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The Atlanta Fed's SouthPoint offers commentary and observations on various aspects of the region's economy.

The blog's authors include staff from the Atlanta Fed's Regional Economic Information Network and Public Affairs Department.

Postings are weekly.


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02/06/2015


Florida's Economic Rebound Continues

During the last several months, business contacts in south Florida have been reporting improving economic conditions. They've discussed increased opportunities for capital expenditure projects, optimistic hiring plans, and a general upturn in business activity. This optimism made me wonder if the data on Florida's economic activity reflected what we've been hearing from our contacts in south Florida.

In November, coincident economic indicator, which measures overall economic activity, was 155.99 (see the chart). The index has been steadily improving since 2012. Although it has not yet reached its peak of 160.87 from February 2007, it seems to be within reach. While the November data for metro areas are not yet available, our South Florida business contacts recently indicated that the economy in south Florida continues to improve. Falling oil prices have not had a direct impact on businesses yet, though the general consensus is that oil's price decline is good for the consumer and consumer spending should improve if these lower prices are sustained.

chart-one

On the manufacturing front, the Southeast Purchasing Managers Index, which is produced by the Econometric Center at Kennesaw State University and measures regional manufacturing activity, declined to 54.1 in November (see the chart). However, with the exception of this past September, it has remained in expansionary territory since August 2012. (A reading above 50 indicates expansion in overall activity; a reading below 50 indicates a decline.)

chart-two

Regarding employment, payroll employment in Florida hit its trough in March 2007 and has been steadily increasing since then. In November, payroll employment in the state increased by 41,900 to 7.897 million employed, remaining slightly below the prerecession peak of 8.053 million (see the chart). South Florida business contacts, however, specifically report continued challenges in filling positions with specialized skills in technology, mathematics, engineering, management, and lending.

chart-three

While Florida's unemployment rate has a ways to go before reaching its prerecession low of 3.3 percent, it improved steadily from April 2012 through December 2013 and then plateaued at a little more than 6 percent for the first eight months of 2014 (see the chart). A downward trend in unemployment started in August of last year, reaching 5.8 percent in November. Anecdotally, we heard positive reports from contacts in the employment sector of an uptick in activity from employers using employment agencies to fill open positions.

chart-four

As you can see from the data above, overall economic activity continues to look promising in Florida, supporting the information we've been receiving from business contacts. Let's hope conditions remain accommodative and that our contacts continue to report good news.

By Marycela Diaz-Unzalu, a senior Regional Economic Information Network analyst at the Atlanta Fed's Miami Branch

February 6, 2015 in Economic Growth and Development, Florida, Southeast, Unemployment | Permalink

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02/03/2015


Charting Employer Sentiment in the Southeast

In a recent speech, Atlanta Fed President Dennis Lockhart remarked, "Overall, there was more improvement in labor markets in 2014 than in any other year of the recovery. Employment conditions are improving, and improving faster, and prospects of continued progress are encouraging moving into the new year."

Although President Lockhart was referring to national labor market conditions in his speech, his assessment holds true for the Southeast as well. In 2014, the Atlanta Fed's Regional Economic Information Network (REIN) staff polled business contacts across the Southeast both at the beginning of the year and the end to get a sense of their hiring plans for the year ahead. Polling our contacts twice allowed REIN to gauge whether business hiring plans had changed during the course of the year, and we shared the January results with you. Fast-forward to last November, when we approached our contacts to ask the same set of questions. We were pleasantly surprised to see that the results were more upbeat.

The survey was conducted from November 10–19 and resulted in a total of 303 responses from a wide variety of firm types and sizes. In this post, we want to share the results as well as some comparisons over time.

The survey's first question asked contacts whether they expect to increase employment, leave employment unchanged, or decrease employment in 2015. The results showed that 59 percent of respondents said they planned to increase employment levels over the next 12 months; up from 46 percent in January and the highest reading in the six times we've conducted this survey. Another 31 percent indicated they planned to leave employment levels unchanged; down from 44 percent in January and the lowest reading since we began asking these questions in 2011. The remaining 10 percent of participants planned to decrease payrolls; unchanged from the beginning of the year. As the chart below shows, a noticeable shift in sentiment took place from January, when we last asked this question. It appears that firms that said they would leave employment levels unchanged are now saying they would increase employment.

