The March 2018 numbers for Northern Nevada are mostly trending green. Notably, of the 85,233 construction jobs in Nevada, 16,942 (20 percent) of those jobs were in the Reno-Sparks MSA (12-month moving average/MMA). This is a jump of 12.1 percent from the 15,117 jobs reported in March 2017, driven by strong residential and commercial real estate demand, as well as shortages of housing units and industrial space.
Enjoy this month’s stats, and don’t hesitate to distribute them to interested parties.
In March 2018 the RCG Employment Index’s 12-month moving average (“12MMA”) for Reno-Sparks increased by 0.1 to 99.3. At just 0.5 points below the record high, the pace at which the Index had been rising has slowed considerably. The Index is up 0.8 points since March 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 March Reno-Sparks job growth, on a 12MMA, fell back 0.1 percentage-points from the previous month’s record high of 5.1%. The rate of growth is 0.5 points up from the 4.5% recorded in March 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%. It subsequently dropped until May 2017, when it began its ascent to the current rate.
The 12MMA headline unemployment has remained at 4.1% since January 2018. It had been falling every month by 0.1, sometimes 0.2 points, since September 2011, but the decline began to stall in May 2017. When compared to the March 2017 headline rate of 4.8%, this March’s rate was 0.7 percentage-points lower. In comparison, the rate in Las Vegas has not changed for the last 3 months, holding at 5.2% since January 2017. Reno’s latest rate has reached rates seen before the Great Recession.
The U-3 unemployment rate for Nevada, after falling in Q4 by 0.2 points, increased by 0.1 points in Q1 2018 to 5.1%. The U-3 rate is now 0.5 points above the average rate for 2007, the year the Great Recession hit. The U-6 rate fell 0.4 points from 10.8% in Q4 to 10.4% in Q1, a healthy decline that follows up last quarter’s 0.6 point drop. Nevada’s U-6 rate is still the 3rd highest in the nation, beating only New Mexico and Alaska. As shown in the chart, the spread between the two rates is generally tightening, albeit gradually, indicating that wage increases will continue to solidify.
In terms of the U-3 rate, Nevada worsened several spots in Q1 2018 and now has the 5th highest headline rate in the nation, beating 3 states and the District of Columbia. In Q4 it was beating 6 states and DC.
There were 85,233 construction jobs in Nevada in March 2018. 16,942 (20%) of those jobs were in the Reno-Sparks MSA (12MMA). While this is a notable jump of 12.1% from the 15,117 jobs reported in March 2017, compared to February 2018 construction jobs did not grow at all. Reno’s very healthy economy has produced strong residential and commercial real estate demand, and continues to contribute to an improving construction sector, but also to shortages of housing units and certain types of commercial space, especially industrial.
The latest stats show that 6.8% 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 exceptional size of the construction job sector was a consequence of the pre Great Recession real estate bubble. The sector continues to recover since bottoming out in February 2012 when there were only 8,792 construction jobs.
The annualized visitor count for Washoe County fell -0.11% from February 2018’s 5.16 million to 5.15 million in March 2018. However, YOY growth in visitation to Washoe County continues to outpace growth in Clark County, although both counties saw a drop in the YOY visitor growth rate in March. We believe the continued decline in visitors to Clark County is the result of a room shortage.
In March 2018, YOY growth for Washoe County was 4.6%. By comparison, the YOY growth rate in Clark County for the month of March 2018 was -1.9%. 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 because of the supply constrained note above.
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 4.2% in March 2018. This brings total revenue up to $70 million, or 78% of the peak (see below). In comparison, Clark County had a YOY growth rate of 2.2% this March. The YOY growth rate for Washoe County has been positive for more than 3 years straight at an average of 3%.
Gaming revenues peaked more than 11 years ago in June 2006 at $89.4 million. On an annual growth rate basis, the peak of 5.5% happened in June 2006.
While Washoe County’s economy continues to benefit from rising taxable retail sales, the YOY growth rate has dropped from a year ago. In February 2018, growth was 5.9% YOY, or 2.7 points lower than the year period ending in February 2017. However, when compared to January 2018, it is up 1.4 points. Taxable retail sales reached $696.3 million in February, 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 0.3 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.
This month we continue the introduction of a new chart for Stat Pack. It displays Washoe County taxable sales generated in a selected sample of what we are calling the “better known” (“BK”) activities. We hope this will give 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 readers will find them interesting.
In February 2018, Retail made up 63.5% of taxable sales of the BK industries and 60.8% of total sales in all sectors. Compared to February 2017, Retail is up 0.3 points as a share of BK sectors. Accommodation & Food/Beverage was the second largest (16.6% of BK sectors and 15.9% of total sales). Accommodation & Food/Beverage is down 0.3 points from February 2017’s 16.9% of the BK industries. Telecom and Media came in at a distant 3rd place with only 5.5% of the BK set, beating out last month’s 3rd place finisher, Manufacturing.
