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07/28/2010
Regional labor markets continue struggle
Similar to the national employment report for June, the regional employment report showed a loss in payroll employment for the month. According to the U.S. Bureau of Labor Statistics' establishment survey, the Sixth District lost 26,800 jobs in June after adding 77,400 jobs in May (see chart 1). Job losses in most District states were affected by the end of Census-related temporary jobs. For the United States as a whole, 125,000 jobs were shed in June, reflecting the end of 225,000 temporary Census jobs. Private payrolls in the District have increased over the past few months, albeit at a slow pace. In June, the District added only about 17,000 private jobs.
Looking at another labor market indicator, we also see a slight improvement in the sluggish labor market. In the U.S. Bureau of Labor Statistics household survey, June's unemployment rate decreased in all District states except for Louisiana, where it increased slightly that month. Despite the easing of the unemployment rate, all states in the District have unemployment rates above the national rate of 9.5 percent with the exception of Louisiana, which has an unemployment rate of 7 percent. Much of the decrease in the unemployment rate during the past few months is attributed to a decrease in labor force participation.
To gauge employment's short-term trend versus its long-term trend, employment momentum can be examined through the use of bubble charts (see chart 3).
The employment momentum chart simultaneously plots both short- and long-term employment trends as well as states' total employment share. The vertical (Y) axis measures short-term trends (three-month average annualized percent change). The horizontal (X) axis measures long-term trends (year-over-year percent change). The size of each state's bubble reflects its relative share of total employment among the six measured states.
The position of a state's bubble in a quadrant—the intersection of the state's short- and long-term plot—reflects its employment momentum by using four quadrants that indicate certain situations:
Quadrant 1: Both short- and long-term employment growth are positive. (The higher in the right-hand corner of the chart a state's bubble appears, the stronger the state's employment momentum.)
Quadrant 2: Short-term growth is negative, but long-term growth is positive. (Recent data point to slipping employment momentum.)
Quadrant 3: Both short- and long-term employment growth are negative. (The lower in the left-hand corner of the chart a state's bubble appears, the weaker the state's employment momentum.)
Quadrant 4: Short-term growth is positive, but long-term growth is negative. (Recent data point to improving employment momentum.)
In June, the employment momentum of the Sixth District states is positioned in the improving quadrant, so although long-term growth is still negative, short-term growth is positive. Some states were even entering the expanding quadrant in June. If we take a look back to where the Sixth District was in January (see chart 4), all District states were in the contracting quadrant with both short- and long-term employment growth negative. Although these indicators point to improvement, they show that the labor market in the Sixth District still has a ways to go before getting back to where it was prerecession, with state bubbles in the expanding quadrant and lower unemployment rates.
By Sandra Kollen, a senior economic analyst in the Atlanta Fed's research department
July 28, 2010 in Louisiana, Recession, Unemployment | Permalink
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07/20/2010
Southeastern housing update
The Federal Reserve of Atlanta's monthly survey of Realtors and homebuilders in its region saw home sales weaken notably in June though sales remained above last year's levels. Many brokers noted that sales continued to benefit from the housing stimulus as buyers closed on contracts signed prior to the April 30, 2010, deadline. However, close to half of survey respondents reported that sales in June declined compared with May.
Reports from Southeastern homebuilders indicated that new home sales also continued to weaken in June, falling farther below last year's level.
Buyer traffic continued to soften in June on a year-over-year basis.
Reports also indicated that traffic slowed notably from May to June. Typically, buyer traffic rises from May to June and remains strong in June, but more than half of brokers and builders surveyed reported that buyer traffic declined from May to June.
The outlook for sales growth among both brokers and builders continued to weaken.
Note: June survey results are based on responses from 83 residential brokers and 54 homebuilders and were collected July 5–15. The housing survey's diffusion indexes are calculated as the percentage of total respondents reporting increases minus the percentage reporting declines. Positive values in the index indicate increased activity while negative values indicate decreased activity.
