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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.
February 13, 2015
Southeastern Manufacturing Sees No Shadow
In a January SouthPoint post, I suggested that winter posed problems for manufacturing last year, and after the release of December's lackluster Southeast Purchasing Managers Index (PMI) report, it appeared that 2015 might get off to a slow start as well. Then the really disconcerting news hit: America's favorite groundhog saw its shadow on February 2, predicting six more weeks of winter. Would this event affect southeastern manufacturing going forward? According to the January Southeast PMI report, released on February 6, the answer was a resounding no!
The Atlanta Fed's research department uses the Southeast PMI to track manufacturing activity in the Southeast. 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 contracting in December for the first and only time in 2014, the Southeast PMI bounced back with vigor in January (see the chart). The overall reading rose 10.0 points over December to 55.6 and saw a healthy rise in most subindexes.
- The new orders subindex rebounded 23.4 points over December, seeing the subindex increase to a solid 57.4 reading.
- The production subindex also saw a significant gain over last month, rising 21.1 points to a 61.1 reading.
- The employment subindex rose 5.3 points over December and remained in expansionary territory for the 16th consecutive month, suggesting that manufacturing payrolls continue to grow.
- The supplier deliveries subindex increased 1.9 points from the previous month to 51.9.
- The finished inventory subindex fell 1.9 points compared with December. The 48.1 reading suggests that inventories may be slightly below optimal levels, and production could ramp up in the near term as a result.
- The commodity prices subindex continued its slide, falling another 5.0 points compared to last month.
Optimism was at healthy levels in January as well. When asked for their production expectations during the next three to six months, 61 percent of survey participants expected production to be higher going forward.
The January report was a nice reversal from the December data and provides a strong start to 2015. Hopefully, the momentum will carry over to the entire year. Although we love Punxsutawney Phil as much as anyone, we hope his weather forecast doesn't hamper manufacturing activity. So far in 2015, there are no shadows in the Southeast.
By Troy Balthrop, a senior Regional Economic Information Network analyst in the Atlanta Fed's Nashville Branch
February 12, 2015
Southeastern Labor Market Continues Strengthening
December 2014 state-level labor market data from the U.S. Bureau of Labor Statistics reflected a strengthening labor market among Sixth District states, with a declining aggregate unemployment rate and solid job gains.
Unemployment rates decline, albeit modestly
The aggregate district unemployment rate in December was 6.2 percent, a 0.2 percentage point decline from the previous month and 0.5 percentage point lower than a year ago. Although higher than the 5.6 percent national figure, the aggregate rate continues to trend down. In fact, Florida matched the national unemployment rate in December and Alabama came very close (see the chart).
The unemployment rate declined in nearly all southeastern states. Alabama's unemployment rate fell to 5.7 percent, and Florida's rate declined to 5.6 percent, the lowest level in nearly seven years for both states. At 6.9 percent, Georgia's unemployment rate continued on a downward path, as did Tennessee's, with an unemployment rate of 6.6 percent. For the second month in a row, Mississippi had the highest unemployment rate in the United States with 7.2 percent, a distinction the state has taken turns owning with Georgia since June 2014.
In Louisiana, the unemployment rate rose again (for the eighth straight month) to 6.7 percent in December. What's going on there? As I've mentioned a few times (here, here, and here), increases in the labor force are the driver of unemployment rate increases in the state, as opposed to people actually losing jobs on net. This isn't a bad thing, especially considering the state added more than 6,000 jobs in December (I'll discuss that shortly). Louisiana just added more people looking for work than the number of people who found work, hence the increase in unemployment. In fact, from January to December 2014, Louisiana's labor force grew by 4.8 percent (while the number of employed grew by just 2.8 percent). An increase like 4.8 percent may not seem like a big number, but when you look at the national figure of 0.4 percent during the same period, Louisiana's labor force growth stands out. National data released last week for the month of January told a similar story: the unemployment rate ticked up 0.1 percentage point to 5.7 percent from 5.6 percent in December, yet much of this increase can be attributed to labor force gains that outpaced gains in employment.
Payrolls also see modest growth
On net, the District added 47,400 jobs in December, and every state experienced positive job growth (see the chart). This contribution makes up 19 percent of the national payroll contribution of 252,000. On aggregate, the industries that contributed the most net jobs in the Sixth District were professional and business services (up 9,800), health care (up 8,300), and accommodation and food services (up 5,200).
Here are some key state-by-state payroll facts from the December report:
- Alabama added 1,000 net payrolls. Much of the state's contributions were reduced by losses in the professional and business services sector (down by 2,400).
- Florida added 12,700 jobs on net, mostly from the professional and business services (up 5,800) and health care (up 4,900) sectors.
- Georgia contributed 14,100 net payrolls. Gains were widespread, yet the sector contributing the most jobs was health care (up 3,100).
- Louisiana added 6,200 net payrolls. Gains were widespread in this state as well, though the biggest contributor was the accommodation and food services sector (up 1,600).
- Employers in Mississippi added 900 net payrolls. Gains in the professional and business services sector (up 1,100) were reduced by losses in other sectors.
- Tennessee employers added 12,500 net payrolls. The largest increases occurred in the goods-producing (up 5,300) and retail trade (up 2,400) sectors. employers added 12,500 net payrolls. The largest increases occurred in the goods-producing (up 5,300) and retail trade (up 2,400) sectors.
Overall, the report was a sign of improving labor market conditions across the Sixth District states, a trend we hope to see continue into 2015.
By Rebekah Durham, economic policy analysis specialist in the New Orleans Branch of the Atlanta Fed
February 6, 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.
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.)
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.
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.
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 3, 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.
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!
