December 2011

No recovery within sight for Coos economy

[innerindex]In November, the Coos Index fell for the sixth month in a row on a monthly year-over-year basis, hitting the lowest point since the beginning of the latest recession. The recovery, which started since the mid-2009, lost steam in the second half of 2011. The downward trend is increasingly apparent in all but one component indicator; four out of five component indicators had persistently decreased in recent months on a year-over-year basis. The goods-producing activity, mostly manufacturing, were in decline; industrial electricity sales had decreased at an increasingly faster pace since May on a monthly year-over-year basis. The labor market never recovered from the latest recession; neither number of employed residents nor estimated wages and salaries had registered a year-over-year gain in 2011. The hospitality industry had been better off than other industries; estimated rooms and meals revenues surpassed the pre-recession level and kept rising, although average Saturday traffic counts remained stagnant. This New Year may be a better one, though, considering encouraging news from the Gorham area, such as the biomass plant construction and the reopened paper mill.

The economic recovery gained momentum in the State. The revised data showed that economic growth picked up pace for the first time since March on a monthly year-over-year basis. Three of five component indicators were up from prior year. The labor market continued to rebound; the monthly year-over-year growth rate of number of employed residents rose three months in a row after falling four straight months. However, the aggregate employment data may paint the picture better than it actually is. New Hampshire Employment Security reported that nearly half of the increase in jobs in November came from the accommodation and food services industry, where many jobs tend to be part-time. On the other hand, the higher-paying manufacturing industry lost jobs. This is consistent with one of the NCEI component indicators, industrial electricity sales, which declined two months in a row on a monthly year-over-year basis. The picture in the hospitality industry was mixed; estimated rooms and meals revenues posted a strong gain from a year earlier, while average Saturday traffic counts continued to decline.

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 nearly unchanged from October’s revised value of 91.4. On a monthly year-over-year basis, the Index declined for the sixth month in a row.

The New Hampshire Coincident Index advanced to 96.4 in November from October’s revised value of 96. On a monthly year-over-year basis, the Index increased its pace of growth for the first time since March.

How strong are the forces of change?

In November, the Coos Coincident Index fell for the sixth month in a row on a monthly year-over-year basis. Four out of five component indicators were down from their November 2010 levels. The State Index increased 15 months in a row on a monthly year-over-year basis. Three out of five component indicators remained up from prior year. Its monthly year-over-year growth picked up pace for the first time since March.

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, retreated 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, advanced three months in a row after contracting four straight months. On a monthly year-over-year basis, its growth accelerated for the third month in a row.

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, increased two straight months. On a monthly year-over-year basis, its growth rate rose for the first time since June.

New Hampshire

The estimated rooms and meals revenue, adjusted for inflation and smoothed by 12 month moving average, rose for the third 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.

Coos County

Average Saturday traffic counts, smoothed by 12 month moving average, decreased for the third time in past four months. On a monthly year-over-year basis, it dropped nine straight months.

New Hampshire

Average Saturday traffic counts, smoothed by 12 month moving average, were nearly unchanged. On a monthly year-over-year basis, it decreased for the fifth month in a row.

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, dropped from prior month. And, 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 October. 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 eighth consecutive month. On a monthly year-over-year basis, it retreated six months in a row.

New Hampshire

Industrial electricity sales, smoothed by 12 month moving average, dropped for the third straight month. On a monthly year-over-year basis, it fell two 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 November, the housing market remained stagnant in the County. Home sales, smoothed by 12-month moving average, contracted for the 15^th consecutive month on a monthly year-over-year basis. Median home prices, smoothed by 12-month moving average, fell for the ninth straight month on a monthly year-over-year basis.

New Hampshire

In State’s housing market, homes sales kept rebounding, but it wasn’t enough to boost prices. Home sales, smoothed by 12-month moving average, were up from a year earlier. This year-over-year gain was the first since October 2010. Median home prices, smoothed by 12-month moving average, slid ten months in a row at an increasingly faster pace 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.