January 2012

Things looking up for New Hampshire in 2012

[innerindex]In December, the Coos Index fell for the eighth month in a row on a monthly year-over-year basis. The pace of decline was the largest since 2009. Four of five component indicators were down from where they stood a year ago. The labor market continued to struggle; both number of employed residents and estimated wages and salaries were down from a year ago. Particularly, struggles of the manufacturing industry were eye-catching; industrial electricity sales fell by a double-digit for the first time in two years on a monthly year-over-year basis. Even the lone bright spot, the hospitality industry showed signs of slowing; estimated rooms and meals revenues grew at slowest pace since June 2010. Average Saturday vehicle traffic counts fell ten months in a row.

In December, the State economy ended the year strong despite some concerns. The State Index grew sixteen months in a row on a monthly year-over-year basis. The economic growth accelerated for the second month in a row after falling seven straight months. Particularly encouraging is the labor market; the year-over-year growth of the number of employed residents grew at an increasingly faster pace for the fourth month in a row, while estimated wages and salaries exhibited a similar pattern. The leisure and tourism industry contributed to the strong finish as well; estimated rooms and meals revenues expanded for the 13^th straight month on a monthly year-over-year basis. However, all is not good for the state economy. The manufacturing continued to drag; industrial electricity sales fell three consecutive months on a monthly year-over-year basis. In addition, the housing sector remains a threat. Despite rebounding sales, free-falling home prices have yet to show any signs of a turnaround. All in all, chances of a double-dip recession that was increasingly likely a few months ago seemed to be waning with 2011.

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 90.7 in December from November’s revised value of 90.8. On a monthly year-over-year basis, the Index declined for the eighth month in a row.

The New Hampshire Coincident Index grew to 96.6 in December from November’s revised value of 96.3. The year-over-year growth of the Index accelerated for the second month in a row.

How strong are the forces of change?

In December, the Coos Coincident Index fell for the eighth month in a row on a monthly year-over-year basis. Four out of five component indicators were down from their December 2010 levels. The pace of decline was the largest in two years. The State Index increased 16 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 accelerated 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, advanced four months in a row after contracting four straight months. On a monthly year-over-year basis, its growth accelerated for the fourth 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, decreased after increasing two straight months. On a monthly year-over-year basis, it registered a slowest growth since June 2010.

New Hampshire

The estimated rooms and meals revenue, adjusted for inflation and smoothed by 12 month moving average, rose for the fourth 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, increased for the second time in past four months. On a monthly year-over-year basis, it dropped ten 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 sixth 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, rose from prior month for the first time since past January. 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 November. 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 ninth consecutive month. On a monthly year-over-year basis, it marked the largest percentage decline since October 2009.

New Hampshire

Industrial electricity sales, smoothed by 12 month moving average, rose for the first time since past June. On a monthly year-over-year basis, however, it fell three 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 December, the Coos housing market remained stagnant but showed a glimpse of stabilization. Home sales, smoothed by 12-month moving average, contracted for the 16^th consecutive month on a monthly year-over-year basis. Median home prices, smoothed by 12-month moving average, fell for the tenth straight month on a monthly year-over-year basis. However, the pace of decline in the home prices fell to the lowest since past March.

New Hampshire

In State’s housing market, a combination of historically-low interest rates and low home prices enticed more people to buy. But the increasing demand has yet to stop the free-falling home prices. Home sales, smoothed by 12-month moving average, rose two months in a row on a monthly year-over-year basis. Median home prices, smoothed by 12-month moving average, slid 11 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.