October 2011

Hopeful Signs for State’s Labor Market

[innerindex]In September, the aggregate economic activity continued to decline in the County. The Coos Index fell for the fourth month in a row on a monthly year-over-year basis. Four out of five component indicators were down from prior year. Estimated rooms and meals revenues series was the only indicator that was up from where it stood a year earlier. However, it too showed signs of slowing down. Estimated rooms and meals revenues posted month-to-month declines for the second consecutive month. It may have to do with BALSAMS’s early seasonal closure in September due to the proposed sales agreement. There were no signs of improvement in the labor market; number of employed residents and estimated wages and salaries continued to decline on a monthly year-over-year basis. The manufacturing sector wasn’t an exception; industrial electricity sales kept on falling on a monthly year-over-year basis. This month report includes average Saturday vehicle traffic counts thanks to the timely publication of the data. We sincerely appreciate the cooperation from the new Commissioner and staff members of the New Hampshire Department of Transportation.

According to the revised data with the inclusion of the traffic counts, the State economy showed signs of stabilization in September. Its monthly year-over-year growth rate remained at 0.8%, the pace of growth in prior month, after falling five months in a row. All but one indicator increased on a monthly year-over-year basis. Most notably, the labor market exhibited some encouraging signs; the monthly year-over-year growth rate of the number of employed residents picked up pace for the first time in five months. However, the overall economic picture was far from spectacular. The manufacturing activity continued to slow; industrial electricity sales growth nearly came to a halt. The picture in the hospitality sector is mixed; estimated rooms and meals registered a modest gain while traffic counts fell. All in all, the state economy remained on a growth path; but it was a fragile one.

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 91.5 from August’s revised value of 91.7. On a monthly year-over-year basis, the Index declined for the fourth month in a row.

The New Hampshire Coincident Index ticked up to 95.7 in September from August’s revised value of 95.6. On a monthly year-over-year basis, the Index maintained the growth pace of the previous month after falling five months in a row.

How strong are the forces of change?

In September, the Coos Coincident Index fell for the fourth month in a row on a monthly year-over-year basis. Four out of the five component indicators were down from their September 2010 levels. The State Index increased 13 months in a row on a monthly year-over-year basis. Four out of five component indicators remained up from prior year. Its monthly year-over-year growth rate changed little from prior month.

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, edged down after expanding two months in a row. On a monthly year-over-year basis, it continued its long-term skid.

New Hampshire

Employment at the state level, adjusted for seasonal variation, expanded after contracting four straight months. On a monthly year-over-year basis, its growth rate picked up pace a bit.

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, fell for the second month in a row after a long expansion. Still, it remained up from its September 2010 level.

New Hampshire

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

New Hampshire

Average Saturday traffic counts, smoothed by 12 month moving average, fell for the ninth time in ten months. On a monthly year-over-year basis, it decreased for the third 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, dropped from prior month. And, 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 August. 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 sixth consecutive month. On a monthly year-over-year basis, it retreated for the fourth consecutive month.

New Hampshire

Industrial electricity sales, smoothed by 12 month moving average, dropped from prior month. Still, 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

In September, the County’s falling housing market continued to show early signs of stabilization. Home sales, smoothed by 12-month moving average, contracted for the 13^th consecutive month on a monthly year-over-year basis; but its pace of decline decreased four straight months. Median home prices, smoothed by 12-month moving average, fell for the seventh straight month on a monthly year-over-year basis; but its pace of decline decreased for the third month in a row.

New Hampshire

Falling home prices in the State’s housing market showed no signs of slowing down in September. Home sales, smoothed by 12-month moving average, contracted for the 11^th consecutive month; but its pace of decline slowed for the third straight month. Median home prices, smoothed by 12-month moving average, slid eight months in a row at an increasingly faster pace.

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.