Southpoint

October 28, 2014

Southeastern Labor Markets Give Off Some Positive Signs

Following an encouraging national employment report released on October 3, last week's release of September 2014 state-level labor market data from the U.S. Bureau of Labor Statistics likewise showed some positive labor market signs. The unemployment rate fell in 31 states, was unchanged from the previous month in 11 states, and rose in eight states. This was the smallest number of states to see a month-over-month increase in unemployment since April. The September report also revealed that employers added net jobs in 39 states and cut jobs in 10 and that payrolls were unchanged in one state. So how did the Sixth District states fare?

Before we dive into the numbers, I'd like to share a disclaimer that might make sense if you've read my posts about state-level employment data during the last few months: churn and seemingly unintuitive results are to be expected with high-frequency economic data, labor market data in particular. Read on to see what I mean.

Unemployment rates
The aggregate district unemployment rate in September was 6.8 percent, a 0.1 percentage point decline from the previous month, though nearly a full percentage point above the national rate of 5.9 percent (see the chart).

The unemployment rate declined in nearly all states, and Georgia and Tennessee bucked a four-month trend of upward movement, falling to 7.9 and 7.3 percent, respectively. Also, Alabama had a 0.3 percentage point drop in its unemployment rate, which fell to 6.6 percent in September—it's lowest rate in seven months. Florida's rate fell 0.2 percentage point to 6.1 percent, the lowest it's been in over six years.

On the other hand, Louisiana's unemployment rate increased for the fifth consecutive month to 6.0 percent, which isn't necessarily a bad thing in the short run, since the state added jobs (I'll get to that). By definition, Louisiana added more people looking for work than the number of people who found work; hence the increase in unemployment. (This result is what I meant by "seemingly unintuitive.")

In addition, though, the decline in Georgia's unemployment rate may be considered an encouraging sign. The state had the highest unemployment rate in the nation for the second month in a row, followed by another Sixth District state: Mississippi, with 7.7 percent.

Payrolls
Employers in most Sixth District states added to payrolls in September: 39,900 payrolls were added on net (see the chart). The sectors with payroll additions varied state by state, though leisure and hospitality gains were relatively widespread and sizable across Sixth District states, adding 13,200 net jobs. The trade, transportation, and utilities sector contributed the most net jobs with 14,600. However, the majority of these new payrolls came from Florida, and losses in the sector occurred in three Sixth District states: Tennessee (down 1,200), Louisiana (down 600), and Mississippi (down 200). Below, some state-by-state payroll and key sector facts:

• Alabama, which contributed 11,400 net jobs, hadn't seen this many jobs added in one month in about 20 years. Leisure and hospitality (up 5,000) and professional and business services (up 2,600) sectors were the top contributors. The only sector that subtracted jobs in Alabama was financial activities (down 200).
• Florida added 13,400 jobs on net in September, mostly from the trade, transportation, and utilities sector (up 11,300), with a large number of them (8,600) from retail trade alone. Payrolls fell in the financial activities (down 3,400), education and health services (down 2,600), and professional and business services (down 800) sectors.
• After adding nearly 20,000 jobs for two months in a row, Georgia subtracted 2,800 net payrolls from the September aggregate figure. The biggest losses came from the goods-producing sector (down 3,500), with 2,900 manufacturing jobs lost and the professional and business services sector (down 3,300). Georgia's payroll gains occurred in trade, transportation, and utilities (up 3,900), education and health services (up 3,000), and financial activities (up 200).
• Louisiana added 3,600 payrolls on net, most of which came from leisure and hospitality (up 2,000), professional and business services (up 1,300), and the other services (up 1,200) sectors. Losses occurred in the trade, transportation, and utilities (down 600), government (down 600), and education and health services (down 300) sectors.
• Employers in Mississippi added 6,000 net new payrolls in September, the state's largest net gain in nearly a year, mostly boosted by the professional and business services (up 2,700), education and health services (up 2,200), and leisure and hospitality (up 1,300) sectors. The biggest payroll losses occurred in the government sector (down 2,700).
• Tennessee employers increased payrolls by 7,200 on net in September. The largest increases occurred in the education and health services (up 3,100), government (up 2,100), and goods-producing (up 2,000) sectors. Payrolls were subtracted in the trade, transportation, and utilities (down 1,200) and other services (down 1,200) sectors.