Do-you-expect

Focusing on the 59 percent of firms that indicated that they planned to increase employment, we asked them to give us the top three motivating factors driving their decision. The most frequently cited reasons were similar to past results. The majority of firms cited high expected growth of sales as the most important reason for increasing employment. For the second most important factor, two selections garnered similar levels of response: current staff was overworked, and the firm needed skills not currently possessed by existing staff. Finally, the third factor was improvement in the firm’s financial position (see the chart).

Conversely, we also wanted to learn the top three factors restraining hiring. Similar to January, firms' primary concern remained their need to keep operating costs low. Other frequently selected reasons were the firms' inability to find workers with the required skills and uncertainties related to regulations or government policies. What stood out this time was that a larger share of firms said that they were unable to find workers with required skills: 13.8 percent in January compared with 21.0 percent in November. Also, fewer contacts said that expected sales growth was low: 15.2 percent in January compared with 9.7 percent in November. Additionally, uncertainty about health care costs subsided; a smaller share of firms noted this factor as a reason for not hiring (see the chart).

In short, it's clear that employment levels in the Southeast should improve this year, which is exactly what we said this time last year. Were we correct for 2014? Now that we have data in hand, let's see. According to the latest employment data from the U.S. Bureau of Labor Statistics, the district averaged 38,800 net payrolls per month for 2014, up from 33,600 net payrolls a month in 2013. So our contacts did, in fact, increase payrolls like they said they would last year. Let's see what happens this year!

Photo of Shalini PatelBy Shalini Patel, a REIN director in the Atlanta Fed's research department

February 3, 2015 in Employment, Jobs, Recession, Southeast | Permalink

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01/15/2015


O Manufacturing, Is Winter Thy Enemy?

While in high school, I really enjoyed studying Shakespearean literature. Not because I liked the plays so much, but because I enjoyed trying to speak Shakespearean. It became a go-to move when I was trying to aggravate my mother. "Mom, would thee please passeth the potatoes ere I starve to death?" My mother would look at me with complete exhaustion but would always pass the potatoes.

While mulling over the data from the December Southeast purchasing managers index (PMI) report released on January 5, I was reminded of last winter and a Shakespeare quotation. A partial line from his play As You Like It read, “Here shall he see no enemy but winter and rough weather” (act 2, scene 5). If you remember, last winter’s weather caused problems for manufacturing activity across much of the country. According to the Southeast PMI, December had been a lackluster month for regional manufacturing activity for several years, and 2014 was no different.

The Atlanta Fed’s research department uses the Southeast PMI to track regional manufacturing activity. The Econometric Center at Kennesaw State University produces the survey. It provides an analysis of current market conditions for the manufacturing sector in Alabama, Georgia, Florida, Louisiana, Mississippi, and Tennessee. The PMI is based on a survey of representatives from manufacturing companies in those states and analyzes trends concerning new orders, production, employment, supplier delivery times, and inventory levels. A reading above 50 indicates that manufacturing activity is expanding, and a reading below 50 indicates that activity is contracting.

After indicating expansion every month this year, the overall PMI fell below the 50 threshold for expansion in December (see the chart). All underlying variables in the December PMI report fell except for finished inventories. In some cases the decreases were significant. The PMI decreased to 45.6, which was a 12.7 point drop compared with November.

  • The new orders subindex fell below the 50-point threshold for expansion for the first time since January, decreasing 27.0 points compared with the previous month.
  • The production subindex fell 19.8 points compared with November, also falling below the 50-point threshold for expansion.
  • The employment subindex fell 10.6 points from November but remained in expansionary territory for the fifteenth consecutive month.
  • The supply deliveries subindex decreased 7.3 points from the previous month to 50.0, which represents no change in activity.
  • The finished inventory subindex inched up 1.2 points compared with November and now also reads 50.0.
  • The commodity prices subindex fell to 42.0, a 10.4 point decrease compared with November.

