Journal-Advocate (Sterling)

October mystery: Colorado hiring surges, but unemployme­nt rate also rises

Conflictin­g reports create confusion about direction of state economy

- By Aldo Svaldi

Colorado employers reported adding 17,700 nonfarm payroll jobs from September to October, continuing a three-month streak of over-the-top hiring, according to a survey of business establishm­ents.

But a separate survey of households found that 5,000 fewer people described themselves as employed last month and the number who said they were unemployed and actively looking for work rose by 6,800 to 116,400. That was enough to push the state’s seasonally-adjusted unemployme­nt rate up from 3.4% in September to 3.6% in October, still under the U.S. rate of 3.7%.

“While this divergence between the two series can make it difficult to interpret the path of the Colorado market, the establishm­ent survey has a larger sample and is more reliable,” Ryan Gedney, senior economist with the Colorado Department of Labor and Employment, said during a press call Friday morning.

Gedney said most months the two surveys line up, but about 14% of the time since the 1990s they have diverged. That usually happens when households report increasing employment while businesses say they had cut payrolls.

Broomfield economist Gary Horvath sides with the household survey based on what he is seeing on the street. Restaurant­s aren’t as full, retail spending is trending down and holiday hiring is not as strong as last year. Mortgage lenders and real estate firms are letting go of workers as higher interest rates weigh on the housing market. Homebuilde­rs are pulling back hard and developers are anxious about finding the financing they need to bring projects to market, which should impact constructi­on hiring. And business leader confidence is solidly pessimisti­c.

“This long, strange trip has successful­ly moved past the election but faces internatio­nal turmoil, labor shortages, and high inflation. Inflation appears to have peaked in some areas; however, prices will be at an elevated level longer than desired and will push the economy into a shallow recession in 2023,” Horvath said in an email.

Steven Byers, a senior economist with the Common Sense Institute in Denver, describes the divergence as paradoxica­l. Hir

ing wasn’t tepid, so why did more people say they were unemployed?

“This may have an explanatio­n such as people holding down more than one job or this will be corrected as the numbers are revised,” he said in an analysis of Friday’s report. One reason people may be taking on second jobs is to cope with inflation at a 40-year high.

Hiring estimates for September

were also revised higher by 600, bringing the total for the month to 5,600. Over the past three months, employers report adding 38,000 nonfarm jobs, nearly triple the number they added from May to July, Gedney said. An accelerati­on of hiring is not usually associated with an economy heading into a recession.

Over the month, profession­al and business services added 5,900 jobs; constructi­on added 2,600; and trade, transporta­tion and utilities added 2,000 workers on a seasonally adjusted basis. Gains in educationa­l and health services, manufactur­ing and other services ranged from 1,100 to 1,400. No industries had significan­t month-over-month declines,

Adding to the mystery, the Colorado Secretary of State reported a 10.6% increase in new business filings between the second and third quarters, a season when new filings usually fall or go flat. While October is outside that range, business formations have been very strong the past 18 months, Gedney said. Those matter because the household survey captures those who are employed by someone else or self-employed, while the establishm­ent survey only tracks those who take a job.

Colorado has the second highest rate of any state for its share of the adult population either working or looking for working — 66.9% compared to 62.2% for the U.S. That makes it much less likely to see a flood of people coming off the sidelines to work, which is another thing that could have boosted unemployme­nt despite strong hiring.

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