Overall, Sixth District states' labor markets fared well in September (though I plan to keep my eyes on Louisiana's rising unemployment trend; watch this space for further analysis).

Hopefully we'll continue to see signs of gathering strength when October's report is released on November 21.

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

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October 20, 2014

Southeastern Tourism Continues Trekking to Health

Members of the Federal Reserve Bank of Atlanta's Travel and Tourism Advisory Council reported continued strength in this important sector at their October 9 meeting. They also expressed optimism regarding future prospects for regional tourism activity.

Members noted that most areas in the Southeast registered increases in hotel occupancy, daily rates, and state park visits. International travel continued to boost the region's overall tourism numbers. Council members continue to report an increase in international tourist activity in 2014 over 2013, primarily from Latin America and Europe, and they added that foreign visitors help drive retail sales in tourist destinations.

Once again, the council discussed capital expenditure projects across the region. Some areas continue to report construction activity in new hotels, sports venues, and other attractions, in addition to renovations of restaurants, hotels, and convention centers. Locations with recently completed construction projects are reporting additional visitors who wish to experience the newly opened venues.

Council members also discussed how expansion in the tourism sector has resulted in job growth. As in other sectors, application of technology has reduced the need for some labor resources. However, council members said that the need to create “experiences” for travelers requires a human touch, resulting in an additional need for workers as the sector expands and new venues open.

Some members expressed concerns about the challenges of finding skilled labor for specialized positions in technology, mathematics, engineering, and management, with some accompanying wage pressure in these specific positions. The part-time to full-time employee has remained stable for some time, with contract workers being used for specific projects.

Council members discussed concerns regarding economic disparity among potential travelers. This disparity is causing high-income individuals to travel more and spend more, and some middle-class people are unable to afford leisure travel. Ideally, members said, traveling and visiting family entertainment venues would be increasingly affordable to middle-class consumers.

Some council members stated that new businesses are emerging, citing rising levels of restaurant franchising. However, even though consumers are dining out, they said that the restaurant dining has not yet hit prerecession levels. In general, travel and tourism looks promising in the near term. With continued new developments in the sector, hopefully even more people will head south for their getaways.

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

• October 20, 2014 in
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October 14, 2014

In the Volunteer State, Economic Growth Anticipated

The Center for Business and Economic Research (CBER) at the University of Tennessee recently published its fall 2014 economic outlook for Tennessee. The report painted a moderately positive economic picture for the Volunteer State, lining up well with what we have been hearing from our business contacts, highlighted in a recent SouthPoint post.

CBER conducts research on national and state economic trends. Report findings are used not only by the University of Tennessee, but also by state government and other public and private entities. The center—headed by director William F. Fox and associate director Matthew Murray—has provided an economic report to the governor every year since 1975, and these reports serve as the official forecast for the state.

The fall report highlighted a rebound in state employment and noted slow but steady gains during the first half of 2014. Nonfarm employment grew by 1.4 percent in the first quarter and 2.6 percent in the second. To compare, the national employment growth rate was 2.2 percent in the second quarter. Although Tennessee's unemployment rate has come down during 2014, the progress has been somewhat uneven. During the first quarter, the unemployment fell to 6.9 percent, and then it fell further to 6.4 percent in the following quarter. Recently, however, the rate increased to 7.4 percent in August. The unemployment rate is expected to inch downward during the fourth quarter and average 7.0 percent for 2014 and 2015. That said, the state's unemployment rate has remained even with or above the national rate since March 2012.