Southeast-purchasing-managers

However, optimism rose in December versus November. When asked for their production expectations during the next three to six months, 66 percent of survey participants expected production to be higher going forward.

Is it just coincidence that winter began and manufacturing activity slowed? One could point to several other factors for the decrease. Maybe the strong dollar is reducing manufacturing exports, or maybe the fall in oil prices is affecting production activity. It’s still too early to know for sure. Based on optimism for future production, let’s hope it was just a one-month anomaly. The Atlanta Fed will be watching—or in my best Shakespeare, "we shalt be watching."

By Troy Balthrop, a senior Regional Economic Information Network analyst in the Atlanta Fed's Nashville Branch

January 15, 2015 in Manufacturing, Southeast | Permalink

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12/23/2014


Florida's Job Report Shines Bright

On December 19 the U.S. Bureau of Labor Statistics published November 2014 state-level labor market data. This release followed the national report published on December 5, which revealed an impressive 321,000 jobs were added on net in November, while the unemployment rate held firm at 5.8 percent. The state-level data helps us determine how the Sixth District labor market compared with the national labor picture. On aggregate, Sixth District states appear to have fared well. The district contributed 49,500 jobs in November, 15 percent of the national figure. However, although the sum of jobs added in the Sixth District last month was the highest since April, losses in some states brought the aggregate number down a bit.

Florida becomes the region's top jobs contributor
One Sixth District state had a stellar month of job gains and an unemployment rate that declined to match the national rate. If you guessed the Sunshine State, you were correct. Florida was the top contributor of jobs in the district by far, with 41,900 jobs added on net (see the chart).

Contributions-to-change

Florida's job growth in November was the most the state has added in four and a half years, when it contributed 45,200 payrolls in May 2010. The November number reflects 85 percent of all jobs created in the district, and it follows a strong month in October as well, when 34,400 jobs were added on net in the state. At 5.8 percent, Florida's unemployment rate in November was the lowest it's been since May 2008, when it was 5.7 percent.

So where did these jobs come from? Though November's gains occurred in nearly all sectors, the largest contributions came from trade, transportation, and utilities (up 12,700), leisure and hospitality (up 8,400), and financial activities (up 5,800) (see the chart).

Florida-payroll-contributions

Within the trade, transportation, and utilities sector, retail added 8,400 jobs on net, followed by transportation, warehousing, and utilities, which added 3,500 jobs, and wholesale trade, which gained 800 jobs. Looking at Florida's payroll contributions over the year so far, you can glean that the trade, transportation, and utilities sector has often performed well. In fact, the sector has contributed 47,600 jobs in Florida so far this year, 30,200 from retail alone. The other big contributors over the last 11 months have been the leisure and hospitality (up 42,700), professional and business services (up 40,500), and goods-producing (up 39,000, with 33,500 from construction) sectors (see the chart).

Florida-payroll-contributions-by-sector

Looking at the losses
A few Sixth District states saw payroll declines in November, losses the district had not seen on aggregate since June. Tennessee's loss of 1,900 jobs in November was the first time the state encountered net losses since June. The largest decreases occurred in the trade, transportation, and utilities (down 2,000 payrolls) and leisure and hospitality (down 1,900) sectors. In addition, for the first time since January, Louisiana experienced job losses in November, with 2,600 jobs subtracted on net. The goods-producing sector drove the losses, shedding 3,400 jobs. Within the sector, 3,000 construction jobs were lost. Additionally, Louisiana's unemployment rate rose in November for the seventh month in a row to 6.5 percent, increasing 2.0 percentage points since April. In fact, the movements in unemployment rates of Sixth District states, particularly during the last few months, indicate that all states rates are trending down except Louisiana (see the chart).

Unemployment-rates

Furthermore, Mississippi experienced net job losses in November, shedding 4,500 payrolls. The bulk of the losses were in the leisure and hospitality (down 2,200) and professional and business services (down 1,700) sectors. Mississippi also had the highest unemployment rate in the United States in November with 7.3 percent (previously, another Sixth District state—Georgia—held that distinction for three months in a row).

