05/21/2013
Nashville’s Music City Center: If You Build It, They Will Come
Borrowing and slightly altering a line from the movie Field of Dreams somewhat applies to Nashville’s high expectations for its new state-of-the-art convention center. The new downtown Nashville facility, aptly named “The Music City Center,” is scheduled to open May 19. Located in the heart of downtown Nashville and within walking distance of the famous Ryman Auditorium and the Country Music Hall of Fame, Nashville expects the convention center to serve as a catalyst for economic development by luring hundreds of thousands of visitors to the city each year. It will be the centerpiece for activity in an already lively downtown area.
The Nashville metropolitan statistical area is already riding a wave of employment expansion. Tennessee’s unemployment rate is slightly above the national rate; however, Nashville’s rate is more than a full percentage point lower. The city’s employment expanded 3.8 percent in 2012 and has expanded 16.6 percent since 2001. Throw a deep recession into the middle of that time frame, and the numbers are impressive. The city’s diverse economy, along with the state’s business friendly environment are just a couple of reasons why Forbes magazine recently ranked Nashville second to only San Francisco on its list of best cities for jobs in 2013.
The Music City Center (MCC) project was born in 2004 when metro Nashville government felt the city needed more convention space. In 2007, Nashville Mayor Karl Dean, along with local business leaders and community activists, pushed the project to the front of Nashville’s developmental priorities. The Metro Council of Nashville approved construction of the project in January 2010. Three years later, the grand opening is upon us.
The massive building, dubbed a “widescraper” due to its enormous footprint, covers four city blocks and is longer than 12 football fields. The building has a total of 1.2 million square feet, with a 350,000-square-foot exhibit hall, a 57,000-square-foot ballroom and 1,800 parking spaces. The center also features 60 meeting rooms and 32 docks to allow seamless loading for convention center exhibitors. The “Green Roof” is four acres of a grass-like plant called sedum. The roof also features the outline of—what else?—a guitar.
The Music City Center’s green roof and guitar motif (photo courtesy of the MCC)
The MCC’s economic benefits could also be significant and immediate. According to the Nashville Convention and Visitors Corporation, hotel room bookings for the center have already surpassed 800,000. The Omni is constructing an 800-room hotel adjacent to the MCC that has surpassed 250,000 nights booked, which is four months ahead of schedule. Another 18 hotel projects are under way or proposed in the downtown market.
The city has already seen a spike in hotel tax revenue because of an increase in leisure travel. A total of 101 meetings with dates ranging between 2013 and 2026 are now booked at the convention center, with another 300 considering Nashville for their meeting, according to Music City Center CEO Charles Starks. The annual impact is estimated to be about $200 million, with more than 1,500 jobs being added to the local economy. Business owners in the downtown area are counting on the new convention center to bring an array of visitors.
Dennis Lockhart, president of the Federal Reserve Bank of Atlanta (right), and Larry Atema of the Nashville Convention Center Authority tour the Music City Center.
Saying that Nashville has high hopes for the Music City Center is an understatement. The city has built a top-of-the-line facility to attract conventions from all across the nation. The project should add to Nashville’s growing economy.
Nashville built it and, based on early indications, they are indeed coming.
By Troy Balthrop, a Regional Economic Information Network analyst in the Atlanta Fed’s Nashville Branch
May 21, 2013 in Economic Growth and Development, Employment, Nashville, Tennessee, Tourism | Permalink
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05/15/2013
The Regional Housing Recovery: Where Are the Jobs?
We’ve been reporting for some time that our business contacts in the homebuilding industry were observing an increase in sales and construction. This growth is clear in the Atlanta Fed’s monthly Residential Construction and Real Estate poll and can be seen in the charts below.
With sales and construction of new homes on the rise, we should expect an increase in the number of workers employed in the construction industry. But these employment increases have not been readily observed. The chart below shows total construction employment for the six states in the Sixth Federal Reserve District. It has barely budged for the last three years.
Another way of looking at construction employment is to measure the change from peak to trough and from the trough to the most recent data point—March 2013—for each state in the region. The table below shows that the region as a whole has added more than 27,000 construction jobs since the low point, but this number pales in comparison to the number of construction jobs lost during the downturn—more than a half-million.
