The Colorado Department of Labor and Employment on Monday published an employment report for January after the U.S. Bureau of Labor Statistics lifted an unprecedented exclusion of its data.
Federal labor statisticians stopped using the state’s employment data in November following quality concerns tied to the state’s modernization of its unemployment insurance system in the third quarter of 2023. The new and more advanced system, rather than improving premium reporting and data gathering, had lower compliance rates, which made counts less reliable.
Last month, the BLS started accepting data from the state’s unemployment insurance system for inclusion in the Quarterly Census of Employment and Wages or QCEW. Once it was confident again in that key report, the BLS recalibrated state payroll counts through the third quarter and gave a green light for monthly job estimates going forward.
The QCEW helps benchmark employment counts, and revisions made earlier this year show the Colorado economy wasn’t as robust as first thought. Employers added 33,200 non-farm jobs in 2024 rather than the 48,600 calculated from the less reliable estimates. And the state’s annual unemployment rate for 2024, initially estimated at 3.9%, came in at a higher 4.3%.
Revisions took the state’s job growth rate from 1.6% to 1.1%, underperforming the U.S. pace of 1.4%, and that underperformance is carrying into 2025.
The state’s unemployment rate ticked up to 4.7% from 4.6% in December and 3.8% at the start of 2024. Colorado is solidly above the 4% rate measured nationally. There were an estimated 152,772 people actively looking for work in the state, compared to 124,624 in January 2024.
Employers added 3,900 jobs between January and December, based primarily on strong hiring in the public sector, which added 2,100 jobs and educational and health services, which added 2,500. Construction shed 2,400 jobs while leisure and hospitality dropped 1,000.
“All jobs are important; however, there was an increase of 2,100 government employees. In other words, private sector job growth was weak,” said Broomfield economist Gary Horvath.
Since January 2024, employers in the state have added an estimated 22,600 net jobs, with the private sector growing by 7,600 and governments adding 15,000 jobs. The Trump administration is looking to cut federal headcounts and will likely be sending less money to support state and local governments. The state is also staring down a $1 billion budget shortfall which could impede future hiring.
The biggest private sector gains in the past year have come in educational and health services, up 5,900; trade, transportation, and utilities, up 4,400, and leisure and hospitality, up 3,400. The biggest declines are in three higher-paying sectors — professional and business services, down 4,000; information, down 3,200, and financial activities, down 2,000.
Colorado’s annual job growth rate is running at 0.8% in January versus the U.S. rate of 1.3%.
“One month does not make a year; however, it is necessary to have increased employment levels to help reduce the state government’s budget shortfall,” Horvath warned.