Northern NV continues positive economic trends

    Here are all the latest stats and graphs for the Reno-Sparks MSA. As always, don’t hesitate to contact RCG Economics chief John Restrepo at with questions or comments.

    r stat highlights

    r positive

    r emp index

    The RCG Employment Index’s 12-month moving average (“12MMA”) for Reno-Sparks remained at 99.2 in November, establishing a trend over the past 6 months whereby the Index rises 0.1 every two months. At just 0.6 points away from the record high, the pace at which the Index had been increasing has slowed considerably. The Index is up one point since November 2016. The Index peaked 11 years ago in December 2005 at 99.8. The trough of 89.6 occurred in January 2010.

    r job growth

    Reno-Sparks job growth on a 12MMA is dropping fast, falling another 0.4 points in November from 3.1% to 2.7%. The rate of growth is 2.2 points lower than that recorded in November 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 below this number and continues slipping.

    The 12MMA of the headline unemployment rate is still stalled out at 4.2% in November, making this the 2nd month that the rate has remained unchanged. The rate had been falling reliably every month by 0.1, sometimes 0.2 points, since September 2011, but the decline began to stall in August of this year. When compared to the November 2016 headline unemployment rate of 5.1%, this November’s rate was 0.9 percentage-points lower. For the sake of comparison, the headline unemployment rate in Las Vegas has not changed for the last 3 months, holding at 5.1% since August. Reno’s unemployment rate is very near rates seen before the Great Recession.

    r yoy construction

    There were 84,417 construction jobs in Nevada recorded for November 2017. 15,200 of those were in the Reno-Sparks MSA (12MMA). This is 5.4% more than the 14,417 jobs reported the previous year in November 2016, and 63.2% 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% of the region’s payroll job-base is in construction, down 0.2 points from last month. 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. However, construction jobs were artificially inflated due to the housing bubble. The sector continues to recover since bottoming out in February 2012 when there were only 8,792 construction jobs.

    r visitor

    Over a 12-month period ending in November 2017, on an annualized basis, visitors to Washoe County reached 5.13 million. YOY growth in visitation to Washoe County continues to outpace growth in Clark County, where visitor growth continues to decline. In November 2017 YOY growth was 4.8%. By comparison, the YOY growth rate in Las Vegas for the month of November was -1.4%. Early in 2016, 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 nearly 3 straight years, since January 2015, at an average rate of 2.7%. 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%. Despite earlier challenges, the Reno-Sparks hospitality industry has made important gains.

    r gross gaming

    Washoe County’s 12MMA YOY gross gaming revenue grew by 2.8% in November 2017. This brings total revenue up to $68.7 million, or 77% of the peak (see below). The YOY growth rate has been positive for 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.

    r taxable retail

    While Washoe County’s economy continues to benefit from rising taxable retail sales, the YOY growth rate has fallen considerably from a year ago. In October 2017, the rate of growth was 6.0% YOY, or 3.8 points lower than the year period ending in October 2016. When compared to the month prior, it is down 0.4 points. Taxable retail sales reached $679.4 million in October, having already surpassed, in March 2016, the previous peak on a nominal basis (not inflation-adjusted). As the chart shows, Washoe’s taxable sales growth is very near the state average at just 0.6 points below.

    Success in business attraction and retention is driving the region’s economy and is the primary cause of growth in taxable retail sales, though increasing visitation has also contributed.

    Note: It will be interesting to see how adult-use marijuana sales will pan out relative to the taxes they will generate. The first of month of reporting occurred this July, but there has been a delay in releasing the data to the public. While still small relative to Nevada’s revenue-base, we will begin tracking the contribution that these sales are making to the base as soon as the data are available, likely next month.

    r home resales

    MLS home resales in Washoe County remained at 568 units in November 2017 on a 12MMA basis. When compared to November 2016, this is an increase in resales of 5.1%. For more than 2½ straight years now home sales have been increasing on a YOY basis, though the rate of growth has been fluctuating between 4.5% and 7.0% over the previous 6 months, with the rate falling 1.7 points in November compared to October. Over the last 6 months the average YOY growth rate is 5.8%, compared to 3.2% for the preceding 6 months. The median sales price rose to $333,151 (12MMA) in November, a 9.9% increase from November 2016. By comparison, the Las Vegas median resale price in November increased by 9.7% to $222,992. The looming affordability issue also applies to the resale market.

    r weekly earnings

    The 12MMA of the average weekly wage (not adjusted for inflation) in the Reno-Sparks MSA is up $1 (0.29%) in November to $795. This is the 5th consecutive month when growth was positive after 11 months of negative growth. When considered on a YOY basis the unadjusted weekly wage is down -1.4% from $806 in November 2016.

    The inflation-adjusted 12MMA wage of $683 is also up $1 from previous month’s real wage, putting it -3.4% lower than the $707 recorded in November 2016. This was the first month of real wage growth since May 2016. In November Reno-Sparks’ average weekly real earnings are now just 2.1% higher than the Las Vegas average of $669.

    r weekly hours

    In November Reno-Sparks MSA’s average weekly hours were unchanged from October, when they experienced a drop of 0.1 points from 35.9 to 35.8. Despite last month’s decline in average weekly hours, the general trend since October 2014 has been upward. When compared to November of last year, weekly hours are up 0.6 hours from 35.2. The 8-year peak occurred in July 2009 at 36.8 hours, while the trough (8-year) of 32.5 hours occurred 3 years ago in September 2014.

    r fuel

    The average price per gallon for regular unleaded gasoline in Reno-Sparks as of January 4, 2018 was $2.84, down $0.05 (-1.8%) from $2.89 the previous month. However, when compared to the previous year the price of regular unleaded is up $0.18 (6.8%).

    According to AAA, “Gas prices in the West Coast region remain among the most expensive in the country… According to EIA’s latest weekly report, the region’s refinery crude utilization rate hit a new record high at 96.3 percent, which is the highest level since the mid-2010s and well above the 80 percent rate seen at this time last year. In addition, gasoline inventories continue to measure above 30 million bbl. for a third week, positioning the region with a comfortable supply level as the year begins.”

    r gold

    Per the World Gold Council, in November, the end-of-month spot price of gold (ounce of pure gold) increased by nearly $9 (1.1%) to just under $1,254 on a 12MMA basis. Gold prices had gone up 14 straight months, from February 2016 to March 2017, but over the last 8 months the price has wobbled up and down with a net change of -$3. On a YOY basis, the price of gold is up 1.1%. It peaked in December 2012 at $1,678. Prices have been increasing on a YOY basis for the past 13 months, though the YOY growth rate has been trending down and is now the lowest it has been since July 2016.

    r pot tax

    Tax revenues generated from marijuana sales through the first four months are $19.1 million. The most readily available data 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 dispensaries’ recreational users. According to the Department, tax revenue from the sale of marijuana is expected to reach $120 million over 2 years. With tax revenue only expected to rise in the coming months, the state appears to be well on track to reach this goal. The major “know unknown” is if the U.S. Justice Department will go through with its threats of curtailing or putting a halt to the industry’s activities.

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