This observation is not to suggest that we should be looking for a return to the 1.35 million total people who were employed in the construction sector during the peak of the housing boom, but it does help add perspective. Also, looking at the state-by-state data, we see that each state has performed a bit differently. That said, the question still stands: Given the increase in construction activity, shouldn’t we be seeing stronger gains in construction employment? The answer appears rather straightforward, as the chart below shows.
While our contacts in the homebuilding sector are reporting an increase in activity—both sales and construction—the increase in permits for new home construction has been modest and is coming off very low levels. The trend is clearly in the right direction and appears to have momentum, but even stronger gains are needed if we are to see more significant increases in construction employment.
My colleagues Jessica Dill and Whitney Mancuso blogged on this subject back in December:
Perhaps the situation with construction employment simply boils down to a comment recently made by a real estate developer contact: "Capacity is lacking in all trades throughout the homebuilding process, which has limited how quickly production can be increased. Such capacity issues are always largest on the front end of the recovery. It is likely that labor will fill in at a quicker pace as the recovery picks up more steam."
By Mike Chriszt, a vice president in the Atlanta Fed’s Public Affairs department
May 15, 2013 in Construction, Employment, Housing, Southeast | Permalink
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05/10/2013
Expansion in Regional Manufacturing Continues
Manufacturing contacts in the Southeast region reported continued expansion for the fourth consecutive month, as reflected in the Southeast Purchasing Managers Index (PMI).
The Southeast PMI, produced by the Econometric Center at Kennesaw State University, provides an analysis of the most current market conditions for the manufacturing sector in Alabama, Georgia, Florida, Louisiana, Mississippi, and Tennessee. The index is based on a survey of representatives from companies in those states regarding trends and activity of new orders, production, employment, supplier delivery time, and finished goods. A reading on this index above 50 represents an expansion in the manufacturing sector, and a reading below 50 indicates a contraction.
This positive trend for manufacturing activity came as a pleasant surprise as the Institute of Supply Management (ISM) Manufacturing Index reported two consecutive drops in the national PMI, suggesting manufacturing growth to have slowed nationally. While Southeast PMI is not a subset of the national index, both measure a mix of similar components by surveying purchasing managers.
The Southeast PMI experienced less than a point increase in April compared with March. Although this increase over the prior period is minimal, the overall index reflected the highest level since May 2012 at 55.5, which is 5.5 points above the of 50-point benchmark. Increases in indices of new orders, production, and employment drove this growth, and each of these components was substantially above its respective measure in the national PMI.
Production experienced the most significant jump of the survey components, with an increase of 5.7 points from March to April, ending at 61.2. Employment jumped 4.1 points during the same period to 57.8. While new orders reflected a much smaller increase of 0.4 points, this minimal increase brings the submeasure to 57.8, well above the expansion benchmark (see the chart).
Of survey participants, 43 percent expect production to be higher in the next three to six months, versus 33 percent for the prior survey period. Although this is not the highest level of optimism reported this year by survey participants, those following the industry welcome these positive sentiments while watching to see if the region will continue to outperform national manufacturing activity.
By Amy Pitts, a senior Regional Economic Information Network analyst in the Atlanta Fed’s Nashville Branch
May 10, 2013 in Alabama, Employment, Florida, Georgia, Louisiana, Manufacturing, Mississippi, Southeast, Tennessee | Permalink
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04/25/2013
Beige Book: Southeast, U.S. Exhibiting Similar Trends
The Summary of Commentary on Current Economic Conditions by Federal Reserve District—commonly known as the Beige Book—is a report is published by the Federal Reserve eight times a year. Each Reserve Bank gathers anecdotal information on current economic conditions in its District through reports from Bank and branch directors and interviews with key business contacts, economists, market experts, and other sources. The Beige Book summarizes this information by District and sector.
Below is a comparison of the national summary and the Atlanta Fed's portion of the report, which was released on April 17:
Overall economic conditions
- National: Reports from the 12 Federal Reserve Districts suggest overall economic activity expanded at a moderate pace during the reporting period from late February to early April.
