Colorado’s unemployment rate rose to 4.4% last month, up one-tenth of a percentage point and the highest in three years. At the same time, there are fewer job openings and fewer people filing to start a new business.
While that seems like the opposite direction state officials prefer, there were some positives and additional context to better understand what happened, Secretary of State Jena Griswold said during a news conference Monday.
“Job and GDP growth numbers are encouraging and indicate the economy is stabilizing after several years of inflation,” Griswold said. “Colorado remains in a strong economic position and the state and national outlook is positive.”
The state added jobs last year — an average of 4,500 new jobs per month. At 3.3 million, the state’s labor force is the biggest it’s ever been. Denver-area inflation was down to 2% last month. New business filings in Colorado fell 0.4% in the fourth quarter from a year ago, but renewals were up 6.5%, so companies are sticking around, she said.
But the rising unemployment rate is a concern for area economists. The state’s jobless rate also went the opposite direction of the nation’s, which fell one-tenth of a point to 4.1% in December.
“On one hand, we’re seeing continued job growth. We’re seeing wage growth and income growth and GDP growth and so on. All that is pointing to continued expansion of the economy,” said Brian Lewandowski, executive director of the Business Research Division at the University of Colorado’s Leeds School of Business.
“But we do need to pay attention to this rising unemployment rate at 4.4%, compared to 3.7% a year ago at the same time,” he said. “We need to be watching this closely to understand if it’s starting to point to some new underlying slowing in Colorado’s labor market. I wouldn’t pretend that a 4.4% and rising unemployment rate is simply OK.”
At 4.4%, that’s lower than the 5.19% average over the past 50 years. But it’s higher than the 10-year average of 3.86%, which includes the extreme spikes during the COVID pandemic.
Fellow CU economist Richard Wobbekind said the data is showing some weakness but other bits can be interpreted as a good thing. Fewer job openings mean that employers have found the workers they need. Currently, there are about 1.2 job openings for every unemployed Coloradan. Back in the pandemic recovery, when employers complained about worker shortages, there were often 2.5 jobs and up to 3 job openings for every person looking for one.
“Perhaps when we look at this data down the line we’re going to say, ‘Well, this was good news because there was a more plentiful labor force,’” Wobbekind said.
Cynthia Eveleth-Havens, a spokesperson for the Colorado Chamber of Commerce, said that it’s still a challenge to find workers, even if the economy has improved.
In a Chamber survey of 169 employers in December, 41% of the companies said they still had open positions that are difficult to fill. That’s better than the 48% who said the same thing in 2023 and the 66% in 2022.
But the survey also revealed that companies are holding back on increasing their workforce in the new year. In 2022, 48% had plans to increase their workforce. This year, it’s 29%.
“There’s certainly more balance in the job market when it comes to filling open positions, but we’re finding that there’s still a strain on employers,” Eveleth-Havens said.