Economy Shifting into Lower Gear[innerindex] In May, signs of economic slowdown spread to the broader economy not only in the Coos County but also in the State. The Coos County Index, although it remained up from prior year, slowed in its year-over-year growth rate for the third consecutive month. All five component indicators exhibited slowing growth or accelerating decline. The manufacturing sector cooled down after leading the county economy out of recession; the year-over-year growth rate of industrial electricity sales was steadily reduced to 0.6% from its peak in last December when it marked 8.4% growth. The rebounding hospitality sector appeared to be facing a tougher fight as well; average Saturday traffic counts had fallen at a faster clip last three months, while the year-over-year growth rate of estimated rooms and meals revenue edged down two months in a row. The labor market never fully recovered from the past recession; the number of employed residents kept falling on a year-over-year basis.
The State economy followed suit. For the first time since August 2010, the State Index slowed in its monthly year-over-year growth rate. Like in the case of the Coos economy, all five component indicators showed signs of slowing growth. Contrary to what the decline in the state’s unemployment rate may suggest, the rebounding labor market may have hit the ceiling in May. The unemployment rate declined in May not because more residents found a job, but because some job seekers dropped out of the labor force and thus no longer counted as unemployed. The labor force contracted partially because some residents quit seeking employment due to gloomy job prospects, and perhaps because some people in the public sector retired for concerns over the ongoing collective bargaining issues. In fact, the number of employed residents, after seasonal adjustment, declined from prior month for the first time since the end of the past recession. There has been mounting evidence that the economy may be shifting into lower gear in both Coos County and the State of New Hampshire. Continued troubles in the housing sector are another reason for concern.
The real estate market analysis can be found at the end of this report.
The Coos Coincident Index, which tracks the current state of the Coos economy, edged down to 93.0 from April’s revised value of 93.4. While the Index advanced 12 straight months on a monthly year-over-year basis, its growth rate slid for the third consecutive month.
The New Hampshire Coincident Index slid to 96.1 in May for the first time since February 2010. On a monthly year-over-year basis, the Index expanded for the ninth month in a row. However, its growth rate decreased for the first time since the past recession.
How strong are the forces of change?
In May, the Coos Coincident Index advanced 12 straight months on a monthly year-over-year basis. Three out of the five component indicators were up from their May 2010 levels. However, its growth rate slowed three months in a row. The State Index increased nine months in a row on a monthly year-over-year basis. All five component indicators remained up from prior year. However, following the course of the County economy, its growth rate fell for the first time since the end of the Great Recession.
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.
Employment index, adjusted for seasonal variation, retreated three straight months. And, it remained down from prior year.
Employment at the state level, adjusted for seasonal variation, contracted for the first time since November 2009. Though, it remained up from the level seen a year earlier.
Rooms and Meals Revenues
It is estimated from total tax yielded from rooms and meals sales. It tends to increase with tourism activities.
The estimated rooms and meals revenue, adjusted for inflation and smoothed by 12 month moving average, declined in May for the first time since May 2010. Still, it remained up from its May 2010 level.
The estimated rooms and meals revenue, adjusted for inflation and smoothed by 12 month moving average, contracted in May for the first time since June 2010. Still, it remained up from prior year.
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.
Average Saturday traffic counts, smoothed by 12 month moving average, fell for the fourth consecutive month. On a monthly year-over-year basis, it dropped three straight months.
Average Saturday traffic counts, smoothed by 12 month moving average, fell six months in a row. Still, it was higher than its May 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.
The estimated wages and salary disbursement, adjusted for inflation and smoothed by 12 month moving average, was nearly unchanged from prior month. On a monthly year-over-year basis, it advanced four months in a row.
The estimated wages and salary disbursement, adjusted for inflation and smoothed by 12 month moving average, was nearly unchanged from April. Still, 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.
Industrial electricity sales, smoothed by 12 month moving average, fell for the third time in four months. On a monthly year-over-year basis, it expanded 14 straight months.
Industrial electricity sales, smoothed by 12 month moving average, fell for the second time in three months. Still, it remained up from where it was a year ago.
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.
In May, a downward trend continued in the Coos real estate market. Home sales, smoothed by 12-month moving average, plunged by more than 22% on a year-over-year basis. It declined for the ninth consecutive month at an increasing pace. As a result, home prices registered a double-digit decline for the first time since February 2010 on a monthly year-over-year basis. Median home prices, smoothed by 12-month moving average, fell by nearly 19%. This is the third consecutive decline on a monthly year-over-year basis.
Troubles in the state’s real estate market continued. 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 four months in a row at a faster clip on a year-over-year basis.
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.
- 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.
© Copyright 2010: Daniel Lee and Vedran Lelas, College of Business Administration, Plymouth State University.