Overall, the Sixth District's aggregate payroll contributions in November and a declining unemployment rate seen over a three-month trend are positive signs of continued strengthening in the labor market. However, a distinction must be made between the aggregate and state-by-state figures, considering the Sunshine State's occasional tendency to outshine its cohorts, as seen in November's data.

The state-level labor market report for December will be released on January 27, 2015, and we'll parse its numbers for you.

Photo of Rebekah DurhamBy Rebekah Durham, economic policy analysis specialist in the Regional Economic Information Network at the New Orleans Branch of the Atlanta Fed

December 23, 2014 in Florida, Southeast | Permalink

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12/12/2014


A Closer Look at Earnings in the Southeast

It is widely accepted that average incomes can vary from location to location. A look at recent data on average earnings by state compiled by the Regional Economic Analysis Project demonstrates the variability in average earnings among Southeast states. Average earnings in all six states in the Federal Reserve Bank of Atlanta’s district fall below the national average. Within the district, average wages are notably higher in Georgia, Louisiana, and Tennessee than in Mississippi, and they are somewhat higher than in Alabama and Florida (see the chart).

Average_earnings_per_payroll

Average wages largely reflect the mix of jobs in the state, and so the differences across states partly reflect differences in the industry mix as noted in this report. The table below shows the industry mix of employment among Southeast states:

2013_payroll_employment

We might expect to see similarities in average wages across state lines within a particular industry, but in fact average earnings also vary considerably from state to state among almost every broad sector (see the table; figures highlighted in yellow are above the national average):

2013_average_earnings

This information suggests that there is also a lot of variation across states in other factors such as the types of jobs and the mixture of types of businesses within the industry. In fact, the industry categories used here are rather broad and probably encompass a wide range of possible job and business types.

The preceding gives a snapshot of the earnings picture in the region at a point in time. Another perspective is to look at the pattern of earnings over time.

In the chart below, we show for each state a ratio of per-worker wages to the national average. This ratio allows us to see how state wages have compared to the national trend over time (a reading above 1.0 for a given state indicates wages per employee are higher than the national wage per employee measure).

Relative_average_earnings

Several things jump out at you as you look at the chart. Once again, per-worker wages among Sixth District states have been below the national level during the last three decades. (The exception is Louisiana, which saw a run-up in wages that coincided with the sharp rise in oil prices in the late 1970s, followed by a sharp drop as the oil industry went bust.) Also, you can see the rise in wages following Hurricane Katrina’s landfall on August 29, 2005.

Wages in Alabama, Florida, and Tennessee were very similar from the late 1980s until the early 1990s, when all three (to varying degrees) experienced a decline in wages. Much of this decline coincided with the decline in manufacturing jobs that took place during this time and affected the entire region. The nondurable manufacturing sector, which accounted for nearly half of all manufacturing jobs in the region (but only about 40 percent of manufacturing jobs nationally), was particularly hard hit as many textile and apparel firms shifted jobs outside the United States after the North American Free Trade Agreement (NAFTA) was implemented on January 1, 1994 (as noted here and here). It wasn’t until the early 2000s that wages across much of the region began to rise. This period coincided with improvements in the manufacturing sector, driven by the durable sector as the automotive industry moved more production to the region, as noted in this paper, and new home production increased as well, particularly in Florida. The subsequent bust in the housing market later in the decade put downward pressure on wages, most notably in Florida.

Average Georgia wages grew strongly during the 1980s and very nearly equaled the national level from the mid-1980s to early 2000s. A striking feature is how Georgia has lost ground relative to the United States since about 2000. Interestingly, this decline in relative performance coincided with a sharp retrenchment in employment in the information technology industry from December 1993 to October 2000. Employment in the relatively high-paying information sector grew by 57 percent in Atlanta (a city that represented about 55 percent of Georgia’s employment base at the time), but by January 2005 employment in that sector had shrunk by 23 percent. Weaker demand for workers in the technology sector may have contributed to declining average wages in Georgia relative to the United States during the early 2000s even as relative wages were rising elsewhere in the region.

