Reno-Sparks MSA Hits Near-peak Employment

    As of February 2018, the RCG Employment Index’s 12-month moving average (“12MMA”) for Reno-Sparks increased to 99.3, just 0.5 points off January 2010’s record high. The pace at which Index had been rising has slowed considerably; this marks the first time it has budged in five months. What does this mean? The RCG Index compares the current employment rate to the peak employment rate via the 12-month moving average. In a nutshell, then, Reno is at about 99 percent of its peak employment rate.

    Check out all the latest Reno-Sparks metrics, below.

    r state highlights

    r positive

    r emp index

    In February 2018 the RCG Employment Index’s 12-month moving average (“12MMA”) for Reno-Sparks increased to 99.3. At just 0.5 points below the record high, the pace at which the Index had been rising has slowed considerably. This is the first time it has budged in 5 months. The Index is up 0.8 points since February 2017. It peaked 11 years ago in December 2005 at 99.8 aka 100.0. The trough of 89.6 occurred in January 2010.

    r job growth

    In February Reno-Sparks job growth remained unchanged on a 12MMA from the month prior, holding at the new record high of 5.1%. The rate of growth is 0.6 points up from that recorded in February 2017. The lowest rate of growth in the last 10 years occurred 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 climbing again to the current rate in May 2017.

    The 12MMA headline unemployment has remained at 4.1% since December of last year. This was a welcome drop after 3 straight months when it remained the same. It had been falling every month by 0.1, sometimes 0.2 points, since September 2011, but the decline began to stall in August 2017. When compared to the February 2017 headline rate of 4.8%, this February’s rate was 0.3 percentage-points lower. In comparison, the rate in Las Vegas has not changed for the last 7 months, holding at 5.1% since August 2017. Reno’s latest rate has reached rates seen before the Great Recession.

    r yoy construction

    There were 84,775 Construction jobs in Nevada in February 2018. 16,958 (20%) of those jobs were in the Reno-Sparks MSA (12MMA). This is a notable jump of 13.8% from the 14,900 jobs reported in February 2017, and 70.5% of the peak (see below). 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, a 0.1 point increase from the previous 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 largely driven by 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.

    r visitor volume

    Over a 12-month period ending in February 2018, visitors to Washoe County reached 5.16 million. YOY growth in visitation in Washoe County is outpacing growth in Clark County, where the rate of visitor growth continues to decline. We believe this is largely due to shortage of hotel rooms in Clark County.

    In February 2018, YOY growth for Washoe County was 5.1%. By comparison, the YOY growth rate in Clark County for the month of February 2018 was -1.7%. 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 2.9%. 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 and continues to grow stronger.

    r gross gaming

    Washoe County’s 12MMA YOY gross gaming revenue grew by 4.7% in February 2018. This brings total revenue up to $69.9 million, or 78% of the peak (see below). In comparison, Clark County had a YOY growth rate of 3.3% this February. The YOY growth rate for Washoe County has been positive for more than 3 years straight at an average of 2.9%.

    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% occurred in June 2006.

    r taxable sales

    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 January 2018, growth was 4.5% YOY, or 6.2 points lower than the year period ending in January 2017. When compared to December 2017, it is up 0.6 points. Taxable retail sales reached $690.6 million in January, 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 1.3 points lower 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.

    washoe taxable

    This month, we introduce a new chart into Stat Pack. It displays Washoe County taxable sales generated in a selected sample of what we are calling the “better known” activities. We hope this will give readers an insight into the level of economic activity in familiar industries. Some of these industries are not necessarily large generators of sales taxes, but we think readers will find them interesting.

    In January 2018, Retail made up 64% of taxable sales of the better known (“BK”) sectors and 61.2% of total sales in all sectors. Compared to January 2017, Retail is up 3.4 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 0.4 points from January 2017’s 15.9% of the BK sectors. Manufacturing came in at a distant 3rd place with only 5.8% of the BK set.

    home resales

    MLS home resales in Washoe County rose 4 units to 569 on a 12MMA basis to kick off 2018. When compared to January 2017, this is an increase in resales of 5.3%. For nearly 3 straight years, home sales have been increasing on a YOY basis, with the rate of growth fluctuating between 4% and 7% during the previous 6 months. The rate rose 1.2 points in January compared to December. Over the last 6 months the average YOY growth rate is 5.6%, compared to 3.8% for the preceding 6 months.

