The Stat Pack
In December 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 held steady at 99.9 since last month, still under the all-time high of 100.0, which was last reached in October 2018. The trough of 89.6 occurred in January 2010.
Reno-Sparks job growth on a 12MMA held steady from November to December, at 4.4%. The rate of growth is down .5 points from the 4.9% recorded in a year ago in December 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 also held at 3.7% in December. When compared to the December 2017 headline rate of 4.2%, this year’s rate was 0.5 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 0.3 points in Q3 2018, dropped another 0.1 points to 4.5 in Q4. The U-3 rate is now lower than 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 0.1-point decline from 9.4% to 9.3%.
In terms of the U-3 rate, Nevada is still .6 points higher than the national average of 3.9%. While the U-6 rate saw some improvement, the national average of 7.6% is still 1.7 points lower than Nevada’s rate.
There were 91,658 construction jobs in Nevada in December 2018. 17,692 (or 19.3%) of those jobs were in the Reno-Sparks MSA (12MMA). This is a 5.4% jump from the 16,792 jobs reported in December 2017, and the 7th 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 7.3% 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 73.5% 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 0.49% from November 2018 to 4.99 million in December. The YoY visitation rate sank by 2.9% in December, continuing a downward trend in both YoY and MoM numbers. This is in contrast to Clark County, where visitation numbers grew by .17% in December and began to tick upward in October 2018.
Washoe County has now seen four straight months of YOY decline, bringing the average annualized rate down to 2.0%. 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 4.4% in December 2018, a drop of 0.8% from November. This leaves total 12MMA revenue at $72.1 million. In comparison, Clark County saw a YOY growth rate of 2.4% this December. 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. Industry insiders also credit a reinvigorated Reno economy and casinos’ focus on locals for this stability.
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 November 2018, the 12MMA growth rate was 5.1% YOY, a decrease of 1.1 points from November 2017. The YOY growth rate has hovered about 5% after dropping in August. Taxable retail sales reached $721.5 million in November 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 0.1 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 Q4 2018 median sales price of $375,000 for single-family home resales in the Reno-Sparks area represents a 7.3% jump YOY. Compared to the previous quarter, the price dropped by 1.3%. The Q4 median price is now approximately $52,501 (16.3%) 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 $60,607, a difference of -2.7 points. This represents the first drop in the Reno-Sparks median price since 3Q 2016. 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 December 2018 MLS home resales in Washoe County fell by 1.62% from the previous month to 496 on a 12MMA. When compared to December 2017, resales fell by 12.1%, which continues the trend of YoY sales decline that began in June 2018.
The median sales price rose to $376,168 (12MMA) in November, an 11.7% jump from the year prior. By comparison, the November Las Vegas median resale price rose by 14.0%, but is much lower at $257,575. The looming housing affordability issue in both regions also applies to the new home market.
According to Colliers International, Reno-Sparks Office vacancy in Q4 2018 has grown after falling in Q2 and Q3. Office vacancy rose by 0.8 points from the previous quarter to 11.8%. 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 rose in Q4, adding 0.8 percentage-points and reaching 5.7%. This rise comes after falling for 9 straight quarters, though the industrial vacancy rate is still 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 $10 (or .23%) in December 2018 over the previous month, to $853. This marked the 18th consecutive month of growth. On a YOY basis, this wage is up 6.9% from $798 in December 2017.
The inflation-adjusted (real) 12MMA wage for December 2018 of $713.67 is up just over $7 from the previous month’s wage and is $29 (4.3%) 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 December, the region’s average weekly earnings were 5.1% higher than the Las Vegas average of $676. Reno-Sparks’ real wage has fallen from the $730 peak in May 2016, just over 2 years ago.
In December 2018, the Reno-Sparks MSA’s 12MMA average weekly hours worked grew for the second straight month, hitting 35.7 hours. Weekly hours worked have finally started to climb after remaining stagnant for much of 2018. Weekly hours in Las Vegas also seem to be trending slowly upward. On a YOY basis, 12MMA weekly hours for Reno-Sparks are the same as they were in December 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 Feb 4, 2019 was $2.81, down $0.17 (-5.7%) from $3.25 the previous month. When compared to the previous year, the price of regular unleaded is down $0.14 (-4.8%). Gas prices have been rising steadily and could impact resident and business spending in other 1areas of the local economy.
According to AAA, “For most states, gas prices are starting off the first week in February cheaper than the last week in January. On the week, only eight states saw gas prices increase which is a big shift from the week prior that saw increases for 25 states. With the majority of state gas price averages decreasing, the national gas price average held flat at $2.26 even though the Energy Information Administration’s (EIA) latest demand rate reflected summer-like numbers.
For the week ending Jan 25, the EIA reported U.S. gasoline demand at 9.6 million b/d. The last time the rate was this high was during the 2018 Labor Day weekend. As the EIA rate is an estimate, it’s considered preliminary and the agency may revise it later this year when it releases final figures for the month. If the estimate is not revised, one reason for the jump could be the extreme cold weather seen last week.
“Three-fourths of the country faced below freezing temperatures last week which may have prompted many motorists, especially in the mid-west, to fill-up early and often ahead of the storm, in turn driving demand. This is similar to what we see prior to hurricanes,” said Jeanette Casselano, AAA spokesperson. “Now that the storm has passed, demand is likely to fall more in-line with typical February estimates.”
Per the World Gold Council, in January the 12MMA month-end spot price for an ounce of pure gold fell by about $2 (-0.14%) from December to just over $1,262. On a YOY basis, the 12MMA price of gold is down 1.1%. The peak of $1677.77 occurred in December 2012. Despite the dips in recent months, the YOY growth rate has generally trended upward for the last 2 years.
Nevada excise tax revenues generated from marijuana sales through the first 17 months of its collection are over $101 million, with the most recent recorded month, November 2018, seeing 1.23% growth in revenue from the previous month, and 51.53% growth over November 2017. This November brought in over $8.3 million in combined retail and wholesale taxes. The most readily available report by the Nevada Department of Taxation contains only retail and wholesale excise taxes, and does 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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