The Stat Pack
The RCG Employment Index’s 12-month moving average (“12MMA”) for Reno-Sparks held at 99 in July. The Index is up 1.3 points since July 2016. The Index has stalled less than 1 point away from the peak after 69 straight months in which it increased by either 0.1 or 0.2 points. Despite this pause, we expect the general upward trend will continue; though, the pace at which the Index has been increasing might slow since we are nearing its record high. The index peaked 11 years ago in December 2005 at 99.8. The trough of 89.6 occurred in January 2010.
Reno-Sparks job growth on a 12MMA continues to trend down, falling by 0.2 points in July from 4.1% to 3.9%. The rate of growth is 0.8 points lower than that recorded in July 2016. The lowest rate of growth in the last 10 years occurred in December 2009 (-9.3%). The region had surpassed its previous high mark of 3.7% achieved in December 2006, but has now fallen back down close to this number.
The 12MMA of the headline unemployment rate fell by 0.1 points for the 8th month straight to 4.3% in July 2017. When compared the July 2016 headline unemployment rate of 5.6%, this July’s rate was 1.3 percentage-points lower. The unemployment rate continues to improve steadily and is approaching rates seen before the Great Recession.
There were 80,817 construction jobs in Nevada recorded for July 2017. 14,800 of those were in the Reno-Sparks MSA (12MMA). This is 5.5% more than the 14,033 jobs reported the previous year in July 2016, and 62% of the peak (see below). Reno’s healthy economy has produced strong residential and commercial markets in the region, and this continues to benefit the construction sector. The latest stats show that 7.2% of the region’s job-base is in construction. Construction jobs in the Reno-Sparks MSA peaked at 24,042 in August 2006 on a 12MMA basis. At that time, the industry accounted for 11.1% of all jobs. The construction sector continues to recover since bottoming out in February 2012 when there were only 8,792 construction jobs.
There were 418,747 visitors to Washoe County in July on a 12MMA basis. YOY growth in visitation to Washoe County continues to outpace growth in Clark County, where visitor growth is trending down. In July 2017 YOY growth was 3.6%. By comparison, there was no YOY growth rate in Las Vegas for July. Reno had been lagging behind Las Vegas in visitor growth, but the tables have turned with YOY visitor growth rates in Washoe County beating those of Clark County every month since June 2016.
Washoe County has now seen YOY growth in visitor volume every month for over 2½ straight years, since January 2015, at an average rate of 2.5%. The 12MMA peak occurred in May 2004, when 467,904 visitors came to Washoe. The highest annual growth rate occurred in January 2013, when visitor volume grew 5.8%. The Reno-Sparks hospitality industry is seeing some improvement despite continued challenges.
Washoe County’s 12MMA YOY gross gaming revenue grew by 1.4% in July 2017. This brings total revenue up to $67.3 million, or 75% of the peak (see below). The growth rate has been positive for just over 2½ years straight at an average rate of 2.9%.
Gaming revenues peaked 11 years ago in June 2006 at $89.4 million. On an annual growth rate basis, growth peaked at 5.5% in June 2006.
Washoe County’s taxable retail sales continue to rise higher, a boon of the region’s strong economy. In June 2017 taxable retail sales reached $665.8 million. This was a 5.8% jump compared to June 2016 on a 12MMA basis. This represents over 5 years of rising retail sales on a YOY basis. Sales have surpassed their previous peak on a nominal basis (not inflation-adjusted). As the chart shows, Washoe’s taxable sales growth in June fell behind an improving state average by a 1.3 percentage-point margin.
Success in business attraction and retention is driving the region’s economy and is the primary cause of growth in taxable retail sales.
MLS home resales in Washoe County rose to 555 units in July 2017 on a 12MMA basis. This is an increase in resales of 6.1% over the previous July. For more than 2 straight years now home sales have been increasing on a YOY basis, and the rate of growth now appears to be on the rise. After what was a brief leveling-off, home sales are picking up steam again. The median sales price rose to $320,606 (12MMA) in July, an 8.6% jump from July 2016. For comparison, the Las Vegas median resale price in July increased by 7.7% to $213,899. The looming affordability issue also applies to the resale market.
In Q2, 2017 the Housing Opportunity Index (“HOI”) for the Reno-Sparks MSA fell 1.5 points from 50.1 in Q1 to 48.6 in Q2 on a four-quarter moving average (“4QMA”) basis. The U.S. index decreased 0.6 points from 60.9 to 60.3 during the same period. The Reno-Sparks 4QMA HOI is 11.7 points lower than the national number. On a YOY basis, the Reno-Sparks index fell 6.5 points from 55.1 in Q2, 2016.