- Atlanta: Sixth District business contacts reported that economic activity continued to advance at a modest pace.
Outlook
- National: Outlooks among respondents remained optimistic across sectors and Districts, with growth mostly expected to continue at the same or a slightly improved pace.
- Atlanta: Reports across sectors were generally positive, and expectations for the coming months remained optimistic.
Consumer Spending
- National: Consumer spending grew modestly, and firms in some Districts cited higher gasoline prices, expiration of the payroll tax cut, and winter weather as factors restraining sales growth.
- Atlanta: Retail reports were mixed, with some retailers citing improved sales and others feeling the pinch from a constrained consumer.
Tourism
- National: Travel and tourism expanded across most reporting Districts, boosted by both business and leisure travel.
- Atlanta: Hospitality contacts reported healthy activity in both leisure and business travel.
Real estate
- National: Most Districts said residential and commercial real estate improved markedly since the last report. Home prices were rising in many areas of the country.
- Atlanta: Homebuilders and brokers experienced further improvements in sales and prices of new and existing homes, and inventories continued to decline on a year-over-year basis. Commercial contractors noted a strong year to date as construction levels improved from late last year.
Manufacturing
- National: Most Districts noted increases in manufacturing activity since the previous report.
- Atlanta: Overall, manufacturing activity remained positive as new orders and production increased.
Banking
- National: Loan demand was steady to slightly up in most Districts.
- Atlanta: Loan demand remained steady, according to bankers.
Employment
- National: Employment conditions remained unchanged or improved somewhat.
- Atlanta: Payrolls continued to grow at a tepid pace as firms remained reluctant in hiring, in part because of uncertainty over fiscal policy and health care reform.
Prices
- National: Aside from reports of increases in home prices and residential construction materials, price pressures remained mostly subdued across Districts.
- Atlanta: Prices remained stable and most firms continued to report having relatively little pricing power.
Based on these comparisons, the southeastern economy appears to exhibit trends similar to the rest of the nation.
The next Beige Book will be published June 5.
By Shalini Patel, an economic policy analysis specialist in the Atlanta Fed's research department
April 25, 2013 in Beige Book, Economic Growth and Development, Employment, Manufacturing, Prices, Real Estate | Permalink
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04/23/2013
Regional Employment Grew in March, Led by Florida and Georgia
On April 19, the Bureau of Labor Statistics (BLS) released the March regional and state employment and unemployment report. Data in the report show that Sixth District states added a seasonally adjusted 45,500 payrolls in March, and the aggregated regional unemployment rate dropped 0.1 percentage point, to 7.7 percent, with results generally positive across southeastern states (see the chart). The United States as a whole added 88,000 payrolls in March 2013, which means the Sixth District states accounted for a large portion of the national gain.
Notably, February payroll gains for the region were revised down by 11,800, to a new level of 29,800. Nonetheless, the three-month average employment gain for the region remained a healthy 34,500.
Sixth District highlights
- All states within the Sixth District with the exception of Tennessee added payrolls in March 2013 (see the table). The largest gains were in Florida (32,700, highest in the nation) and Georgia (13,600, third-highest in the nation).
- Leisure and hospitality (12,500) added the most jobs in Florida, followed by trade, transportation, and utilities (6,600) and construction (5,500).
- Payroll increases in Georgia came from professional and business services (6,700), trade, transportation, and utilities (4,200) and construction (3,100).
- Most of the sectors in Tennessee cut jobs over the month, with the leaders being professional and business services (down 3,300) and trade, transportation and utilities (down 2,400).
- Alabama, Louisiana, and Mississippi experienced only small increases in payrolls.
- The unemployment rate decreased in Florida (down 0.3 percentage point), Georgia (down 0.2 percentage point), and Mississippi (down 0.2 percentage point). It was unchanged in Alabama and increased in Louisiana (up 0.2 percentage point) and Tennessee (up 0.1 percentage point; see the chart).
