February 2011

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Hospitality Sector Keeps Recovery Alive

In January, the Coos economy showed a glimpse of an accelerating recovery. The Coos Index advanced at the fastest pace on a year-over-year basis since the latest recession. A strong rebound in the hospitality sector continued to be an engine of economic recovery in the county’s economy. The estimated rooms and meals revenues kept expanding on a year-over-year basis. However, the rising gasoline prices could threaten the revitalizing tourism industry down the road. The average Saturday vehicle traffic counts were not reported by the New Hampshire Department of Transportation, perhaps due to the ongoing budget and personnel issues. The manufacturing sector contributed to the recovery as well. The industrial electricity sales remained strong. However, the recovery had yet to show signs of gaining traction. In particular, the labor market remained weak. While both indicators of the labor market – number of employed residents and the estimated total wages and salaries – stopped falling, there were no signs of a strong and sustained rebound either.

On the contrary, State recovery appeared to be well under way. The State Index advanced five months in a row on a year-over-year basis at an increasing pace. All available component indicators remained up from where they were a year ago. A strong rebound in the labor market largely accounts for the recovery. Both the number of employed residents and the estimated total wages and salaries were up from prior year. The manufacturing sector continued its expansion as well. So did the hospitality sector. The estimated rooms and meals revenues expanded two months in a row on a year-over-year basis.

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, inched up to 93.2 in January for the second month in a row. The Index advanced eight straight months on a monthly year-over-year basis.

The New Hampshire Coincident Index rose to 95.5 in January for the tenth consecutive month. On a monthly year-over-year basis, the Index expanded for the fifth month in a row.

How strong are the forces of change?

In January, the Coos Coincident Index was up from where it was a year ago for the eighth time in a row. Two out of four available component indicators were up from their January 2010 levels, while one indicator changed little. The county economy showed a glimpse of accelerating recovery. It advanced at the fastest rate on a monthly year-over-year basis since the end of the latest recession. In the meantime, the state economy kept on its expansion at an increasingly faster pace. Its growth rate accelerated five months in a row. Furthermore, all four available 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 for the third time in four months. On a monthly year over year basis, it changed little.

New Hampshire

Employment at the state level, adjusted for seasonal variation, ticked up 14 months in a row. It was up from its January 2010 level.

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, dipped following seven consecutive months of increase. Still, it was up from its January 2010 level.

New Hampshire

The estimated rooms and meals revenue, adjusted for inflation and smoothed by 12 month moving average, rose for the fifth straight month. On a monthly year-over-year basis, it advanced three 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.

The average Saturday vehicle traffic counts were not reported since last year by the New Hampshire Department of Transportation, perhaps due to the ongoing budget and personnel issues.

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 two months in a row. And, it was down from its January 2010 level.

New Hampshire

The estimated wages and salary disbursement, adjusted for inflation and smoothed by 12 month moving average, expanded for the sixth 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 sixth time in seven months. On a monthly year-over-year basis, it expanded 10 straight months.

New Hampshire

Industrial electricity sales, smoothed by 12 month moving average, inched up 11 months in a row. And, 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

While, in January, the median home price was slightly higher than its January 2010 level, the pace of increase dropped to a single digit for the first time since May. Slow home sales seemed to have put the break on the strong rebound in the home prices. Home sales weakened five months in a row on a monthly year-over-year basis.

New Hampshire

On a monthly year-over-year basis, median home prices increased five months in a row, while home sales contracted three straight months. Should home sales continue to fall in the coming months, we may see a double dip in home prices.

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.