Reno-Sparks’ HOI peaked at 85.8 in Q1, 2012. It bottomed out at 17.3 in Q4, 2006 at the peak of the housing boom. The 10-year average is 60. The region’s latest index is now just slightly higher than the 10-year average, which tells us that the housing market remains relatively affordable. However, if the index begins to deteriorate there could be issues in the future.
The HOI is based on the share of homes sold that are affordable to a family earning the median income in the Reno-Sparks MSA, assuming standard mortgage underwriting criteria.
According to Colliers International, Reno-Sparks Office vacancy maintained its downward trajectory. In Q2 of 2017, Office vacancy fell 0.5 points from the previous quarter to 13.2% on a 4QMA basis, its lowest value since Q4, 2007. The Reno-Sparks Spec Office market has been improving, albeit slowly. By comparison, the Las Vegas Spec Office vacancy rate was 6.8 percentage-points higher at 20% in Q2, on a 4QMA basis.
The Q2, 2017 Industrial vacancy rate also fell, reaching 8.6% in Q2. This was a drop of 0.6 percentage-points from 9.2%. After 5 consecutive quarters of increasing vacancy, the Industrial markets vacancy rate has now fallen 4 straight quarters. Vacancy is now comfortably below the 10% stabilized rate. Although a large amount of new product has recently come to market, there appears to be healthy demand in the Reno-Sparks MSA for Industrial space. The Las Vegas Industrial vacancy rate is significantly lower at 5.5% in Q2 on a 4QMA basis; however, the Vegas rate has been ticking up since Q3, 2016.
The 12MMA of the average weekly wage (not adjusted for inflation) in the Reno-Sparks MSA rose $1 to $792 in July, though the wage had been trending downward for nearly a year prior, since July 2016. When considered on a YOY basis it is down -4.0% from $824 in July 2016.
The inflation-adjusted 12MMA wage of $684 is $1 less than the previous month’s real wage of $685, bringing it -5.8% lower than the $726 recorded in July 2016. In July, Reno-Sparks’ average weekly real earnings were 3.2% higher than the Las Vegas average of $663, but Reno-Sparks’ advantage continues to shrink. Where Las Vegas’ average weekly real earnings are improving, Reno-Sparks’ are headed in the opposite direction. Inflation-adjusted wages have experienced a significant 6.3% drop from the recent record high in May 2016 of $730.
While weekly earnings are decreasing in the Reno-Sparks MSA, weekly hours are increasing, ticking up by 0.1 points to 35.9 in July. When compared to July of last year, weekly hours are up 0.8 hours from 35.1. The 8-year peak occurred in July 2009 at 36.8 hours, while the trough (8-year) of 32.5 hours occurred in September 2014.
The average price per gallon for regular unleaded gasoline in Reno-Sparks as of September 6, 2017, was $3.14, up $0.12 (4.1%) from $3.02 the month prior. However, when compared to the previous year the price of regular unleaded is up $0.48 (18.3%).
According to AAA, “Hurricane Harvey may no longer be raining down on the Gulf Coast, but the storm’s impact continues to drive up gas prices across the country. At $2.65, the national gas price average is 27 cents more expensive on the week. Motorists in 26 states are paying 25 to 44 cents more for a gallon of unleaded compared to seven days ago. In fact, every state in the country has seen gas prices increase except four (Alaska, Idaho, Hawaii and Utah), where prices remain stable. Overall, gas prices are pennies away from topping the highest price ($2.67, August 15-18, 2015) Americans have paid for a gallon of gas in more than two years…. As Texas dries out from Harvey, all eyes are on Hurricane Irma, now a Category 5 hurricane.
Despite being the region with the smallest gas price increases on the week, the West Coast continues to sell the most expensive gas. Gas prices on the West Coast increased as much as 12 cents on the week: California (+12 cents), Arizona (+9 cents), Nevada (+9 cents), Washington (+7 cents), Oregon (+6 cents), Alaska (+4 cents) and Hawaii (+3 cents)… the West Coast does not typically draw gasoline from the Gulf Coast and is not experiencing price spikes as compared to the East Coast.”
Per the World Gold Council, the end-of-month spot price of gold (ounce of pure gold) barely changed from the month prior, increasing by just 0.02% ($0.21) in August 2017 to nearly $1,249, on a 12MMA basis. On a YOY basis, the price of gold increased by 3.8%. It peaked in December 2012 at $1,678. Prices have been increasing on a YOY basis for the past 13 months.
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