By Shalini Patel, a REIN director in the Atlanta Fed's research department
February 13, 2015
Southeastern Manufacturing Sees No Shadow
In a January SouthPoint post, I suggested that winter posed problems for manufacturing last year, and after the release of December's lackluster Southeast Purchasing Managers Index (PMI) report, it appeared that 2015 might get off to a slow start as well. Then the really disconcerting news hit: America's favorite groundhog saw its shadow on February 2, predicting six more weeks of winter. Would this event affect southeastern manufacturing going forward? According to the January Southeast PMI report, released on February 6, the answer was a resounding no!
The Atlanta Fed's research department uses the Southeast PMI to track manufacturing activity in the Southeast. 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 contracting in December for the first and only time in 2014, the Southeast PMI bounced back with vigor in January (see the chart). The overall reading rose 10.0 points over December to 55.6 and saw a healthy rise in most subindexes.
- The new orders subindex rebounded 23.4 points over December, seeing the subindex increase to a solid 57.4 reading.
- The production subindex also saw a significant gain over last month, rising 21.1 points to a 61.1 reading.
- The employment subindex rose 5.3 points over December and remained in expansionary territory for the 16th consecutive month, suggesting that manufacturing payrolls continue to grow.
- The supplier deliveries subindex increased 1.9 points from the previous month to 51.9.
- The finished inventory subindex fell 1.9 points compared with December. The 48.1 reading suggests that inventories may be slightly below optimal levels, and production could ramp up in the near term as a result.
- The commodity prices subindex continued its slide, falling another 5.0 points compared to last month.
Optimism was at healthy levels in January as well. When asked for their production expectations during the next three to six months, 61 percent of survey participants expected production to be higher going forward.
The January report was a nice reversal from the December data and provides a strong start to 2015. Hopefully, the momentum will carry over to the entire year. Although we love Punxsutawney Phil as much as anyone, we hope his weather forecast doesn't hamper manufacturing activity. So far in 2015, there are no shadows in the Southeast.
By Troy Balthrop, a senior Regional Economic Information Network analyst in the Atlanta Fed's Nashville Branch
February 12, 2015
Southeastern Labor Market Continues Strengthening
December 2014 state-level labor market data from the U.S. Bureau of Labor Statistics reflected a strengthening labor market among Sixth District states, with a declining aggregate unemployment rate and solid job gains.
Unemployment rates decline, albeit modestly
The aggregate district unemployment rate in December was 6.2 percent, a 0.2 percentage point decline from the previous month and 0.5 percentage point lower than a year ago. Although higher than the 5.6 percent national figure, the aggregate rate continues to trend down. In fact, Florida matched the national unemployment rate in December and Alabama came very close (see the chart).
The unemployment rate declined in nearly all southeastern states. Alabama's unemployment rate fell to 5.7 percent, and Florida's rate declined to 5.6 percent, the lowest level in nearly seven years for both states. At 6.9 percent, Georgia's unemployment rate continued on a downward path, as did Tennessee's, with an unemployment rate of 6.6 percent. For the second month in a row, Mississippi had the highest unemployment rate in the United States with 7.2 percent, a distinction the state has taken turns owning with Georgia since June 2014.
In Louisiana, the unemployment rate rose again (for the eighth straight month) to 6.7 percent in December. What's going on there? As I've mentioned a few times (here, here, and here), increases in the labor force are the driver of unemployment rate increases in the state, as opposed to people actually losing jobs on net. This isn't a bad thing, especially considering the state added more than 6,000 jobs in December (I'll discuss that shortly). Louisiana just added more people looking for work than the number of people who found work, hence the increase in unemployment. In fact, from January to December 2014, Louisiana's labor force grew by 4.8 percent (while the number of employed grew by just 2.8 percent). An increase like 4.8 percent may not seem like a big number, but when you look at the national figure of 0.4 percent during the same period, Louisiana's labor force growth stands out. National data released last week for the month of January told a similar story: the unemployment rate ticked up 0.1 percentage point to 5.7 percent from 5.6 percent in December, yet much of this increase can be attributed to labor force gains that outpaced gains in employment.
Payrolls also see modest growth
On net, the District added 47,400 jobs in December, and every state experienced positive job growth (see the chart). This contribution makes up 19 percent of the national payroll contribution of 252,000. On aggregate, the industries that contributed the most net jobs in the Sixth District were professional and business services (up 9,800), health care (up 8,300), and accommodation and food services (up 5,200).
Here are some key state-by-state payroll facts from the December report:
- Alabama added 1,000 net payrolls. Much of the state's contributions were reduced by losses in the professional and business services sector (down by 2,400).
- Florida added 12,700 jobs on net, mostly from the professional and business services (up 5,800) and health care (up 4,900) sectors.
- Georgia contributed 14,100 net payrolls. Gains were widespread, yet the sector contributing the most jobs was health care (up 3,100).
- Louisiana added 6,200 net payrolls. Gains were widespread in this state as well, though the biggest contributor was the accommodation and food services sector (up 1,600).
- Employers in Mississippi added 900 net payrolls. Gains in the professional and business services sector (up 1,100) were reduced by losses in other sectors.
- Tennessee employers added 12,500 net payrolls. The largest increases occurred in the goods-producing (up 5,300) and retail trade (up 2,400) sectors. employers added 12,500 net payrolls. The largest increases occurred in the goods-producing (up 5,300) and retail trade (up 2,400) sectors.
Overall, the report was a sign of improving labor market conditions across the Sixth District states, a trend we hope to see continue into 2015.
By Rebekah Durham, economic policy analysis specialist in the New Orleans Branch of the Atlanta Fed
February 6, 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.
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.)
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.
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.
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 3, 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.
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!
By Shalini Patel, a REIN director in the Atlanta Fed's research department
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