The Stat Pack
Reno-Sparks job growth, on a 12-month moving average (MMA), dropped 0.2 points in June, from 4.8 percent to 4.6 percent. The rate of growth is down 0.1 points from the 4.7 percent recorded in a year ago. The 12MMA “headline” unemployment rate fell 0.1 points to 3.9 percent in June. When compared to the June 2017 headline rate of 4.6 percent, this May’s rate was 0.7 percentage-points lower. Reno has reached rates seen before the Great Recession.
For the rest of the Reno-Sparks metrics, scroll down.
The FY2018 final results for EDAWN-assisted new jobs were adjusted to 2,148 jobs. This is a 35.4% decrease over the number of assisted new jobs in 2017. The FY2019 forecast also predicts 2,500 new jobs, a considerable drop from previous years. EDAWN’s latest data supports its success in enabling job growth and diversification. Note: These figures do not include jobs related to Tesla.
In June 2018 the RCG Employment Index’s 12-month moving average (“12MMA”) for Reno-Sparks held steady at 99.4. While the Index has been increasing at a slower rate, it continues making progress closer to the all-time high. The Index is up 0.7 points since May 2017. It peaked more than 12 years ago in December 2005 at 99.8 aka 100.0. The trough of 89.6 occurred in January 2010.
In June Reno-Sparks job growth, on a 12MMA, dropped 0.2 points from 4.8% to 4.6%. The rate of growth is down 0.1 points from the 4.7% recorded in a year ago in June 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 August 2016 when jobs grew by 4.9%.
The 12MMA headline unemployment rate fell 0.1 points to 3.9% in June. When compared to the June 2017 headline rate of 4.6%, this May’s rate was 0.7 percentage-points lower. Reno has reached rates seen before the Great Recession.
The U-3 unemployment rate, or headline rate, for Nevada, after ticking up 0.1 points in Q1 2018, moved back down by 0.2 points in Q2. The U-3 rate is now 0.3 points above 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 0.7-point decline from 10.4% to 9.7%.
In terms of the U-3 rate, Nevada fell one spot to have the 6th highest headline rate in the nation. While the U-6 rate saw strong improvement, Nevada still holds the 5th highest rate in the country, falling from 3rd-highest in the previous quarter. Nevada businesses maintain a significant reliance on part-time workers.
There were 86,658 construction jobs in Nevada in June 2018. 16,958 (19.6%) of those jobs were in the Reno-Sparks MSA (12MMA). While this is a notable jump of 6.7% from the 15,892 jobs reported in June 2017, construction jobs were largely unchanged since February of this year. Reno’s very healthy economy has produced strong residential and commercial real estate demand, but also to shortages of housing units and certain types of commercial space, especially industrial.
The latest stats show that 7.7% 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 70.5% 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 increased 0.09% from May 2018 to just over 5.15 million in June. With a YOY visitation growth rate of 3.4%, Washoe County continues to outpace growth in Clark County, which had a visitation growth rate in May of -1.7%. See Clark County commentary.
Early in 2016, Washoe had been lagging behind Clark in visitor growth, but the tables have turned with YOY visitor growth rates in Washoe beating those of Clark every month since June 2016 for the reasons previously noted in the Clark County Stat Pack section.
Washoe County has now seen YOY growth in visitor volume every month for 3.5 straight years (since January 2015) at an average rate of 3%. 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%. Despite earlier challenges, the Reno-Sparks hospitality industry has made important gains and continues to grow stronger.
Washoe County’s 12MMA YOY gross gaming revenue grew by 6.4% in June 2018. This brings total revenue up to $71.4 million, or 80% of the peak (see below). In comparison, Clark County had a YOY growth rate of 2.7% this June. Both counties saw an increase in the gross gaming revenue growth rate. The YOY growth rate for Washoe County has been positive for more than 3 years straight at an average of 3%, corresponding to a similar growth streak in visitor volume.
Gaming revenues peaked nearly 12 years ago in June 2006 at $89.4 million. 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 May 2018, the growth rate was 6.9% YOY, up 0.5 points from May 2017. Compared to April 2018, the YOY growth rate is flat. Taxable retail sales reached $708 million in April, having already surpassed the previous peak (March 2016) on a nominal basis (not inflation-adjusted). As the chart shows, Washoe’s taxable sales growth is 2.6 points higher than the overall Nevada average.
Success in business attraction and retention, and proximity to the Bay Area and the Pacific Northwest, is driving the region’s economy. It is the primary cause of growth in taxable retail sales, though increasing visitation has also contributed.
