Colorado's economy looks strong heading into 2023, with record employment levels in 2022 expected to continue in the next 12 months and several strong industries here to propel the state through recession worries, according to the 2023 Colorado Business Economic Outlook by University of Colorado Boulder’s Leeds School.
This year is expected to be a record one for employment, so the state is likely to sustain job growth into 2023, according to the report released Monday. Colorado is expected to gain 57,100 jobs, an increase of 2%, in 2023 with nine of out 11 business sectors to grow employment levels. But report authors cautioned the shortage of available workers, inflation, increased borrowing costs and supply chain disruptions will continue to present challenges.
The natural resources and mining industry will likely see the quickest growth in percentage terms, but professional and business services are expected to add the most jobs. Population growth will continue to rise with the addition of an estimated 55,500 people — about 35,000 of which will come from net in-migration, according to the State Demography Office.
This forecast is put together by CU Boulder’s Leeds Business Research Division, which held the 58th annual Colorado Business Economic Outlook Forum in downtown Denver on Monday.
“We forecast employment numbers to grow in nine of Colorado’s 11 industries in 2023,” Richard Wobbekind, senior economist at the Leeds School of Business, said in a news release. “The two exceptions are the construction and financial activities sectors, which are navigating the accentuated ill effects of rising interest rates.”
Breakdown by industry
Each industry will face unique challenges in 2023. Here is a forecast breakdown for each, according to the report:
Agriculture: High production costs and drought concerns will continue to be the biggest issues in 2023. While the cost of farmer’s products has gone up, so has the cost of input needed to produce. Colorado’s net farm income is projected to fall to $772 million next year, the lowest it’s been in 20 years, according to the report.
Natural Resources and Mining: Due to increased oil and gas pricing during this year, this sector is expecting a strong 2023. The estimate in the report of Colorado’s Natural Resources and Mining sector value for 2022 is $27.8 billion, which is over double its valuation of 2020.
Construction: According to the report, total construction activity is estimated at $23.7 billion in 2022,a decrease of about 1.5% from 2021. Rising mortgage rates are expected to slow down the single-family housing market, but there are hopes for Colorado serving as an attractive place for primary and secondary homes. Non-residential building will remain steady and nonbuilding construction is expected to increase due to more state and federal funding.
Manufacturing: This year, employment in the manufacturing sector fully rebounded and then went over pre-pandemic levels. This sector remains strong in renewable energy investments, breweries, cannabis products, aerospace and health care, according to the report. Growth is expected to slow in 2023.
Trade, Transportation and Utilities: Worker shortages will remain the most significant challenge for this industry in 2023. However, the return of travel and retail trade sales will strengthen employment next year.
Information: Digitization, automation and data have either hurt or helped this sector. There is a continued demand for connectivity and infrastructure, which has increased with the remote workforce. Data processing and hosting are a large area for growth in the state. Employment is expected to shift and continue growth.
Financial Activities: This industry underperformed others in 2022 due to higher interest rates, supply chain issues, consumer prices and geopolitical stress, according to the report. Employment is expected to decrease in 2023.
Professional and Business Services: This is the largest private sector, accounting for 20% of total employment in the state. Employment increased by 5.2% in 2021 and continued to grow in 2022. The current outlook is favorable for this sector in 2023.
Education and Health Services: Behavioral health services continued to see a surge in need due to the pandemic, which resulted in an increased turnover at all staffing levels. Education is being forced to adjust to online learning demands and closures. Employment increased in 2021, but began seeing a downward trend this year — which is expected to continue in 2023.
Leisure and Hospitality: The industry is expected to gain employment in 2023 at a moderate pace. The outdoor recreation and skiing sectors are aiding the success of this industry.
Government: Employment continued to recover this year, but entities were impacted by challenges like labor force shortages, supply chain issues and increased costs. The proposed 2023-2024 state budget, along with funding from the Jobs Act and Inflation Reduction Act, will likely help this sector remain stable in 2023.
Other Services: This sector will benefit from other businesses and average life returning to normal in 2023. Person-to-person interaction allowed this industry to come back from the issues brought on by the pandemic recession.