April 2011

Economic growth slows

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In March, although continuing its long-term course to recovery, the Coos economy grew at a rate slower than it did in February. More telling may be easing growth in the manufacturing and hospitality industry, both of which had been an engine of the county’s economic recovery since the end of recession. The year-over-year growth rate of industrial electricity sales had slowed steadily since November. A similar pattern was observed in estimated rooms and meals revenues. Furthermore, the average Saturday vehicle traffic counts dipped below the level seen a year ago for the first time since September. The labor market continued to show a mixed picture. Number of employed residents was down from where it was a year ago, while estimated wages and salaries were up.

The State economy continued its course to recovery. All five component indicators remained up from a year earlier. Its growth rate had inched up steadily since August. The improving labor market led economic recovery in March. Both number of employed residents and estimated wages and salaries grew at an increasing pace. On a more cautionary note, though, there were some signs of slowing in the manufacturing and hospitality industry. Industrial electricity sales fell from prior month, although it remained up from where it was a year earlier. So did both indicators of the hospitality industry – estimated rooms and meals revenues and average Saturday vehicle traffic counts. It remains to be seen whether they were just a temporary statistical fluke or the beginning of a new slump in the industry. In addition, the struggling housing industry remains a trouble spot of the 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, was little changed in March from February’s revised value of 93.5. Still, the Index advanced ten straight months on a monthly year-over-year basis.

The New Hampshire Coincident Index ticked up to 96.2 in March for the twelfth consecutive month. On a monthly year-over-year basis, the Index expanded for the seventh month in a row.

How strong are the forces of change?

In March, the Coos Coincident Index advanced eleven straight months. Three out of the five component indicators were up from their March 2010 levels. However, its growth rate was down from prior month on a monthly year-over-year basis. In the meantime, the state economy kept on its expansion at an increasingly faster pace. Its growth rate accelerated seven months in a row. Furthermore, all five component indicators remained up from where they were a year ago.

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, contracted after increasing three consecutive months. On a monthly year over-year-basis, it fell for the twelfth month in a row.

New Hampshire

Employment at the state level, adjusted for seasonal variation, expanded sixteen months in a row. Its growth rate increased for the last three months. The employment level was up from its March 2010 level as well.

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, bounced back after falling for the first time since May 2010. And, it was up from its March 2010 level.

New Hampshire

The estimated rooms and meals revenue, adjusted for inflation and smoothed by 12 month moving average, ticked down for the first time since June. On a monthly year-over-year basis, it advanced five months in a row.

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.

Coos County

Average Saturday traffic counts, smoothed by 12 month moving average, fell for the third time in four months. On a monthly year-over-year basis, it dropped for the first time since September.

New Hampshire

Average Saturday traffic counts, smoothed by 12 month moving average, fell four months in a row. Still, it was higher than its March 2010 level.

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 four months in a row. On a monthly year-over-year basis, it advanced two months in a row.

New Hampshire

The estimated wages and salary disbursement, adjusted for inflation and smoothed by 12 month moving average, expanded for the twelfth consecutive month. 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, rose for the fourth time in five months. On a monthly year-over-year basis, it expanded twelfth straight months.

New Hampshire

Industrial electricity sales, smoothed by 12 month moving average, declined for the first time since February 2010. Still, it remained up from where it was a year ago.

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

The Coos real estate market headed south in March. Home sales, smoothed by 12-month moving average, plunged by more than 15% from the same month a year ago. The double-digit decline in sales finally ended an upward trend in home prices, mostly fueled by the federal home buyer tax credit program. Median home prices, smoothed by 12-month moving average, fell for the first time since April 2010 on a monthly year-over-year basis.

New Hampshire

A similar pattern was observed in the State’s real estate market. Home sales, smoothed by 12-month moving average, had fallen at an increasing pace since October on a year-over-year basis. Its effect was felt on home prices. Median home prices, smoothed by 12-month moving average, dropped for two months in a row on a 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.