Job growth in the Rocky Mountain region has slowed over the past year, according to recent surveys by the Federal Reserve Bank of Kansas City. The latest edition of the Rocky Mountain Economist examines employment outlooks, compensation strategies, and staffing decisions among regional firms as reported in the Kansas City Fed Manufacturing and Services Surveys.
Businesses in Colorado, Wyoming, and New Mexico are signaling a shift toward stable employment levels for 2026. About 30 percent of businesses surveyed in November 2025 expect to increase their headcount over the next year, down from nearly 50 percent at the end of 2024. In September 2025, that figure was at 40 percent. Meanwhile, more firms anticipate reducing employment: 31 percent expect lower employment levels in 2026 compared with just 12 percent who said so for 2025.
The reasons behind hiring have also changed. At the end of last year, many companies were hiring to address overworked staff or fill specific skill gaps. Now, fewer firms report these constraints; only those expecting demand growth plan to expand their workforce in 2026. More businesses now cite declining demand as a primary factor limiting hiring activity.
Wage increases are also slowing across the region. Businesses are less likely to raise wages for new hires or existing employees than they were in previous years. Approximately one-third of surveyed firms plan to keep wages flat for new hires in the coming year—a higher proportion than seen in both 2023 and 2024. Only about 16 percent intend to implement wage increases for select job categories, compared with nearly double that share previously.
For current employees, roughly 29 percent of businesses will maintain wage increases at rates similar to recent years; however, almost one-fifth plan slower raises and nearly a quarter expect no increase at all. This trend reflects a broader move toward cost-of-living adjustments rather than competitive wage hikes aimed at attracting or retaining workers.
Most firms have not actively reduced their workforce recently but are instead letting positions go unfilled when employees leave or by closing job openings without backfilling them. In the past three months, only about 11 percent reported selective layoffs while just four percent cited hiring constraints as a reason for falling headcount.
Labor markets throughout much of this year have been described as “low-hire, low-fire,” marked by reduced turnover and limited hiring activity both regionally and nationally.
Looking ahead into next year, businesses on average expect little change in overall workforce size though some may continue passive reductions by not filling open roles left vacant through attrition or other means. The momentum behind job growth is weaker going into 2026 than it was a year ago; whether labor markets remain resilient will depend on future economic developments.
“The views expressed are those of the authors and do not necessarily reflect the positions of the Federal Reserve Bank of Kansas City or the Federal Reserve System.”