Looking down the road
Employment gains this year and next should be broad-based across most sectors of the Tennessee economy, with the exception of the information and government sector, which is projected to shed jobs this year. The professional and business services sector is expected to lead employment gains, but it could experience slowing growth in 2015. The transportation and utilities, education, and health care services sectors are expected to see stronger growth in 2015 compared with this year, and manufacturing employment growth is expected to slow to 0.9 percent in 2014 and 0.5 percent in 2015. Manufacturing employment in the state remains below prerecession levels although manufacturing output has surpassed prerecession levels, indicating productivity gains in the sector.

Nominal personal income is on pace to grow by 3.5 percent in 2014, well ahead of the 2.1 percent mark seen in 2013. Income growth is expected to accelerate to 4.4 percent in 2015. Tennessee's personal income grew faster than that of the nation in 2013, but it is expected to be slightly lower than the national rate in 2014 and 2015.

New investments on the horizon
Tennessee has recently received several welcome developments on the investment front. Volkswagen announced plans to add a midsize SUV to its manufacturing plant in Chattanooga, resulting in a $600 million expansion and an additional 2,000 jobs. The Maryland-based apparel company Under Armour plans to build a distribution facility in Mount Juliet. The facility will create 1,500 new jobs and represents a $100 million investment.

Overall, it appears Tennessee will hold its own, economically speaking, and the national economy will continue to rebound. If that modestly optimistic outlook doesn't sound like much to get excited about, it nevertheless represents an improvement over recent years.

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

• October 14, 2014 in
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October 10, 2014

Construction Employment: On the Rise in Louisiana

In September, the U.S. Bureau of Labor Statistics reported that construction employment increased nationally by 16,000 jobs. And during the past year, the industry added 230,000 jobs on net. Louisiana itself has been no stranger to construction job growth.

Louisiana Economic Development reported that there are more than $50 billion in industrial plant expansion and construction projects in the works over the next few years, spurring growth in both commercial and residential construction and thus growth in construction employment. In fact, the Associated General Contractors of America (AGC) recently reported that Lake Charles, a city tucked in the southwestern corner of Louisiana, had the largest year-over-year percent increase in construction jobs in the country in August: 27 percent, or 2,900 net jobs. Baton Rouge, the state capital, was the fourth-largest contributor to construction jobs in the nation during the same period: 18 percent, or 8,000 jobs.

Despite the upbeat construction job growth picture in Louisiana, the AGC acknowledged that the overall industry has been inconsistent through the recovery. Their report indicated that nationally firms are having a hard time finding enough qualified workers, with one in four firms having to turn down projects because of worker shortages.

For quite some time now, business contacts in our Regional Economic Information Network  have echoed the same sentiment (see past editions of Southeastern Insights), describing difficulties finding qualified workers in various industries. Contacts from the construction industry in particular have conveyed these challenges for a little over a year, often stating that projects were being delayed because of the difficulty finding the quantity and quality of skilled contractor labor. Continuing this theme, the Atlanta Fed’s latest commercial construction poll results revealed an increase in the share of industry contacts who reported a more difficult time filling positions relative to a year earlier (see the chart).

However, three-fourths of these contacts indicated that they plan to increase hiring during the next quarter (see the chart).

So how will the construction industry and labor market in Louisiana fare, considering permits were issued for a myriad of construction projects in the pipeline in Louisiana and that more than 13,000 construction jobs are expected to be needed in the near to medium term? Hopefully concerns about the tight labor market and potential labor shortage will be diminished by various efforts happening in the state to provide training in trade skilled crafts to help address the fast-growing workforce needs of the construction industry. Examples of such training programs are currently administered by the Associated Builders and Contractors and Louisiana’s Community & Technical Colleges. Given the significant job growth and positive outlook in the construction industry in Louisiana, construction might be an industry that could merit additional training programs and workforce development efforts.

