Contacts: Larry Waldman, (505) 277-7077 Steve Carr, (505) 277-1821

October 4, 2002 NEW MEXICO ECONOMIC GROWTH SLOWS AND WILL SLOW FURTHER Growth in the New Mexico economy continued to slow during the second quarter of 2002 due to several factors according to the University of New Mexico’s Bureau of Business and Economic Research (BBER). A weak national economy, numerous layoffs and firm closings and a tourism sector still impacted by the events of Sept. 11, 2001, are among the causes of anemic growth. A statewide drought has also contributed. Nonagricultural employment growth fell to only 0.6 percent, down from 0.9 percent in the first quarter of the year. Employment growth has been shrinking since the first quarter of 2001, when it reached 2.4 percent. New Mexico personal income growth remained surprisingly strong posting a 5.5 percent gain in the first quarter of 2002. The second quarter unemployment rate, seasonally adjusted, jumped to 6.1 percent from 5.0 percent in the first quarter. Each of the three primary industries in the state, mining, manufacturing and construction, are in dire straits. Mining employment was 8.2 percent lower than a year ago, with a loss of more than 1,300 jobs. Manufacturing employment was down 3.2 percent, a reflection of numerous layoffs and plant closings during the last year. In the construction sector, employment growth peaked at just over 5.0 percent at the close of 2000 and into 2001, stimulated by a strong housing market, a major capital expansion at the Intel plant in Rio Rancho, the renovation of the Big-I interstate highway intersection and the usual spate of public construction. However, construction employment growth began to slow rapidly in the second half of 2001, as parts of the Intel expansion wrapped up and other projects came to a close. Overall, construction employment dropped 5.5 percent in the second quarter of 2002. The most robust sector in the second quarter was in the government area, which enjoyed a 3.6 percent employment gain. Employment at all levels of government increased. State government employment was up 2.0 percent, reflecting more than anything else expansion at the Los Alamos National Laboratory. Employment in the Federal government was up 3.7 percent, with the gains appearing all over the state, particularly at military bases, according to the New Mexico Department of Labor. Some of the additions were firefighters. At the local level, employment increased 4.6 percent with 4,333 jobs. Of those, about half were in education, while the remainder came in Native American enterprises, mostly casinos and resorts, and in the administrative component of local government. The government sector is providing the major impetus for employment growth in the New Mexico economy, although the services sector is also contributing. Very modest growth is in store for the New Mexico economy during the next four quarters, with an acceleration in growth expected to begin in the second half of 2003. Nonagricultural employment growth will average only 0.4 percent from the third quarter of 2002 through second quarter of 2003, before climbing to the neighborhood of 1.5 percent. For calendar year 2002, employment growth will reach only 0.6 percent, followed by increases of 0.8 percent in 2003 and 1.8 percent in 2004. New Mexico personal income growth will also be subdued, with expected gains of 4.6 percent this year, 4.3 percent next year, and 5.1 percent in 2004. The unemployment rate will jump to 6.1 percent in 2002 and 6.2 percent in 2003 before easing to 5.6 percent in 2004. This year in New Mexico, shrinking employment in mining, manufacturing and construction will place a substantial restraint on economic growth. The major impetus for expansion will come from the government sector. Next year, government growth will subside, but manufacturing and construction employment will level off and mining will exhibit a little growth. By 2004, all sectors will have more-or-less recovered, with no sector enjoying less than a 1.0 percent gain. For more information contact BBER’s Larry Waldman at 277-7077 or e-mail at lwaldman@unm.edu. # # #

The University of New Mexico
Public Affairs Department
Hodgin Hall, 2nd floor
Albuquerque, NM 87131-0011
Telephone: (505) 277-5813
Fax: (505) 277-1981