 and $115,000. The sales housing market is expected to get another boost when homeowners in the buyout areas receive final approval from the city governments. The average sales price in 1997 was up 5 percent to $86,500. New townhouses in the price range of $80,000 to $90,000 and in the more expensive range of more than $150,000 were selling well.

The limited amount of recent apartment construction has consisted mostly of small projects located in Grand Forks and in East Grand Forks. Although the tightness of the rental market caused by the flood has begun to ease, rents for the year increased by approximately 10 percent. Higher rents and a lack of available units last Summer forced some renters to move back home or to double up with other households. Military strength reductions at Grand Forks Air Force Base also released rental units. There will be some pressure on the market when the construction season begins and workers who are now commuting start looking for housing in the city.