January 2011

Recovery Spinning Wheels in Mud

[innerindex]As announced in December report, the methodology page has been revised to briefly describe how the new NCEI is constructed and how well it conforms to the business cycle. In December, the County Index advanced for the seventh consecutive month on a year-over-year basis. However, the recovery still appeared to be fragile. The pace of growth remained too small to build up momentum. A major drag came from the labor market. The estimated wages and salaries continued to slide, suggesting job losses had not stopped. On the other hand, the number of employed residents appeared to have been stabilized after a slide during the recession. This diversion between the two labor market indicators may indicate that some of the unemployed may have become self-employed or domestic help, instead of looking for a job. On a positive note, the hospitality sector continued to register gains. In particular, the estimated rooms and meals revenues continued with its impressive expansion. The production activity remained strong; the industrial electricity sales series was up from prior year.

On the contrary, the impending recovery for the State’s economy looked ever more credible. The State Index advanced four months in a row on a year-over-year basis at an increasing pace. All of the Index’s component indicators turned up from where they were a year ago. The encouraging signs were apparent in the labor market. 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. December data brought good news to the hospitality sector as well. In addition to the average Saturday traffic counts, the estimated rooms and meals revenues turned up from prior year for the first time since the beginning of the recession.

Starting this month, we upgraded the analysis on the real estate market by adding median home prices to the list that already includes home sales. The report can be found below.

Coincident Index

The Coos Coincident Index, which tracks the current state of the Coos economy, changed little in December from November’s revised value of 92.8 after falling 0.5% in November. Still, the Index advanced seven straight months on a monthly year-over-year basis.

The New Hampshire Coincident Index rose to 95.9 for the tenth consecutive increase in December. On a monthly year-over-year basis, the Index expanded for the fourth month in a row.

How strong are the forces of change?

In December, the Coos Coincident Index was up from where it was a year ago for the seventh time in a row. Four out of five component indicators were up from their December 2009 levels. However, the continued feeble growth suggests that much anticipated recovery for the County economy has yet to see momentum building. In the meantime, the state economy kept on its expansion at an increasingly faster pace. The growth accelerated four months in a row by gaining 2.1% on a year-over-year basis. It is the fastest ever seen since the beginning of the recession. Furthermore, all five component indicators turned 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, posted a mild gain after contracting two months in a row. Still, it was up from where it was a year ago.

New Hampshire

Employment at the state level, adjusted for seasonal variation, was stagnant after expanding four months in a row. Still, it was up from its December 2009 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, continued its impressive expansion seven months in a row. On a monthly year-over-year basis, it rose for thirteen straight months.

New Hampshire

The estimated rooms and meals revenue, adjusted for inflation and smoothed by 12 month moving average, rose for the fifth time in six months. As a result, it finally posted a positive gain on a monthly year-over-year basis, the first time since the beginning of the recession.

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 after two consecutive months of increases. Still, it was up from where it was a year ago.

New Hampshire

Average Saturday traffic counts, smoothed by 12 month moving average, fell in December for the first time since February. Still, it advanced nine months in a row on a monthly year-over-year basis.

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, contracted four months in a row. And, it was down from its December 2009 level.

New Hampshire

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

New Hampshire

Industrial electricity sales, smoothed by 12 month moving average, inched up ten 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

On a monthly year-over-year basis, median home prices increased eight months in a row, while the volume of home sales fell four straight months. Given that the volume of home sales has usually led median home prices in the past, a continuous fall in home sales in the coming months would portend a double dip in home prices.

New Hampshire

On a monthly year-over-year basis, median home prices increased four months in a row, while home sales contracted two 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.