Economy Watch Study Figures Show a Robust Economy in New Mexico
By Winthrop Quigley
Journal Staff Writer
Routine revisions to job data show the state's economy finished 2005 much stronger than previously thought, according to the semiannual Economy Watch study by the University of New Mexico prepared for the Journal.
A first pass at evaluating employment numbers in December, which include employer survey results, showed 2005 job growth at 2 percent. As more reliable numbers have become available, including payroll data, it appears New Mexico job growth was a 2.4 percent in 2005, said Lee Reynis, director of the university's Bureau of Business and Economic Research, which did the report.
Upward revisions of this magnitude suggest a meaningful turn-around in economic performance, Reynis said.
Better yet, she said, growth accelerated as 2005 went on, reaching 2.6 percent in each of the last two calendar quarters.
New Mexico's economy added 20,500 jobs between the fourth quarter of 2004 and the fourth quarter of 2005. Albuquerque added 8,000 jobs in the same period.
Construction once again drove much of the city's and the state's job growth. Statewide, 4,200 construction jobs were added. Albuquerque added 2,200 construction jobs. Much of this job growth is driven by public projects, including transportation projects and the city's San Juan-Chama water project. Those projects, in turn, are fueled by oil and gas tax windfalls, Reynis said.
The oil and gas sector added 1,600 new jobs in New Mexico last year.
Home construction is slowing. "We're looking at declines in (home construction) permits within Albuquerque and in the state as a whole as we go forward," Reynis said. February data show home prices are slipping. "We have run up against the limits of affordability," she said.
Factory construction, on the other hand, may be poised for some growth. Businesses nationally have hoarded cash for some time. They have been willing to buy equipment but not to expand factory space. "The expectation in the national forecast is that we're going to see more investment in plant," Reynis said.
Not that New Mexico needed much new factory space. The state added 200 manufacturing jobs through 2005.
"We're expecting a real resurgence in the manufacturing sector in 2006," Reynis said. Given manufacturing projects already in the pipeline— some small expansion at Intel, new activity at Eclipse Aviation and other projects— the sector should add 2,000 jobs this year.
The state's emerging high-tech sector should contribute to the manufacturing activity, and that is very good news, Reynis said.
While mature manufacturers with well established, easily duplicated processes will always look for low-cost labor and will always find it off shore. New Mexico is seeing growth in lasers, solar energy, biotechnology and nanotechnology, all areas that require innovation and skilled labor. Those jobs aren't as easily exported, Reynis said.
An indication of the importance of the high-tech manufacturing subsector shows up in employment numbers for professional and business services. "If you're looking at an economy that is supposedly high tech, you want to see growth in that area," Reynis said. The state added 2,000 jobs there in 2005, all but 800 of them in Albuquerque.
Personal income statewide grew 6.6 percent between the fourth quarters of 2004 and 2005, which helps account for the increase in retail and wholesale trade employment. "That sector depends on all these other things," Reynis said. "You've got to have dollars coming into the state from mining and manufacturing and (research and development) to help support that over all sector."
Retail trade employment grew by 2,200 jobs, and wholesale employment grew 600 jobs statewide.
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