By Neil Desai, a senior economic analyst in the Atlanta Fed’s research department
April 23, 2013 in Alabama, Employment, Florida, Georgia, Louisiana, Mississippi, Southeast, Tennessee, Unemployment | Permalink
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04/15/2013
Regional Manufacturing Remains Positive in March (and in the Longer-Term View)
Southeastern manufacturers reported expanding factory activity for the third consecutive month in March, according to the Econometric Center at Kennesaw State University. The increase in overall regional manufacturing activity reported from February to March was not as substantial as the prior two periods, but this sector continues to be one of the brighter spots in the economy. The southeastern Purchasing Managers Index (PMI) reading in March was 5.2 points above the expansion benchmark of 50 and is at its highest level since May 2012. The continued strength in manufacturing activity in the region was a result of an increase in all southeastern PMI components except for finished inventory. Of the six states that make up the Atlanta Fed’s region, four reported activity to be expanding, with Tennessee and Georgia showing the highest activity levels.
In addition, the manufacturing outlook remained healthy as well, although the March survey showed that the percentage of southeastern manufacturing contacts who expect production to be higher in the next three to six months was a bit lower than the past few months. Thirty-three percent expect production to be higher in the next three to six months, versus 45 percent for February. Still, the index level for the outlook remains a very healthy 61.
Employment data also show that the manufacturing sector is growing. Since its trough in February 2010, total manufacturing employment in the region had risen by 65,600, or 4.5 percent, a welcome sign after the manufacturing sector experienced significant job losses during the recent recession.
Recent studies also offer encouraging news for the long-term outlook of the manufacturing sector. A recent report by Capital Economics, an independent macroeconomic research company, addressed onshoring and current conditions in the manufacturing sector that could lead to a potential renaissance. In part, it said:
The offshoring boom does appear to have largely run its course but there is, as yet, little evidence of any significant onshoring. Nevertheless, with US labour costs becoming relatively more competitive, domestic energy prices falling and new technologies being developed, the medium-term outlook for the US manufacturing sector is brighter than it has been for a long time.
While many plants remain shuttered or are producing well below capacity, changes are expected to come over the next decade. Harold Sirkin, a partner at Boston Consulting Group, provides supporting comments for onshoring trends in his report Made in America, Again. Huffington Post provides support of the onshoring trend in an article, Why Onshoring High-tech Manufacturing Jobs Makes Economic Sense.
Looking more closely at the region, the latest Economic Report to the Governor, from the University of Tennessee's Center for Business and Economic Research, addressed the emergence of advanced manufacturing, which is leading to changes in the types of workers manufacturers are looking to hire:
There is no simple definition of advanced manufacturing, but it generally entails the integration of technology and sophisticated labor skills to the manufacturing process. Advanced manufacturing in principle could apply to any manufacturing firm in any sector of the economy. Robotics and additive manufacturing such as 3D printing are good examples of advanced manufacturing processes in practice.
Surveys of manufacturing activity, data regarding employment levels, and longer-term studies all point to a healthy rebound and continued expansion in the region’s manufacturing sector.
By Amy Pitts, a senior Regional Economic Information Network analyst in the Atlanta Fed’s Nashville Branch
April 15, 2013 in Employment, Manufacturing, Productivity, Southeast | Permalink
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04/11/2013
Is Transportation Feeling Sequestration’s Effects?
The Atlanta Fed’s Trade and Transportation Advisory Council recently convened at the Jacksonville Branch to discuss current economic conditions in the transportation sector. The conversation focused on various topics related to the movement of goods as well as on how fiscal tightening will impact the nation’s ports and airports.
A poll of the council members revealed that demand was slightly higher in the first quarter of 2013 for the majority of firms than it was for the same period in 2012. Most council members indicated that they are implementing price or rate increases whenever possible: trucking companies are able to assess fuel surcharges along with some nonfuel price increases as wage pressures mount for qualified and available truck drivers. Railroads continue to enjoy increases in intermodal volume as higher fuel prices drive some cargo from truck to rail. In ocean shipping, fuel costs are a percentage of the direct cost per load and thus have a material effect on the bottom line.