The Q1, 2018 median sales price of $368,000 for single-family home resales in the Reno-Sparks area represents a 16.8% jump YOY. Compared to the previous quarter the price grew by 5.3%. The Q1 median price is now approximately $54,730 (17.5%) greater than the $313,270 that would have resulted from using the 1990-2001 average annual appreciation rate of 4% per year. Last quarter the difference was $39,107. The Reno-Sparks median price is increasing rapidly. Housing affordability is a looming problem that should be monitored closely by public officials and community leaders for its potential negative impact on economic growth and business attraction.
MLS home resales in Washoe County in March remained even with February on a 12MMA. When compared to March 2017, resales rose by 6.1%. For just over 3 straight years, home sales have been increasing on a YOY basis, with an average rate of growth of 4.1%. The rate rose 0.3 points in March compared to February. Over the last 6 months the average YOY growth rate is 5.5%, compared to 4.7% for the preceding 6 months.
The median sales price rose to $350,365 (12MMA) in March, a 12.9% jump from March 2017. By comparison, the Las Vegas median resale price in March also jumped by 12.9%; However, the Las Vegas price is much lower at $234,117. The looming housing affordability issue in both regions also applies to the new home market.
The 12MMA of the nominal average weekly wage (not adjusted for inflation) in the Reno-Sparks MSA grew $2 in March 2018 to $802, making 9 straight months of growth. When considered on a YOY basis the unadjusted weekly wage is up 1% from $794 in March 2017.
The inflation-adjusted (real) 12MMA wage for March 2018 of $684 is even with the previous month’s wage, but is -1% lower than the $691 recorded in March 2017. Reno-Sparks’ real wage has fluctuated between $682 and $686 for the last 11 months, unable to maintain an upward trend. In March, the region’s average weekly earnings were 2.4% higher than the Las Vegas average of $669. The real wage peak of the last 10 years occurred in May 2016 when it was $730.
In March 2018, the Reno-Sparks MSA’s average weekly hours fell 0.2 points from 35.6 to 35.4, continuing a downward trend that began in October 2017. On a YOY basis, weekly hours are down -0.2 from March 2017. The 8-year peak happened in July 2009 at 36.8 hours, while the trough (8-year) of 32.5 hours happened 3½ years ago in September 2014.
The average price per gallon for regular unleaded gasoline in Reno-Sparks as of May 2, 2018 was $3.36, up $0.23 (7.3%) from $3.13 the previous month. When compared to the previous year the price of regular unleaded is up $0.47 (16.3%). Gas prices have been rising steadily and could impact resident and business spending in other areas of the local economy.
According to AAA, “Pump prices in the West Coast region are among the highest in the nation: Hawaii ($3.61), California ($3.61), Washington ($3.29), Alaska ($3.25), Nevada ($3.23) and Oregon ($3.19). On the week, prices in the region are mostly up; with Nevada (+7 cents) leading the way and Alaska (+2 cents) seeing the smallest gain.
When looking at year-on-year increases, California (+62 cents) tops the list of all states in the country, followed by Arizona (+55 cents), Hawaii (+54 cents), Nevada (+52 cents), Oregon (+43 cents), Washington (+38 cents) and Alaska (+32 cents).
For the fifth consecutive week, gasoline stocks in the region have fallen. At 29.6 million bbl for the week ending on April 20, inventories in the region are at their lowest point since November 2017. Although stocks are below the level they were at last year, they are still higher than the five year average for the region.
Per the World Gold Council, in April, the month-end spot price of gold (ounce of pure gold) increased by a little more than $4 (0.36%) to just under $1,293 on a 12MMA basis. On a monthly basis, gold prices have increased for 6 months straight. On a YOY basis, the price of gold is up 2.9%. Prices have been increasing on a YOY basis for the past 21 months. Though the YOY growth rate had been trending down, it has now increased for 5 straight months. The price of gold peaked in December 2012 at $1,678.
Various sources often report employment-to-total population ratios, but that metric muddles the true ratio of workers to working-age population, because U.S. society is aging and the share of non-retirees is shrinking. Therefore, we present the employment-to-adult-working-age population ratio. This relates jobs the population cohort that is actually expected to work. It more accurately describes the employment situation in the region.
This chart shows that the region’s employment-to-adult-working-age population ratio saw its biggest increase in 2017 (+.016) since bottoming out in 2010. The most recent ratio is still well short of the 2007 peak 0f 0.521. It went as low as .455 during the depths (2010) of the Great Recession.
Excise tax revenues generated from marijuana sales through the first 8 months are $41.9 million. The $5.9 million in marijuana excise tax collected for the month of February 2018 was the biggest take since recreational legalization in July 2017. 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 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 over 2 years. Tax revenues through 8 months are right on track to meet the 2-year 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 nationally.