May 2011

Rising Energy Costs May Be Slowing Recovery.

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In April, the Coos economy continued to show signs of slowing recovery. Although the Index advanced twelve straight months on a monthly year-over-year basis, its growth rate has slowed two consecutive months. Slowing growth was felt on individual sectors as well. The manufacturing sector, which had been one of the few brightest spots of the Coos Economy since the Great Recession, saw its growth rate edging down steadily since November on a monthly year-over-year basis. The rebounding hospitality sector, while doing better than prior year, appeared to have reached a plateau. Average Saturday traffic counts retreated two straight months on a monthly year-over-year basis, while the growth rate of the estimated rooms and meals revenue remained flat since October. High gas prices, along with an increasingly probable double dip in the real estate market, threatened the fledgling economic recovery.

The State economy fared better. All five component indicators remained up from a year earlier. Its growth rate had inched up steadily since August. The labor market continued to improve; the number of employed residents kept climbing up at a faster clip on a monthly year-over-year basis. However, there were some preliminary signs of slowing in the manufacturing and hospitality industry. Growth in industrial electricity sales appeared to have reached a plateau since last year on a monthly year-over-year basis. Similarly, growth in average Saturday traffic counts had steadily declined since last year on a monthly year-over-year basis. High energy costs may be taking a toll on the economy. The struggling housing sector, which appeared to head for deeper troubles, is another reason for concern.

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 93.4 from March’s revised value of 93.5. While the Index advanced eleven straight months on a monthly year-over-year basis, its growth rate slid for two straight months.

The New Hampshire Coincident Index ticked up to 96.5 in April for the thirteenth consecutive month. On a monthly year-over-year basis, the Index expanded for the eighth month in a row.

How strong are the forces of change?

In April, the Coos Coincident Index advanced twelve straight months. Three out of the five component indicators were up from their April 2010 levels. However, its growth rate slowed two months in a row on a monthly year-over-year basis. In the meantime, the state economy kept on its expansion at an increasingly faster pace. Its growth rate accelerated eight months in a row. Furthermore, all five 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, retreated two straight months. On a monthly year over-year-basis, it was nearly unchanged.

New Hampshire

Employment at the state level, adjusted for seasonal variation, expanded seventeen months in a row. On a monthly year-over-year basis, it advanced eleven straight months at an increasing pace.

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, ticked up from March. And, it was up from its April 2010 level.

New Hampshire

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

Coos County

Average Saturday traffic counts, smoothed by 12 month moving average, fell for the third consecutive month. On a monthly year-over-year basis, it dropped two straight months.

New Hampshire

Average Saturday traffic counts, smoothed by 12 month moving average, fell five months in a row. Still, it was higher than its April 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.

Coos County

The estimated wages and salary disbursement, adjusted for inflation and smoothed by 12 month moving average, rose five months in a row. On a monthly year-over-year basis, it advanced three months in a row.

New Hampshire

The estimated wages and salary disbursement, adjusted for inflation and smoothed by 12 month moving average, expanded for the thirteenth 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, fell for the second time in three months. On a monthly year-over-year basis, it expanded thirteen straight months.

New Hampshire

Industrial electricity sales, smoothed by 12 month moving average, bounced back after declining for the first time since February 2010. 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

The Coos real estate market couldn’t reverse its downward trend in April. Home sales, smoothed by 12-month moving average, plunged by more than 22% on a monthly year-over-year basis. It declined for the eighth consecutive month. As a result, the decline in home prices accelerated. Median home prices, smoothed by 12-month moving average, fell by more than 7% after decreasing 3% in March for the first time since April 2010 on a monthly year-over-year basis.

New Hampshire

The State’s real estate market didn’t fare any better. 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 three months in a row at a faster clip on a 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.