The Stat Pack
Here are the latest updates to the Northern Nevada economic metrics we track, so you don’t have to. As always, feel free to reach out to John Restrepo at email@example.com with questions.
In May 2018 the RCG Employment Index’s 12-month moving average (“12MMA”) for Reno-Sparks ticked up to 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 May Reno-Sparks job growth, on a 12MMA, dropped 0.2 points from 5.0% to 4.8%. The rate of growth is up 0.2 points up from the 4.6% recorded in May 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 held at 4.0% in May. When compared to the May 2017 headline rate of 4.7%, this May’s rate was 0.7 percentage-points lower. In comparison, strong job numbers for the Las Vegas MSA resulted in a 0.1 point decline in the unemployment rate there after 4 consecutive months at 5.2%. Reno has reached rates seen before the Great Recession.
There were 86,083 construction jobs in Nevada in May 2018. 16,925 (19.7%) of those jobs were in the Reno-Sparks MSA (12MMA). While this is a notable jump of 8.4% from the 15,608 jobs reported in May 2017, over February and March of this year, construction jobs were unchanged, and compared to April, construction jobs actually fell slightly by 17. 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 7.3% 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 70.4% 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 Great 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 0.22% from April 2018’s 5.14 million to 5.15 million in May. With a YOY visitation growth rate of 3.7%, Washoe County continues to outpace growth in Clark County, which had a visitation growth rate in May of -1.8%. 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 more than 3 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 5.2% in May 2018. This brings total revenue up to $70.5 million, or 79% of the peak (see below). In comparison, Clark County had a YOY growth rate of 2.7% this May. 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 April 2018, growth was 6.9% YOY, just 0.1 points higher than the year period ending in April 2017. Compared to March 2018, the YOY growth rate is up 1.2 points. Taxable retail sales reached $705 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 2.2 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 above chart displays Washoe County taxable sales generated in a selected sample of what we are calling the “better known” (“BK”) activities. We hope this gives our readers an insight into the level of economic activity in familiar industries. Some of these sectors are not necessarily large generators of sales taxes, but we think our readers will find them interesting. What is also interesting are the differences between Washoe and Clark Counties.
In April 2018, Retail made up 64.1% of taxable sales of the BK industries and 61.3% of total sales in all sectors. Compared to April 2017, Retail is up 1.3 points as a share of BK sectors. Accommodation & Food/Beverage was the second largest (15.5% of BK sectors and 14.8% of total sales). Accommodation & Food/Beverage is down 1.3 points from April 2017’s 16.8% of the BK industries. Manufacturing came in at a distant 3rd place with 6.4% of the BK set.
The 12MMA of the nominal average weekly wage (not adjusted for inflation) in the Reno-Sparks MSA grew $5 in June 2018 to $813. June was the 12th consecutive month of growth. When considered on a YOY basis the unadjusted weekly wage is up 2.8% from $791 in June 2017.
The inflation-adjusted (real) 12MMA wage for June 2018 of $688 is up $2 from the previous month’s wage. June’s wage is $3 higher than the wage recorded in June 2017. Reno-Sparks workers saw little wage growth over the year, a long-running problem for workers across the US. This has received attention by economists for some time. It is partially a function of the growth of the “gig economy” plus ongoing automation trends.
In June, the region’s average weekly earnings were 2.5% higher than the Las Vegas average of $671. Reno-Sparks’ real wage has fallen considerably from the $730 peak in May 2016, just over 2 years ago.
In May 2018, the Reno-Sparks MSA’s average weekly hours gained back the 0.1 hours that it had lost in April, resulting in average weekly hours of 35.4. Weekly hours had been trending down and this was the first month that they increased since June 2017. Conversely, weekly hours in Las Vegas have been trending slowly upward, but in May saw a 0.1 hour decrease. On a YOY basis, weekly hours for Reno-Sparks are down -0.3 from May 2017. The most recent weekly hour’s peak happened in July 2009 at 36.8 hours, while the trough of 32.5 hours happened over 3 years ago in September 2014.
The average price per gallon for regular unleaded gasoline in Reno-Sparks as of July 13, 2018 was $3.44, down $0.02 (-0.7%) from $3.46 the previous month. When compared to the previous year the price of regular unleaded is up $0.51 (17.2%). Gas prices have been rising steadily and could impact resident and business spending in other areas of the local economy.
According to AAA, “Total crude oil stocks fell an astonishing 12.7 million bbl last week. The Energy Information Administration (EIA) has not recorded a decline of that size since October 2016. EIA data measures stocks at 405.2 million bbl, which are roughly 90 million bbl lower than they were at this time last year. This puts a continued spotlight on tightening U.S. supplies, which are likely to continue dropping as domestic demand for gasoline holds strong while crude and gasoline exports from the U.S. remain robust. If these trends continue amid high global crude demand, oil prices may continue riding high and contribute to increased pump prices throughout the summer and possibly into the fall.
Pump prices in the West Coast region are among the most expensive in the country: Hawaii ($3.73), California ($3.66), Washington ($3.44), Alaska ($3.40), Oregon (3.32), Nevada ($3.24) and Arizona ($3.00). Most prices in the region have declined on the week, with Arizona (-2 cents) leading the group.
Inventories of gasoline in the region fell for a third consecutive week, according to the Energy Information Administration’s (EIA) petroleum status report for the week ending on June 29. Dropping by nearly 150,000 bbl, total inventories now sit at 30.5 million bbl. However, inventories are approximately 2.2 million bbl higher than they were at this point last summer, which will likely help prices stabilize if there are any major supply disruptions in the region this week.”
Per the World Gold Council, in June, the month-end spot price of gold (ounce of pure gold) increased by less than $1 (0.05%) to just over $1,296 on a 12MMA basis. On a monthly basis, gold prices have increased for 8 months straight. On a YOY basis, the price of gold is up 3.3%. Despite last month’s small dip, the YOY growth rate has been trending up for 6 months straight. Prices have been increasing on a YOY basis for the past 23 months.
Nevada excise tax revenues generated from marijuana sales through the first 9 months are $55.5 million, with the most recent recorded month, April 2018, seeing a -7.69% decline in revenue from the previous month. April brought in about $6.6 million in combined retail and wholesale taxes, compared to $7.1 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 point of sales at 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 to only 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 10 months indicate that the Department’s forecast is right on track.
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