Since the end of the Great Recession, wages per worker have varied across the region, with the overall effect being flat to slightly falling average wages compared with the national trend.

So wages vary by location, and the industry and occupational mix clearly influences these differences. Moreover, over time, shocks (both positive and negative) to a particular industry can have a strong influence on average wage growth within a state.

Photo of Whitney MancusoBy Whitney Mancuso, a senior economic analyst, both of the Atlanta Fed's research

December 12, 2014 in Employment, Southeast | Permalink

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12/10/2014


Has Southeast Manufacturing Found Some Optimism?

Have you ever lost your car keys? How about your wallet? I hate looking for things. I was never one to enjoy an Easter egg hunt. It's maddening when I can't find something. Lately in SouthPoint, I've been searching for a little optimism coming from the manufacturing sector. Following a string of strong reports from the Southeast purchasing managers index (PMI), optimism among manufacturers in the Southeast deteriorated significantly in October. According to the October PMI report, only 21 percent of manufacturers expected production levels to be higher during the next three to six months, down 29 percentage points from the prior month's reading. I was wringing my hands trying to figure out whether the weakness in October was an anomaly or a sign of something deeper. So did the November report disappoint me? No: the November Southeast PMI report, released on December 5, indicated that optimism is back.

The Atlanta Fed's research department uses the Southeast PMI to track regional manufacturing activity. Produced by the Econometric Center at Kennesaw State University, the survey analyzes current market conditions for the manufacturing sector in Alabama, Georgia, Florida, Louisiana, Mississippi, and Tennessee. The PMI is based on a survey of representatives from manufacturing companies in those states and analyzes trends concerning new orders, production, employment, supplier delivery times, and inventory levels. A reading above 50 indicates that manufacturing activity is expanding, and a reading below 50 indicates that activity is contracting.

Most underlying variables in the November PMI report were generally positive (see the chart). Despite decreases in the new orders and production subindexes, the PMI increased to 58.3 in November, which was a 1.8 point rise compared with October.

  • The new orders subindex decreased 3.4 points from October but remained above 60.0 points for the third consecutive month with a reading of 61.0.
  • The production subindex fell 7.6 points compared to the previous month, but similar to the new orders subindex, it remained close to 60.0 points, registering 59.8.
  • The employment subindex rose significantly, increasing 9.8 points over October. November's 64.6 is the highest reading for the employment subindex since June 2013.
  • The supplier deliveries subindex rose 2.5 points over October. The rise suggests that purchasing agents are experiencing longer wait times to receive materials they ordered.
  • The finished inventory subindex rose 7.4 points compared with October and now reads 48.8. The rise completely reversed last month's fall of 5.7 points.
  • The commodity prices subindex rose to 52.4, a 1.5 point increase compared with October.

SE-Purchasing-Managers

As I mentioned above, optimism rose significantly in November over October levels. When asked for their production expectations over the next three to six months, 51 percent of survey participants expected production to be higher in that period.

Along with the strong Southeast PMI reading, the national PMI also continued to register strong readings, reaching 58.7 points in November. (Note that the Southeast PMI is not a subset of the national PMI.) Now that optimism is back on the right track, manufacturing looks to close out 2014 on a strong note. And most importantly, I don't have to keep looking for optimism.

By Troy Balthrop, a senior Regional Economic Information Network analyst in the Atlanta Fed's Nashville Branch

December 10, 2014 in Manufacturing, Southeast | Permalink

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12/02/2014


Southeast Commercial Construction Continues Gathering Steam

Through September 2014, U.S. total private construction spending increased 3.38 percent from the year-earlier level. How did the various categories stack up in terms of their contribution to this year-over-year increase in total private construction spending? The multifamily and nonresidential categories together accounted for 4.34 percent of the change, and new single-family and residential improvements combined to shave 0.96 percent off the change (see the chart).

Contribution-to-year-over-year

Does commercial construction activity in the Southeast mirror that of the nation? On a quarterly basis, the Atlanta Fed polls southeastern business contacts engaged in commercial construction to track and better understand regional trends in construction activity. The latest poll results appear to tell a story similar to the one that the national numbers depict.