By Gail Psilos, REIN director, and Rebekah Durham, economic policy analysis specialist, both in the New Orleans Branch of the Atlanta Fed

• October 10, 2014 in
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October 28, 2014

Southeastern Labor Markets Give Off Some Positive Signs

Following an encouraging national employment report released on October 3, last week's release of September 2014 state-level labor market data from the U.S. Bureau of Labor Statistics likewise showed some positive labor market signs. The unemployment rate fell in 31 states, was unchanged from the previous month in 11 states, and rose in eight states. This was the smallest number of states to see a month-over-month increase in unemployment since April. The September report also revealed that employers added net jobs in 39 states and cut jobs in 10 and that payrolls were unchanged in one state. So how did the Sixth District states fare?

Before we dive into the numbers, I'd like to share a disclaimer that might make sense if you've read my posts about state-level employment data during the last few months: churn and seemingly unintuitive results are to be expected with high-frequency economic data, labor market data in particular. Read on to see what I mean.

Unemployment rates
The aggregate district unemployment rate in September was 6.8 percent, a 0.1 percentage point decline from the previous month, though nearly a full percentage point above the national rate of 5.9 percent (see the chart).

The unemployment rate declined in nearly all states, and Georgia and Tennessee bucked a four-month trend of upward movement, falling to 7.9 and 7.3 percent, respectively. Also, Alabama had a 0.3 percentage point drop in its unemployment rate, which fell to 6.6 percent in September—it's lowest rate in seven months. Florida's rate fell 0.2 percentage point to 6.1 percent, the lowest it's been in over six years.

On the other hand, Louisiana's unemployment rate increased for the fifth consecutive month to 6.0 percent, which isn't necessarily a bad thing in the short run, since the state added jobs (I'll get to that). By definition, Louisiana added more people looking for work than the number of people who found work; hence the increase in unemployment. (This result is what I meant by "seemingly unintuitive.")

In addition, though, the decline in Georgia's unemployment rate may be considered an encouraging sign. The state had the highest unemployment rate in the nation for the second month in a row, followed by another Sixth District state: Mississippi, with 7.7 percent.

Payrolls
Employers in most Sixth District states added to payrolls in September: 39,900 payrolls were added on net (see the chart). The sectors with payroll additions varied state by state, though leisure and hospitality gains were relatively widespread and sizable across Sixth District states, adding 13,200 net jobs. The trade, transportation, and utilities sector contributed the most net jobs with 14,600. However, the majority of these new payrolls came from Florida, and losses in the sector occurred in three Sixth District states: Tennessee (down 1,200), Louisiana (down 600), and Mississippi (down 200). Below, some state-by-state payroll and key sector facts:

• Alabama, which contributed 11,400 net jobs, hadn't seen this many jobs added in one month in about 20 years. Leisure and hospitality (up 5,000) and professional and business services (up 2,600) sectors were the top contributors. The only sector that subtracted jobs in Alabama was financial activities (down 200).
• Florida added 13,400 jobs on net in September, mostly from the trade, transportation, and utilities sector (up 11,300), with a large number of them (8,600) from retail trade alone. Payrolls fell in the financial activities (down 3,400), education and health services (down 2,600), and professional and business services (down 800) sectors.
• After adding nearly 20,000 jobs for two months in a row, Georgia subtracted 2,800 net payrolls from the September aggregate figure. The biggest losses came from the goods-producing sector (down 3,500), with 2,900 manufacturing jobs lost and the professional and business services sector (down 3,300). Georgia's payroll gains occurred in trade, transportation, and utilities (up 3,900), education and health services (up 3,000), and financial activities (up 200).
• Louisiana added 3,600 payrolls on net, most of which came from leisure and hospitality (up 2,000), professional and business services (up 1,300), and the other services (up 1,200) sectors. Losses occurred in the trade, transportation, and utilities (down 600), government (down 600), and education and health services (down 300) sectors.
• Employers in Mississippi added 6,000 net new payrolls in September, the state's largest net gain in nearly a year, mostly boosted by the professional and business services (up 2,700), education and health services (up 2,200), and leisure and hospitality (up 1,300) sectors. The biggest payroll losses occurred in the government sector (down 2,700).
• Tennessee employers increased payrolls by 7,200 on net in September. The largest increases occurred in the education and health services (up 3,100), government (up 2,100), and goods-producing (up 2,000) sectors. Payrolls were subtracted in the trade, transportation, and utilities (down 1,200) and other services (down 1,200) sectors.