By Whitney Mancuso, analyst in the Atlanta Fed's research department
July 20, 2010 in Housing, Southeast | Permalink
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07/14/2010
Manufacturing cools in the U.S. and elsewhere
Manufacturing leveled off in the United States and Southeast in June. In fact, most developed countries' manufacturing sectors cooled off last month:
| Global Manufacturing Sectors, May versus June | ||||||
| JP Morgan Global PMI | U.S. | U.S.: Southeast | Japan | EuroZone | China | |
| May PMI | 57.0 | 59.7 | 62.7 | 54.7 | 55.8 | 53.9 |
| June PMI | 55.0 | 56.2 | 57.9 | 53.9 | 55.6 | 52.1 |
| % change | –2.0 | –3.5 | –4.8 | –0.8 | –0.2 | –1.8 |
| Source: Institute for Supply Management, Markit Economics, and JPMorgan Chase | ||||||
While this doesn't signal an end to the manufacturing sector's recovery, it's clear that growth is slowing. Though each purchasing managers index (PMI) mentioned above lost ground in June, each continues to be higher than the 50-point threshold that indicates growth in the manufacturing sector.
"Cooling off" is common after sharp expansions
It is important to remember how these surveys are fashioned and how that affects the outcome of the index. PMIs measure growth, not actual levels of new orders, production, etc. Survey participants are asked to compare their current month's levels of new orders and production (among other variables) with the previous month's level. Responses are generally collected in a "better/same/worse" questionnaire format. In most cases for June, including the United States and the Southeast, many participants jumped from indicating "better" conditions, as they had over the past several months, to reporting that conditions were the "same" from May to June. This response resulted in a lower reading of the PMI, which is a common trend early in recovery stages.
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U.S. and Southeast PMIs indicate above-average growth but are coming off of initial recovery highs
Regarding the Institute for Supply Management's (ISM) PMI, Norbert Ore, chair of the ISM Manufacturing Business Survey Committee, said the following:
"We are now 11 months into the manufacturing recovery, and given the robust nature of recent growth, it is not surprising that we would see a slower rate of growth at this time. The sector appears to be solidly entrenched in the recovery. Comments from the respondents remain generally positive, but expectations have been that the second half of the year will not be as strong in terms of the rate of growth, and June appears to validate that forecast."
Chris Williamson, chief economist at Markit, cites stimulus-driven growth contributing to the second quarter peak and hints that challenges remain for manufacturing:
"The second quarter most likely represents a peaking in the rate of expansion of manufacturing output, as growth slows in coming months as stimulus-driven tailwinds are replaced by mounting headwinds."
On a more local level, Kennesaw State University (KSU), primary producer of the Southeast's PMI, said declines in the Southeast PMI for May and June likely are adjustments to April's unusually high levels of new orders and production.
ISM and KSU reports additionally conclude that U.S. and Southeast production growth measures are still above the global average in June.
So June's PMI data should not be a cause for concern. Further deceleration of purchasing managers indices, however, could signal bad news for not just manufacturing sectors, but the overall economies they represent.
By Mark Carter, an economic analyst in the Atlanta Fed’s research department
July 14, 2010 in Economic Growth and Development, Manufacturing, Southeast | Permalink
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07/07/2010
The Gulf oil spill: Measuring the impact on tourism
In the weeks following the Gulf oil spill, we counted the number of people employed in sectors most vulnerable to a decline in vacationers. In a macroblog posting back in May, we looked at Bureau of Economic Analysis data and developed a conservative estimate of roughly 123,000 workers, based on the total number of individuals employed in arts, entertainment, and recreation as well as accommodation and food services for Gulf Coast metro areas from western Louisiana to Panama City. Since then, we have been patiently waiting for official employment data from the Bureau of Labor Statistics on state and local employment. On July 20, we will see revised data for May and the first release of data for June.
To further help us understand the impact on tourism, we have also been talking to our contacts in the region as well as tuning into what travel industry experts have been reporting. Last week, Hotel News Now reported on how late-spring and early-summer bookings held up better than expected in most places, but advance reservations were declining significantly for Gulf Coast hotels. Our business contacts in the area also report similar experiences. Part of the decline in vacationers is being offset by an increase in bookings by officials and crews that are migrating to the Gulf to plan and assist in the cleanup. Those reports lead us to believe that the employment impact in the tourism-related sectors of the economy may not be readily seen for some time.
We will continue to watch this important industry as well as the entire region as the oil spill continues.
By Michael Chriszt, an assistant vice president in the Atlanta Fed's research department
July 7, 2010 in Employment, Oil Spill, Southeast, Tourism | Permalink
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