The Stat Pack
In November 2018, the RCG Employment Index’s 12-month moving average (“12MMA”) for Reno-Sparks increased by 0.1 points to 99.5. The monthly Index went up 0.2 points since October, and has hit an all-time high at 100.1, breaking the 100-point barrier for the first time. The trough of 89.6 occurred in January 2010.
Reno-Sparks job growth on a 12MMA grew 0.2 points from October to November, from 4.2% to 4.4%. The rate of growth is down a full 1.5 points from the 4.8% recorded in a year ago in August 2017. The lowest rate of growth in the last 10 years happened in December 2009 (-9.3%). The region’s previous record 12MMA high was in January 2018 when jobs grew by 5.1%.
The 12MMA headline unemployment rate fell 0.1 points to 3.7% in November. When compared to the November 2017 headline rate of 4.3%, this year’s rate was 0.6 percentage-points lower. Reno has reached unemployment rates seen before the Great Recession.
The U-3 unemployment rate, or headline rate, for Nevada, after ticking down 0.2 points in Q2 2018, dropped another 0.3 points to 4.6 in Q3. The U-3 rate is now dead even with the average rate for 2007 (4.6%), the year the Great Recession hit. Along with this drop in the U-3 rate, the U-6 rate, which measures underemployment, had a similar 0.3-point decline from 9.7% to 9.4%.
In terms of the U-3 rate, Nevada is tied for the 6th highest U-3 rate in the nation with Arizona and New Mexico. While the U-6 rate saw some improvement, Nevada still holds the 4th highest rate in the country, above the #5 spot held last quarter.
There were 90,758 construction jobs in Nevada in November 2018. 17,550 (or 19.3%) of those jobs were in the Reno-Sparks MSA (12MMA). This is a 5.2% jump from the 16,683 jobs reported in November 2017, and the 6th consecutive month of significant job growth for the area. Reno’s very healthy economy has produced strong residential and commercial (especially industrial) real estate demand, but also has led to a housing (for-sale and for-rent) and industrial space shortage.
The latest stats show that 7.4% of the region’s payroll job-base is in construction. Construction jobs in the Reno-Sparks MSA peaked at 24,042 in August 2006 on a 12MMA basis. Current construction jobs are at 73% of the peak. At the time of the peak, the industry accounted for 11.1% of all jobs. The large number of jobs in the construction sector was a consequence of the pre-Recession real estate bubble. The sector bottomed out in February 2012 when there were only 8,792 construction jobs.
The annualized visitor count for Washoe County decreased 0.29% from October 2018 to 5.01 million in November. The YoY visitation rate sank by 2.2% in November, continuing a downward trend in both YoY and MoM numbers. This is in contrast to Clark County, where visitation numbers began to tick upward in September 2018.
Washoe County has now seen three straight months of YOY decline, bringing the average annualized rate down to 2.6%. The 12MMA peak occurred in May 2004, when 467,904 visitors came to Washoe. The highest annual growth rate happened in January 2013, when visitor volume grew 5.8%.
Washoe County’s 12MMA YOY gross gaming revenue grew by 5.2% in November 2018, and is back up 0.7% from October after two months of decline. This leaves total revenue at $72.2 million. In comparison, Clark County saw a YOY growth rate of 2.3% this November. The YOY growth rate for Washoe County has been positive for more than 3 years straight at an average of 3.4%, corresponding to a similar growth streak in visitor volume.
Gaming revenues peaked nearly 12 years ago in June 2006 at $89.4 million, and the county is still at 80% of that peak. On an annual growth rate basis, the peak of 5.5% happened 12 years ago in May and June of 2006.
Washoe County’s economy continues to benefit from rising taxable retail sales. In October 2018, the 12MMA growth rate was 5.4% YOY, a decrease of 0.6 points from October 2017. The YOY growth rate has remained essentially flat over the last 2 months, after dropping in August. Taxable retail sales reached $719.5 million in October on a 12MMA basis, having already surpassed the previous peak (March 2016) on a nominal basis (not inflation-adjusted). Washoe’s taxable sales growth rate is 0.6 points higher than the statewide average.
Job growth, success in business attraction and retention, resulting in construction activity plus proximity to the Bay Area and the Pacific Northwest, are driving the region’s economy, though increasing visitation has also contributed.
The Q3 2018 median sales price of $380,000 for single-family home resales in the Reno-Sparks area represents a 8.9% jump YOY. Compared to the previous quarter, the price grew by 1.3%. The Q3 median price is now approximately $60,607 (18.9%) greater than the $319,393 that would have resulted from using the 1990-2001 average annual appreciation rate of 4% per year. Last quarter the difference was $58,684. The Reno-Sparks median price is increasing rapidly. Housing affordability is a looming problem that is being monitored closely by public officials and community leaders for its potential negative impact on economic growth and business attraction.
In November 2018 MLS home resales in Washoe County fell by 1.0% from the previous month to 505 on a 12MMA. When compared to November 2017, resales fell by 11.2%, which continues the trend of YoY sales decline that began in June 2018.
The median sales price rose to $374,502 (12MMA) in November, a 12.4% jump from the year prior. By comparison, the November Las Vegas median resale price rose by 14.6% but is much lower at $255,483. The looming housing affordability issue in both regions also applies to the new home market.
