March 2012

Warm Weather Dampened the Tourism Industry

[innerindex]In February, the Coos Index fell for the 10^th consecutive month on a monthly year-over-year basis. The percentage decline was the largest since October 2009. All four available indicators fell on a monthly year-over-year basis. The unusually warm weather dampened the expansion of the tourism industry. Estimated rooms and meals revenues, the only indicator that is up from the pre-recession level, declined for the first time since November 2009 on a monthly year-over-year basis. The manufacturing sector continued to struggle; industrial electricity sales fell nine months in a row. The labor market showed no signs of sustained improvement; both number of employed residents and estimated wages and salaries remained down from prior year. Data on Saturday traffic counts has not been released since the last year. The New Hampshire Department of Transportation explained that they were experiencing some technical difficulties with the traffic recording equipment. The Index was computed assuming no change in Saturday vehicle traffic counts from last December.

The revised data, after the New Hampshire Department of Employment Security’s annual benchmarking activities, showed that the strength of the State economy’s recovery had not been as strong as previously reported. In February, the State Index grew eighteen months in a row on a monthly year-over-year basis. But the pace of the growth ticked down for the second month in a row. The labor market grew but showed some signs of strain; number of employed residents increased on a monthly year-over-year basis, but its pace of growth declined for the first time since May 2011. Although it’s still too early to tell, the decline in the growth is worrisome considering that the level of employment still remained below the prerecession level and the current growth rate was only 1% compared to 1.9% at the peak of the 2001-2007 expansion. The manufacturing sector remained a major drag on the recovery; industrial electricity sales fell five months in a row on a monthly year-over-year basis. The housing sector, despite the increasing volume of home sales, was yet to see a turnaround in home prices. The sustainable recovery entails a boost from the broader economy.

The real estate market analysis can be found at the end of this report.

Coincident Index

The Coos Coincident Index, which tracks the current state of the Coos economy, edged down to 89.6 in February from January’s revised value of 89.7. On a monthly year-over-year basis, the Index declined for the 10^th month in a row.

The New Hampshire Coincident Index ticked up to 96.4 in February from January’s revised value of 96.3. The year-over-year growth of the Index slowed a bit.

How strong are the forces of change?

In February, the Coos Coincident Index fell for the 10^th month in a row on a monthly year-over-year basis. All four available component indicators were down from their February 2011 levels. The pace of decline was the largest in two years. The State Index increased 18 months in a row on a monthly year-over-year basis. Three out of four available component indicators remained up from prior year. Its monthly year-over-year growth decelerated for the second month in a row.

Household Employment

Household employment measures the number of employed residents. In contrast to non-farm payroll employment that is more commonly used in the national and state indexes, household employment includes self-employed, unpaid domestic help and both farm and non-farm workers, all of which may be more significant in rural than urban economy. Employment tends to rise as economy grows.

Coos County

Employment index, adjusted for seasonal variation, expanded for the second time in four months. On a monthly year-over-year basis, it continued its long-term skid.

New Hampshire

Employment at the state level, adjusted for seasonal variation, was nearly unchanged. On a monthly year-over-year basis, its growth declined for the first time since May 2011.

Rooms and Meals Revenues

It is estimated from total tax yielded from rooms and meals sales. It tends to increase with tourism activities.

Coos County

The estimated rooms and meals revenue, adjusted for inflation and smoothed by 12 month moving average, fell for the sixth time in seven months. On a monthly year-over-year basis, it registered the first decline since November 2009.

New Hampshire

The estimated rooms and meals revenue, adjusted for inflation and smoothed by 12 month moving average, rose for the sixth consecutive month. And it remained up from prior year.

Traffic Counts

It tracks the average vehicle traffic counts on Saturdays each month, which is automatically collected from traffic recorders located throughout the State. Two recorders are placed in the Coos county – Jefferson and Northumberland.

January and February data have yet to be released by the NH Department of Transportation.

Wages and Salaries

The estimated wage and salaries disbursements represent total compensation including pay for vacation, bonuses, stock options, and tips. This data is obtained from all workers covered under state and federal unemployment insurance laws; in other words, it is full population counts, not sample-based estimates. Unlike the household employment report, however, it excludes self-employed, domestic workers, and most agricultural workers. For this difference, wages and salaries series complements the number of employed residents in monitoring the labor market conditions as well as the economy. A change in wages and salaries, adjusted for inflation, may reflect changes in the number of jobs, the ratio between part-time and full-time jobs, and wage rates.

Coos County

The estimated wages and salary disbursement, adjusted for inflation and smoothed by 12 month moving average, rose from prior month. Still, it remained down from a year earlier.

New Hampshire

The estimated wages and salary disbursement, adjusted for inflation and smoothed by 12 month moving average, increased from January. And, it was up from where it stood a year ago.

Industrial Electricity Sales

It measures sales of electricity (kWh) to industrial customers. Utilities categorize consumers based on the North American Industry Classification System, demand, or usages. The industrial sector includes manufacturing, construction, mining, agriculture, fishing, and forestry establishments. Among these industries, manufacturing is a primary industry in Coos County making up 69% (73% for New Hampshire in 2008) of the total number of jobs in the industrial sector mentioned above according to the 2006 QCEW data. Therefore, a rise in industrial electricity sales may largely indicate invigorating manufacturing activities in the economy.

Coos County

Industrial electricity sales, smoothed by 12 month moving average, fell for the 11^th consecutive month. On a monthly year-over-year basis, it fell for the ninth consecutive month.

New Hampshire

Industrial electricity sales, smoothed by 12 month moving average, fell after increasing two straight months. On a monthly year-over-year basis, it fell five months in a row.

Real Estate

NCEI reports two real estate market indicators – home sales and median home prices. The data tracks residential homes sold, including condos and manufactured homes. The health of the real estate sector is important to the broad economy due to its multiplier effect. Home transactions not only generate income for real estate brokers and mortgage bankers but also bring more businesses in other sectors including moving services, home furnishings and appliances. In order to minimize volatility in Coos real estate market, indicators are averaged over a 12 month period.

Coos County

In February, the Coos housing market continued to show signs of improvement. Median home prices, smoothed by 12-month moving average, rose two straight months on a monthly year-over-year basis. Home sales, smoothed by 12-month moving average, registered a modest gain on a month-to-month basis. On a monthly year-over-year basis, however, it contracted for the 18^th consecutive month.

New Hampshire

In State’s housing market, a rebound seemed to have gained momentum. Home sales, smoothed by 12-month moving average, rose four months in a row on a monthly year-over-year basis. Median home prices, smoothed by 12-month moving average, continued to fall. But the pace of the decline stabilized at around 6% on a monthly year-over-year basis.

Leading Indicators

This section is under construction. The future reports will include building permits, initial unemployment claims, new business formation, real estate indicators and possibly freight volumes.

Technical Notes

Employment is the number of people employed from the household survey.
The current values of rooms and meals revenues are estimated using the data obtained from participating local hoteliers.
The quarterly wages and salary disbursements are smoothed into the monthly series after the current values are estimated.
These models to estimate the current values of rooms and meals revenues and wages and salary disbursements are re estimated once a year in February using updated data.
The data series reported in the dollar values are adjusted for inflation.
Seasonal factors for the number of employed residents are recalculated once a year in February using updated data. Thus, the seasonally adjusted data series are to be revised accordingly.
Real Estate data is obtained from the Northern New England Real Estate Network (NNEREN). All analysis and commentary related to the statistics is that of the authors, and not that of NNEREN.