Overall, Sixth District states' labor markets fared well in September (though I plan to keep my eyes on Louisiana's rising unemployment trend; watch this space for further analysis).

Hopefully we'll continue to see signs of gathering strength when October's report is released on November 21.

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

• October 28, 2014 in
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October 20, 2014

Southeastern Tourism Continues Trekking to Health

Members of the Federal Reserve Bank of Atlanta's Travel and Tourism Advisory Council reported continued strength in this important sector at their October 9 meeting. They also expressed optimism regarding future prospects for regional tourism activity.

Members noted that most areas in the Southeast registered increases in hotel occupancy, daily rates, and state park visits. International travel continued to boost the region's overall tourism numbers. Council members continue to report an increase in international tourist activity in 2014 over 2013, primarily from Latin America and Europe, and they added that foreign visitors help drive retail sales in tourist destinations.

Once again, the council discussed capital expenditure projects across the region. Some areas continue to report construction activity in new hotels, sports venues, and other attractions, in addition to renovations of restaurants, hotels, and convention centers. Locations with recently completed construction projects are reporting additional visitors who wish to experience the newly opened venues.

Council members also discussed how expansion in the tourism sector has resulted in job growth. As in other sectors, application of technology has reduced the need for some labor resources. However, council members said that the need to create “experiences” for travelers requires a human touch, resulting in an additional need for workers as the sector expands and new venues open.

Some members expressed concerns about the challenges of finding skilled labor for specialized positions in technology, mathematics, engineering, and management, with some accompanying wage pressure in these specific positions. The part-time to full-time employee has remained stable for some time, with contract workers being used for specific projects.

Council members discussed concerns regarding economic disparity among potential travelers. This disparity is causing high-income individuals to travel more and spend more, and some middle-class people are unable to afford leisure travel. Ideally, members said, traveling and visiting family entertainment venues would be increasingly affordable to middle-class consumers.

Some council members stated that new businesses are emerging, citing rising levels of restaurant franchising. However, even though consumers are dining out, they said that the restaurant dining has not yet hit prerecession levels. In general, travel and tourism looks promising in the near term. With continued new developments in the sector, hopefully even more people will head south for their getaways.

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

• October 20, 2014 in
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October 14, 2014

In the Volunteer State, Economic Growth Anticipated

The Center for Business and Economic Research (CBER) at the University of Tennessee recently published its fall 2014 economic outlook for Tennessee. The report painted a moderately positive economic picture for the Volunteer State, lining up well with what we have been hearing from our business contacts, highlighted in a recent SouthPoint post.

CBER conducts research on national and state economic trends. Report findings are used not only by the University of Tennessee, but also by state government and other public and private entities. The center—headed by director William F. Fox and associate director Matthew Murray—has provided an economic report to the governor every year since 1975, and these reports serve as the official forecast for the state.

The fall report highlighted a rebound in state employment and noted slow but steady gains during the first half of 2014. Nonfarm employment grew by 1.4 percent in the first quarter and 2.6 percent in the second. To compare, the national employment growth rate was 2.2 percent in the second quarter. Although Tennessee's unemployment rate has come down during 2014, the progress has been somewhat uneven. During the first quarter, the unemployment fell to 6.9 percent, and then it fell further to 6.4 percent in the following quarter. Recently, however, the rate increased to 7.4 percent in August. The unemployment rate is expected to inch downward during the fourth quarter and average 7.0 percent for 2014 and 2015. That said, the state's unemployment rate has remained even with or above the national rate since March 2012.