Most respondents indicated that the pace of nonresidential construction activity and the pace of multifamily construction activity in the Southeast continued to be ahead of the year-earlier level (see the charts).

Pace-on-nonresidential

Pace-of-multifamily

More than 80 percent of respondents reported a backlog that was similar to or greater than the year-earlier level, signaling that the pipeline of future activity remains fairly robust (see the chart).

Backlog-vs-year

The number of respondents reporting that the amount of available credit met or exceeded demand continued to increase from earlier reports. In the third quarter of 2014, 82 percent of contacts indicated that credit was sufficiently available, compared with 68 percent the previous quarter and 78 percent one year earlier (see the chart).

How-available-do-you

While half of respondents noted that they expect their headcount to remain the same from this quarter to the next, 44 percent of respondents indicated that they were planning to do a modest to significant amount of hiring in the fourth quarter of 2014 (see the chart).

Hiring-plans

Relative to the previous quarter, fewer contacts indicated that they were having a difficult time filling positions (see the chart).

Difficulty-filing

Most contacts reported some degree of upward pressure on labor costs. When looking across the brackets of labor cost increases, most of the pressure seemed to be concentrated in the category indicating that labor costs are up from 3 to 4 percent versus a year ago. This response marks a shift from prior periods, when the pressure appeared concentrated in the bracket indicating that labor costs were up from 1 to 3 percent. Continuing a trend that we’ve noted over the past few quarters, a growing share of contacts (more than 80 percent) indicated that their labor costs had increased more than 3 percent from year-earlier level (see chart).

Labor-costs

The next poll will open on January 5, 2015. If you are a commercial contractor and would like to participate in this poll, please let us know by sending a note to RealEstateCenter@atl.frb.org.

Note: Third quarter 2014 poll results were collected October 6–15, 2014, and are based on responses from 18 business contacts. Participants in this poll included general contractors, subcontractors, lenders, developers, and material fabricators with footprints of varying sizes across the Southeast.

Photo of Jessica DillBy Jessica Dill, senior economic research analyst in the Atlanta Fed's research department

December 2, 2014 in Business Cycles, Construction, Southeast | Permalink

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11/25/2014


Employment Momentum Grows in Florida and the Retail Sector

The U.S. Bureau of Labor Statistics published October 2014 state-level labor market data on November 21. For Sixth District states, a couple of factors stood out. First, after several months of anemic job growth, Florida employers added lots of jobs. In fact, Florida contributed 61 percent of October's net payrolls to the region. Second, although job gains were solid in a number of sectors, retail shined with 13,300 jobs added on net across the District, a figure that represents nearly half of the 27,100 jobs added to the sector in the entire United States in October. These regional retail job growth data confirm what the folks in our Regional Economic Information Network described earlier this month in their recap of economic intelligence gathered from business contacts across the Southeast: retailers anticipate strong holiday sales, and this anticipation translated into robust seasonal hiring in the retail sector in October.

A summary of the payroll and unemployment data for Sixth District states sheds more light on recent activity.

Payrolls flex some muscle
Employers in all Sixth District states except Mississippi added to payrolls: 56,600 jobs were added on net (see the chart). Florida dominated aggregate net gains in October, adding 34,400 jobs on net. Most of these gains came from the leisure and hospitality sector (up 9,300). Big contributors to Florida gains also included the educational and health services (up 9,000), professional and business services (up 6,100), and goods-producing sectors (up 5,100). (The good-producing sector was up 6,200 payrolls from construction alone but was reduced by losses in manufacturing.)

The sectors with payroll additions varied by state, though gains in the trade, transportation, and utilities sector were prevalent, with 16,800 net jobs added. Gains in this sector were dominated by retail trade (see the chart), which was the only sector tracked by all states that added jobs in every Sixth District state in October. This increase is typical for October, as retailers gear up for the holidays.

Employment momentum in the retail sector has been building for most of the region's states for a few months now (see the chart).