In Q3, 2018 the Housing Opportunity Index (“HOI”) for the Reno-Sparks MSA dropped 1.4 points from 39.3 in Q2 to 37.9 on a four-quarter moving average (“4QMA”) basis. The U.S. index decreased by 0.5 points for the second month in a row, from 59.7 to 59.2, during the same period. The Reno-Sparks 4QMA HOI is now 20.8 points (35%) lower than the national number. On a YOY basis, the Reno-Sparks index fell 11.1 points from 49.0 in Q3 2017.
Reno-Sparks’ HOI peaked at 85.8 in Q1, 2012 and has been trending downward ever since. It bottomed out at 17.3 in Q4, 2006 at the peak of the housing boom. The 10-year average is 64.5. The region’s latest index is now 26.6 points below that 10-year average. There will be issues regarding housing affordability will spillover effects on economic growth and business attraction in Reno-Sparks if the index continues to deteriorate.
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 continues a downward trajectory in Q3 2018. Office vacancy fell 0.2 points from the previous quarter to 11.8% on a 4QMA basis, its lowest value in more than 13 years, since Q3 2004. The Reno-Sparks Spec Office market has seen slow and steady improvement since Q3 2010, when the Spec Office market had reached peak vacancy of 21.6%.
The Industrial vacancy rate also fell in Q3, dropping 0.4 percentage-points and reaching 5.2%. After 5 consecutive quarters of increasing vacancy, the Industrial markets vacancy rate has now fallen 9 straight quarters and is now well below the 10% stabilized rate.
The 12MMA of the nominal average weekly wage (not adjusted for inflation) in the Reno-Sparks MSA grew about $5 (or 0.64%) in November 2018 over the previous month, to $841. This marked the 17th consecutive month of growth. On a YOY basis, this wage is up 5.8% from $795 in November 2017.
The inflation-adjusted (real) 12MMA wage for November 2018 of $704.79 is up just over $3 from the previous month’s wage, and is $22 (3.2%) higher than the wage recorded 12 months ago. Reno-Sparks workers are starting to see real wage growth pick up after more than a year of relative stagnation.
In November, the region’s average weekly earnings were 4.8% higher than the Las Vegas average of $673. Reno-Sparks’ real wage has fallen from the $730 peak in May 2016, just over 2 years ago.
In November 2018, the Reno-Sparks MSA’s 12MMA average weekly hours worked remained at 35.4 for the third straight month. Weekly hours worked have leveled off after a brief drop beginning in October 2017. Conversely, weekly hours in Las Vegas seem to be leveling after trending slowly upward. On a YOY basis, 12MMA weekly hours for Reno-Sparks are down 0.4 points from November 2017. The most recent weekly hours worked peak happened in July 2009 at 36.8 hours, while the trough of 32.5 hours happened in September 2014.
The average price per gallon for regular unleaded gasoline in Reno-Sparks as of Jan 2, 2019 was $2.98, down $0.27 (8.2%) from $3.25 the previous month. When compared to the previous year, the price of regular unleaded is up $0.15 (5.2%). Gas prices have been rising steadily and could impact resident and business spending in other areas of the local economy.
According to AAA, “Heading into 2019, gasoline demand is expected to dwindle during the month of January, an expected change following the busy holiday travel season. At the same time, OPEC will begin production cuts on January 1, with hopes that the shift in global supply will push oil prices higher. The effectiveness of the cuts will likely not be known until later in the first quarter.
“All eyes are on OPEC to kick off the year,” said Jeanette Casselano, AAA spokesperson. “Many are waiting to see if they stick to their promise to cut crude production by 1.2-million b/d and if the proposed cuts will be enough to restore balance to the market.”
Over the past few years, OPEC and partnering countries have demonstrated a strong resolve to comply with proposed cuts in production. It is likely that the cartel will reconvene in April, and if there is a need to further balance global supply and demand, OPEC will likely tweak current production numbers at that meeting.”
Per the World Gold Council, in November the 12MMA month-end spot price for an ounce of pure gold fell by about $5 (0.4%) from October to just over $1,265. On a YOY basis, the 12MMA price of gold is still up 0.9%. The peak of $1677.77 occurred in December 2012. Despite the dips in recent months, the YOY growth rate has generally trended upward for 2 years, and is up for the last 12 months straight.
Nevada excise tax revenues generated from marijuana sales through the first 16 months of its collection are over $101 million, with the most recent recorded month, October 2018, seeing a whopping 10.1% increase in revenue from the previous month. October brought in about $8.2 million in combined retail and wholesale taxes. The most readily available report by the Nevada Department of Taxation contains retail and wholesale excise taxes. These taxes do not include sales and use taxes paid at points of sale in the dispensaries, or the annual licensing fees paid by the industry. The wholesale excise tax is collected at a 15% rate from growers to dispensaries on medicinal- and recreational-use marijuana, while the 10% retail excise tax is charged only to recreational users purchasing marijuana at a dispensary.
According to the Department’s original forecast, tax revenue from the sale of marijuana was expected to reach $120 million in the first 2 years. Collections indicate that the performance is on track to exceed the Department’s forecast.
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