First-quarter 2013 employment levels were higher for a third of the council members than year-earlier levels, and half of the council members expect somewhat higher workforce levels over the next three to six months. The proportion of part-time/temporary workers has remained virtually unchanged. The majority of the council members are planning to increase the pace of capital spending; funding for capital expenditures comes from a variety of sources. Ports in particular are seeking more money from public-private partnerships.
The outlook for short-term growth by council members is less positive than it was the last time the Atlanta Fed conducted the poll, in October 2012. At that time, half expected higher growth for the next three to six months. Currently, just over one-third anticipate higher growth in the near term. However, looking out two to three years, nearly 90 percent are forecasting higher growth.
During the meeting, the council members were queried about the effects of sequestration on their industries, particularly as it relates to the furloughing of U.S. Customs and Border Protection (CBP) personnel. Members indicated that the expectation of air cargo and maritime shipping industries at the outset of sequestration was that the budget cuts would affect the ability of ports and airports to clear goods in a timely manner, which would impact perishables and just-in-time shipments. Sequestration originally called for customs agents’ overtime to be cut at ports all over the country, and in March, approximately 60,000 CBP agents received furlough notices.
Recently, there have been reports of delays impacting perishable imports at airports in the Sixth Federal Reserve District. The Miami Herald reported that imports of perishables such as flowers, fruits, vegetables, and fish are being threatened by slow cargo inspections resulting from cuts in overtime pay for customs officers. And as the flower industry gears up for one of its busiest days of the year—Mother’s Day—the potential for delays is concerning. About 90 percent of all flowers the United States imports arrive at Miami International Airport, where customs officers who specialize in perishable goods inspect them. Delayed inspections can result in the stems going bad or arriving too late to be transported across the country in refrigerated trucks. The millions of stems that come through Miami for Mother’s Day could be affected.
According to an April 3 American Shipper article, the CBP announced it was postponing plans to furlough employees after an enactment of a six-month budget for the remainder of fiscal year 2013. This appropriation gives the U.S. Department of Homeland Security more flexibility in implementing budget reductions by taking money out of other programs so as not to impact front-line personnel. This measure would provide some breathing room at ports and airports. In addition, alternative measures have been put in place, such as cross-training of inspectors and relying on private sector entities to fill in the gaps.
In addition to perishable imports, interruptions in passenger processing at airports are a concern—though these types of delays were problematic before sequestration. There have also been some reports of delays in the screening of passenger cruise ships.
Despite these scattered reports of problems, however, the consensus of the Atlanta Fed Trade and Transportation Advisory Council members was that it is still early, and the long-term effects from fiscal tightening on cargo and travelers cannot yet be fully determined.
A look at the effects of sequestration on import volumes as cuts begin to take effect will be the subject of a future blog. As always, we welcome your comments.
By Sarah Arteaga, director of the Regional Economic Information Network for the Atlanta Fed’s Jacksonville Branch
April 11, 2013 in Economic Growth and Development, Employment, Transportation | Permalink
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04/04/2013
Commercial Real Estate Gains Traction
The commercial construction market is warming up, according to participants in our latest commercial construction business contact poll and recent conversations with REIN (Regional Economic Information Network) business contacts in this sector. Our commercial construction poll surveys southeastern builders and lenders on a quarterly basis to keep us informed on changing conditions relating to activity, backlog, labor and material costs, hiring, availability of capital, and future expectations. In this SouthPoint post, we’re highlighting the poll results and comments from conversations with other business contacts that I found to be most telling.
Survey participants indicated that nonresidential construction activity, measured in square feet, is up slightly on both a quarter-over-quarter and a year-over-year basis (see the chart).
To elaborate on that observation, conversations with business contacts revealed that shelved plans are now being revisited, confidence is improving, and some degree of pent-up demand is being released. This renewed interest in commercial construction is reflected in the American Institute of Architects’ architecture billings index, which many analysts view as a leading indicator of future nonresidential construction activity. All categories—total, commercial/industrial, institutional, and mixed—have index scores above 50, signaling an increase in billings now and likely an increase in construction activity six months from now (see the chart).
Interestingly, conversations with several business contacts indicated that margins on recent bids have been extremely narrow. They suggested that this narrowness is driven, at least in part, by increased competition and fee compression. Several noted that they expect margins to increase as construction activity picks up.