The Q2, 2018 median sales price of $375,000 for single-family home resales in the Reno-Sparks area represents a 13% jump YOY. Compared to the previous quarter, the price grew by 1.9%. The Q2 median price is now approximately $58,684 (18.6%) greater than the $316,316 that would have resulted from using the 1990-2001 average annual appreciation rate of 4% per year. Last quarter the difference was $54,730. 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 June 2018 MLS home resales in Washoe County fell by 2.4% from the previous month to 549 on a 12MMA. When compared to May 2017, resales fell by 0.4%, which is a major downward shift of 4 points compared to the same figure for May, ending more than 3 straight years of YOY increases with an average rate of growth of 4.2%.
The median sales price rose to $361,464 (12MMA) in June, a 13.9% jump from a year prior. By comparison, the Las Vegas median resale price in June rose by 14.5% but is much lower at $260,000. The looming housing affordability issue in both regions also applies to the new home market.
In Q2, 2018 the Housing Opportunity Index (“HOI”) for the Reno-Sparks MSA dropped 3.4 points from 42.7 in Q1 to 39.3 on a four-quarter moving average (“4QMA”) basis. The U.S. index decreased by 0.5 points, from 59.7 to 59.2, during the same period. The Reno-Sparks 4QMA HOI is now 19.9 points (34%) lower than the national number. On a YOY basis, the Reno-Sparks index fell 9.3 points from 48.6 in Q2, 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 64.6. The region’s latest index is now 25.3 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 on a downward trajectory in Q2 2018. Office vacancy fell 0.1 points from the previous quarter to 12% on a 4QMA basis, its lowest value in more than 13 years, since Q4, 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 Q1, dropping 0.7 percentage-points and reaching 5.6%. After 5 consecutive quarters of increasing vacancy, the Industrial markets vacancy rate has now fallen 8 straight quarters and is now well below the 10% stabilized rate. Although a large amount of new product has recently come to market, the Reno-Sparks MSA has had a healthy appetite for Industrial space.
In June 2018, the Reno-Sparks MSA’s 12MMA average weekly hours worked remained at May’s figure of 35.4. Weekly hours appear to be leveling off some after trending down since 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 June 2017. The most recent weekly hours peak happened in July 2009 at 36.8 hours, while the trough of 32.5 hours happened almost 4 years ago in September 2014.
The average price per gallon for regular unleaded gasoline in Reno-Sparks as of July 13, 2018 was $3.38, down $0.04 (-1.7%) from $3.44 the previous month. When compared to the previous year, the price of regular unleaded is up $0.45 (15.4%). Gas prices have been rising steadily and could impact resident and business spending in other areas of the local economy.
According to AAA, “The Energy Information Administration’s (EIA) latest reports detail a drop in consumer gasoline demand and a build in gasoline inventories. In fact, this was the first increase in inventories in six-weeks with a substantial addition of 3 million bbl. With a flat national average, U.S. gasoline supply and demand suggest they are balancing. But that’s not to say that we could not see spikes in demand closer to Labor Day as motorists squeeze in those final road trips.
Pump prices in states in the West Coast region are among the highest in the country: Hawaii ($3.76), California ($3.61), Washington ($3.39), Alaska ($3.36), Oregon ($3.27), Nevada ($3.19) and Arizona ($2.89). When compared to last week, all pump prices in the region are down. Arizona (-2 cents) saw the largest drop.
According to EIA’s petroleum status report for the week ending on August 3, inventories of gasoline in the region grew by 200,000 bbl. They now sit at 30.4 million bbl, which is nearly four million bbl higher than total levels at this time last year. Growing supplies will provide a cushion for price fluctuations, which could help pump prices stabilize if there are any shocks to regional supply this week.”
Per the World Gold Council, in July, the month-end spot price for an ounce of pure gold fell by almost $4 (0.3%) from June to just over $1,292 on a 12MMA basis. This puts an end to 8 months of consecutive increases, but on a YOY basis, the price of gold is up 3.5%. Despite the small dip, the YOY growth rate has generally trended upward for 2 years and is up for the last 8 months straight.
Nevada excise tax revenues generated from marijuana sales through the first 11 months are $62.6 million, with the most recent recorded month, May 2018, seeing a 8.6% increase in revenue from the previous month. May brought in about $7.1 million in combined retail and wholesale taxes, compared to $6.5 million in March. 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, tax revenue from the sale of marijuana is expected to reach $120 million in the first 2 years. Collections over the first 11 months indicate that the performance may slightly exceed the Department’s forecast.
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