    The median sales price rose to $341,485 (12MMA) in January, an 11.6% jump from January 2017. By comparison, the Las Vegas median resale price in January jumped by 12.1% to $228,617. The looming affordability issue in both regions also applies to the resale market.

    r housing opp

    In Q4, 2017 the Housing Opportunity Index (“HOI”) for the Reno-Sparks MSA dropped 5.7 points from 49 in Q3 to 43.3 in Q4 on a four-quarter moving average (“4QMA”) basis. The U.S. index fell by just 0.1, from 59.5 to 59.4, during the same period. The Reno-Sparks 4QMA HOI is 16.1 points lower than the national number. On a YOY basis, the Reno-Sparks index fell 9.3 points from 52.6 in Q4, 2016.

    Reno-Sparks’ HOI peaked at 85.8 in Q1, 2012. It bottomed out at 17.3 in Q4, 2006 at the peak of the housing boom. The 10-year average is 63.6. The region’s latest index is now 20.3 points below the 10-year average. There could be issues in the future 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.

    r weekly earnings

    The 12MMA of the nominal average weekly wage (not adjusted for inflation) in the Reno-Sparks MSA stalled in January 2018 after 8 straight months of growth, but in February resumed its climb and is up $2 (0.26%) to $800. When considered on a YOY basis the unadjusted weekly wage is up 0.7% from $795 in February 2017.

    The inflation-adjusted (real) 12MMA wage of $684 is again up $1 from previous month’s wage, putting it -1.4% lower than the $693 recorded in February 2017. Reno-Sparks’ real wage has fluctuated between $682 and $686 for the last 10 months, unable to maintain an upward trend. In February, the region’s average weekly earnings were 2.4% higher than the Las Vegas average of $668.

    r weekly hours

    In February, the Reno-Sparks MSA’s average weekly hours fell 0.1 points from 35.6 to 35.5, continuing a downward trend that began in October 2017. On a YOY basis, weekly hours have seen little improvement from February 2017. 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 unleaded

    The average price per gallon for regular unleaded gasoline in Reno-Sparks as of April 2, 2018 was $3.13, up $0.14 (4.9%) from $2.99 the previous month. When compared to the previous year the price of regular unleaded is up $0.27 (9.5%). Gas prices have been rising steadily and could impact resident and business spending in other areas of the local economy.

    According to AAA, “Drivers in West Coast states are paying the highest pump prices in the nation: Hawaii ($3.52), California ($3.51), Washington ($3.17), Alaska ($3.13), Oregon ($3.09) and Nevada ($3.01). On the week, all drivers in these states saw an increase in prices at the pump. Arizona (+9 cents) saw the largest leap, while Hawaii (+1 cent) saw the smallest. 

    At 1.59 million b/d, last week’s total gasoline production rate is nearly 60,000 b/d less than the rate last year at this time. According to the EIA’s latest weekly report, total gasoline inventories in the region declined by 36,000 b/d last week to sit at 32.7 million bbl. However, inventories may decline further with this week’s scheduled planned maintenance at the Phillips 66 Los Angeles Refinery, which can produce up to 147,000 b/d of gasoline.”

    r gold

    Per the World Gold Council, in March, the month-end spot price of gold (ounce of pure gold) increased by a little less than $7 (0.51%) to just under $1,289 on a 12MMA basis. On a YOY basis, the price of gold is up 2.4%. It peaked in December 2012 at $1,678. Prices have been increasing on a YOY basis for the past 20 months. Though the YOY growth rate had been trending down, it has now increased for 4 straight months.

    r pot

    Excise tax revenues generated from marijuana sales through the first 7 months are $34.9 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 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 7 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.

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