Most survey participants indicated that there has been a slight increase in construction material costs, a finding that was supported by conversations with business contacts (see the chart).
The majority of survey participants indicated that the amount of available credit fell short of demand, though more participants indicated that the amount of available credit exceeded demand than did so in our previous poll (see the chart). A handful of comments, both in the survey and from discussions with business contacts, stressed that financing is available for the right type of projects that bring the appropriate amount of equity to the table and have sponsors with proven track records. Conversations with business contacts also revealed that private equity is returning to the market and serves as an alternate source of capital.
Commercial contractors expressed a willingness to add modestly to their employment levels over the next several months, a willingness that was not present at the end of last year, the survey revealed (see the chart). Conversations with business contacts echoed this sentiment. While some still have some propensity to move talent around the company or maximize efficiencies with technology (or both), more business contacts have begun to indicate that it now makes sense to add new employees.
Overall, our survey and conversations with business contacts showed that 2013 is off to a solid start, and commercial real estate markets should continue to improve as the year progresses.
By Jessica Dill, a senior economic research analyst in the Atlanta Fed’s research department
April 4, 2013 in Construction, Economic Growth and Development, Employment, Housing, Real Estate, Southeast | Permalink
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04/03/2013
Regional Employment Increases
The U.S. Bureau of Labor Statistics (BLS) released state employment and unemployment data on March 29 for the month of February. The news was rather good.
The report showed that Sixth District states added a net 41,600 payrolls in February, which is a stronger showing that January’s upwardly revised increase of 28,200. All states in the region added payrolls in February, with Tennessee (up 11,400) and Louisiana (up 9,100) leading the way.
Meanwhile, the aggregated unemployment rate for the region remained unchanged at 7.8 percent, with individual states’ results a mixed bag (see table below). The unemployment rate decreased in Florida (down 0.2 percentage point) and Georgia (down 0.1 percentage point), the two states that together make up almost 60 percent of the Sixth District’s labor market. The unemployment rate increased in the other states in the region.
By Neil Desai, a senior economic analyst in the Atlanta Fed’s research department
April 3, 2013 in Employment, Florida, Georgia, Southeast, Tennessee, Unemployment | Permalink
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03/27/2013
Better Than It Seemed
SouthPoint has discussed before the slow and bumpy improvement in regional labor markets. Both the data and information from our contacts revealed that hiring was taking place, but as we wrote in our latest Beige Book, "Hiring in District labor markets expanded at a modest pace."
Revised data from the U.S. Bureau of Labor Statistics (BLS), released March 18, showed that for most states in the Sixth District, employment growth was a bit better than originally reported. An article by the BLS details these revisions, which "reflect the incorporation of the 2012 benchmarks and the recalculation of seasonal adjustment factors for payroll employment estimates," according to the report.
Here are a few tables and charts that detail the regional revisions:
The largest upward revisions, both in nominal terms and in percent change, were in Florida. Only Georgia saw downward revisions, but they were relatively minor. For the region as a whole, employment growth was revised up by 112,000, or 0.6 percentage points. The chart below shows the originally reported data along with the revised data for the region as a whole.
Looking ahead, and more broadly, Atlanta Fed President Dennis Lockhart said in February that
Our readings of the incoming data, complemented by anecdotal characterizations of the economy provided by our contacts across the Southeast, suggest a continuation of a 2 percent GDP trend in the first quarter. For 2013 overall, I expect GDP growth to come in between 2 and 2 1/2 percent. This pace of growth implies steady, but not accelerating, net job creation. At this pace of expansion, unemployment will likely continue to decline gradually.
The fact that regional employment growth was stronger than first reported does not mean that all is well. For example, before the revisions, data showed that the region’s overall employment level was still 5.5 percent below its prerecession peak by the end of 2012. After the revisions, data indicate that we are 4.9 percent below our prerecession peak. It was better than it seemed, but it would be a stretch to say we are where we need to be.
By Michael Chriszt, vice president and community affairs officer in the Atlanta Fed's Public Affairs department
March 27, 2013 in Employment, Labor Markets, Southeast | Permalink
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