District gains in the professional and business services sector were also sizeable, with 13,100 jobs added. Momentum in this sector has been building in district states (see the chart). However, two states subtracted jobs from this sector in October: Louisiana (down 1,200) and Mississippi (down 1,500).

A few other facts about the Sixth District's October payrolls and sectors are noteworthy:

  • Alabama added 2,200 jobs on net. The leisure and hospitality (up 3,200) and professional and business services (up 1,400) sectors were the top contributors. The biggest losses occurred in the government (down 1,500); trade, transportation, and utilities (down 600); and financial activities (down 500) sectors.
  • In Florida, aside from job gains mentioned above, payrolls fell in the information (down 2,100) and financial activities (down 100) sectors.
  • Employers in Georgia added 11,600 jobs on net. The largest gains occurred in trade, transportation, and utilities (up7,900, with 4,700 of those payrolls from wholesale trade) and professional and business services (up 5,400). The biggest losses came from government (down 3,200) and financial activities (down 1,200).
  • Louisiana added 1,200 payrolls on net, most of which came from the trade, transportation, and utilities (up 1,500) sector. That sector was up 2,900 from retail trade, reduced by losses in wholesale trade) and educational and health services (up 1,200) sectors. The biggest losses occurred in leisure and hospitality (down 2,600) and professional and business services (down 1,200).
  • Mississippi was the only district state to subtract payrolls from the aggregate district figure. The largest losses came from the professional and business services (down 1,500) and government (down 700) sectors. The only gains occurred in the educational and health services (up 1,300), leisure and hospitality (up 500), and trade, transportation, and utilities (up 400) sectors.
  • Tennessee employers increased payrolls by 7,900 on net. The largest increases occurred in the trade, transportation, and utilities (up 3,500) and professional and business services (up 2,900) sectors. The biggest losses occurred in educational and health services (down 700) and leisure and hospitality (down 400) sectors.

Regional unemployment declines, if only slightly
The aggregate district unemployment rate was 6.6 percent in October, a decline of 0.2 percentage point from September (see the chart).

The rate fell in all states except for Louisiana, where it increased to 6.2 percent from 6.0 percent the previous month and was the sixth straight month of an increasing unemployment rate in that state. As I reported last month, this isn't necessarily a bad thing in the short run, since the state added jobs yet appears to have increased its labor force participation rate.

The unemployment rate fell in all remaining District states. Alabama's rate fell 0.3 percentage point in October to 6.3, its lowest rate in nine months. Florida's rate fell 0.1 percentage point to 6.0 percent, the lowest it's been in more than six years. The unemployment rate in Georgia fell for the second month in a row, to 7.7 percent in October from 7.9 percent in September. Though Georgia's unemployment rate declined, it had the highest rate in the United States in October for the third month in a row, at 7.7 percent. Mississippi's rate declined 0.1 percentage point to 7.6 percent, the lowest it's been in six months. In Tennessee the unemployment rate was 7.1 percent, a 0.2 percentage point decline from September.

So once again, collectively, the Sixth District states' labor market showed continued strengthening in October, particularly the state of Florida and the retail sector.

Hopefully, this progress continues for the month of November. We'll see when the data are released on December 19.

Photo of Rebekah DurhamBy Rebekah Durham, economic policy analysis specialist in the New Orleans Branch of the Atlanta Fed

November 25, 2014 in Economic Growth and Development, Employment, Florida, Jobs, Labor Markets, Retail, Southeast | Permalink

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11/24/2014


Conditions Soften for Southeastern Housing

The Atlanta Fed's latest poll of regional residential brokers and homebuilders shows an increase in the number of contacts reporting softening home sales and construction activity. The two charts below show indexes near or below zero.

Oct-SE-Home-Sales

Oct-SE-Construction

This softening appears to be the result of normal seasonal factors, but even so, it seems a good time to revisit a question we posed one year earlier, where we ask builders to look ahead over the next 12 months and characterize risks to their outlook.

Interestingly, builder contacts indicated that access to development finance and lot availability continues to pose significant risks to their outlook. They also reported that land position and labor shortages have become more significant risks compared to one year ago (see the table).