Looking down the road
Employment gains this year and next should be broad-based across most sectors of the Tennessee economy, with the exception of the information and government sector, which is projected to shed jobs this year. The professional and business services sector is expected to lead employment gains, but it could experience slowing growth in 2015. The transportation and utilities, education, and health care services sectors are expected to see stronger growth in 2015 compared with this year, and manufacturing employment growth is expected to slow to 0.9 percent in 2014 and 0.5 percent in 2015. Manufacturing employment in the state remains below prerecession levels although manufacturing output has surpassed prerecession levels, indicating productivity gains in the sector.

Nominal personal income is on pace to grow by 3.5 percent in 2014, well ahead of the 2.1 percent mark seen in 2013. Income growth is expected to accelerate to 4.4 percent in 2015. Tennessee's personal income grew faster than that of the nation in 2013, but it is expected to be slightly lower than the national rate in 2014 and 2015.

New investments on the horizon
Tennessee has recently received several welcome developments on the investment front. Volkswagen announced plans to add a midsize SUV to its manufacturing plant in Chattanooga, resulting in a $600 million expansion and an additional 2,000 jobs. The Maryland-based apparel company Under Armour plans to build a distribution facility in Mount Juliet. The facility will create 1,500 new jobs and represents a $100 million investment.

Overall, it appears Tennessee will hold its own, economically speaking, and the national economy will continue to rebound. If that modestly optimistic outlook doesn't sound like much to get excited about, it nevertheless represents an improvement over recent years.

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

• October 14, 2014 in
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October 10, 2014

Construction Employment: On the Rise in Louisiana

In September, the U.S. Bureau of Labor Statistics reported that construction employment increased nationally by 16,000 jobs. And during the past year, the industry added 230,000 jobs on net. Louisiana itself has been no stranger to construction job growth.

Louisiana Economic Development reported that there are more than $50 billion in industrial plant expansion and construction projects in the works over the next few years, spurring growth in both commercial and residential construction and thus growth in construction employment. In fact, the Associated General Contractors of America (AGC) recently reported that Lake Charles, a city tucked in the southwestern corner of Louisiana, had the largest year-over-year percent increase in construction jobs in the country in August: 27 percent, or 2,900 net jobs. Baton Rouge, the state capital, was the fourth-largest contributor to construction jobs in the nation during the same period: 18 percent, or 8,000 jobs.

Despite the upbeat construction job growth picture in Louisiana, the AGC acknowledged that the overall industry has been inconsistent through the recovery. Their report indicated that nationally firms are having a hard time finding enough qualified workers, with one in four firms having to turn down projects because of worker shortages.

For quite some time now, business contacts in our Regional Economic Information Network  have echoed the same sentiment (see past editions of Southeastern Insights), describing difficulties finding qualified workers in various industries. Contacts from the construction industry in particular have conveyed these challenges for a little over a year, often stating that projects were being delayed because of the difficulty finding the quantity and quality of skilled contractor labor. Continuing this theme, the Atlanta Fed’s latest commercial construction poll results revealed an increase in the share of industry contacts who reported a more difficult time filling positions relative to a year earlier (see the chart).

However, three-fourths of these contacts indicated that they plan to increase hiring during the next quarter (see the chart).

So how will the construction industry and labor market in Louisiana fare, considering permits were issued for a myriad of construction projects in the pipeline in Louisiana and that more than 13,000 construction jobs are expected to be needed in the near to medium term? Hopefully concerns about the tight labor market and potential labor shortage will be diminished by various efforts happening in the state to provide training in trade skilled crafts to help address the fast-growing workforce needs of the construction industry. Examples of such training programs are currently administered by the Associated Builders and Contractors and Louisiana’s Community & Technical Colleges. Given the significant job growth and positive outlook in the construction industry in Louisiana, construction might be an industry that could merit additional training programs and workforce development efforts.

By Gail Psilos, REIN director, and Rebekah Durham, economic policy analysis specialist, both in the New Orleans Branch of the Atlanta Fed

• October 10, 2014 in
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