Chart_nov_oct

In addition to highlighting the risks that have come into the forefront during the past year, it also seems worthwhile to point out that a few of the risks have fallen off a bit since we last posed this question. For instance, only one-third of respondents considered rising mortgage rates to be significant risk to their outlook in November 2014 compared to two-fifths of respondents in October 2013. And only one-fourth of respondents indicated that consumer confidence was a significant risk to their outlook in November 2014 compared to nearly two-fifths in October 2013.

To explore these results in more detail, or to view other results that were not discussed in this post, please visit our Construction and Real Estate Survey results web page.

Note: The latest poll results, which reflect activity in October 2014, are based on responses from 35 residential brokers and 24 homebuilders and were collected November 3–12. If you would like to participate in this poll, you may sign up here.

Photo of Jessica DillBy Jessica Dill, senior economic research analyst in the Atlanta Fed's research department

November 24, 2014 in Construction, Housing, Southeast | Permalink

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11/13/2014


Signs Point Up for Regional Manufacturing

Have you ever noticed all the signs in the world around you? They are everywhere. Many of them can prompt some deep thought. For instance, I was recently driving to work one morning, and three deer ran out in the road in front of me. Luckily, I didn't hit them, but it made me wonder: Who decides where to put deer crossing signs? How do they know a deer wants to cross the road right there?

Speaking of signs worth your attention, the signs for southeastern manufacturing are pointing up, according to the latest Southeast Purchasing Managers Index (PMI), which was released on November 6. The report suggests that things look pretty strong, and digging into the report, one could conclude that things are even stronger than they initially appear.

The Atlanta Fed's research department uses the Southeast PMI (produced by the Econometric Center at Kennesaw State University) to track manufacturing activity in the Southeast. The survey analyzes current conditions in the manufacturing sector in Alabama, Georgia, Florida, Louisiana, Mississippi, and Tennessee. The Southeast PMI is based on a survey of representatives from manufacturing companies in those states and analyzes trends in new orders, production, employment, supplier delivery times, and inventory levels. A reading above 50 indicates that manufacturing activity is expanding, and a reading below 50 indicates that activity is contracting.

The PMI increased to 56.5 in October, which was a 1.5 point increase over September (see the chart). Some notable highlights:

  • The new orders subindex remained especially strong in October, registering 64.4, which is a 3.4 point increase over September's 61.0. New orders have averaged a solid 60.7 for the year.
  • The production subindex increased significantly to 67.3 during October, 8.3 points higher than September's reading of 59.0.
  • The employment subindex fell 2.2 points from the previous month. October's reading of 54.8 still indicates that manufacturing payrolls are increasing.
  • The supplier deliveries subindex rose 3.8 points during October, indicating that delivery of inputs is slowing as a result of high demand.
  • The finished inventories subindex fell 5.7 points compared with September and sits at 41.3. The fall in finished inventories suggests that inventory levels are lower than the previous month and could lead to higher orders in the near future.
  • The commodity prices subindex fell to 51.0, a 2.0 point decrease from September.
Southeast Purchasing Managers Index

When asked for their production expectations over the next three to six months, only 21 percent of survey participants expect production to be higher, down from 50 percent in September. According to the survey, 19 percent of survey respondents expect production to be lower than their current production levels. Those responses imply that 60 percent expect production to stay at current levels.

So to recap: The PMI indicates that regional manufacturing has seen strong new orders and production, employments levels are expanding, demand for inputs could be slowing deliveries, inventory levels are falling, commodity prices are essentially flat, and most purchasing managers are expecting to remain at their current levels of production. Although the low production expectations for the next three to six months prevent it from being a perfect set of conditions, they collectively indicate strong manufacturing activity in the near future. Just as with the deer crossing signs, I'll be paying close attention.

By Troy Balthrop, a Regional Economic Information Network analyst in the Atlanta Fed's Nashville Branch

November 13, 2014 in Economic conditions, Employment, Inventories, Manufacturing, Prices, Productivity, Southeast | Permalink

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