September 2011

October 1st, 2011 by Daniel Lee

Hospitality, the Lone Bright Spot

In August, the economic picture changed little for Coos County. Coos Index fell for the third month in a row on a monthly year-over-year basis. Three out of four available component indicators fell on a monthly year-over-year basis. The hospitality sector remained as the only bright spot; estimated rooms and meals revenue remained up from the prior year. However, the storyline remained little changed for the rest of the economy. The labor market continued to struggle; both indicators – the number of employed residents and estimated wages and salaries – were down from prior year. The manufacturing activity remained sluggish; industrial electricity sales dropped three straight months on a monthly year-over-year basis. August data for average Saturday traffic counts has yet to be released by the New Hampshire Department of Transportation. So the Indexes were constructed assuming no change from July in the variable.

The State economy fared better in August than in recent months. The pace of increases in the State Index stopped declining after falling four months in a row. The rebounding hospitality sector offset the slowing the manufacturing activity. The hospitality sector exhibited a strong comeback; estimated rooms and meals revenues grew at increasingly faster rates on a monthly year-over-year basis since May when its growth nearly came to a halt. The picture in the labor market was mixed; the monthly year-over-year growth of employed residents slowed to a crawl, while that of estimated wages and salaries remained strong. These two indicators track different segments of the labor market. The latter represents total compensation paid by the employers that are covered under the federal and state unemployment insurance laws. Changes in wages are due largely to fluctuations in employment. However, the data excludes the self-employed, domestic help, proprietors, all of which are tracked by the number of employed residents. The conflicting reports, therefore, may reflect struggles in many small businesses rather than larger firms.

The real estate market analysis can be found at the end of this report.

August 2011

September 1st, 2011 by Daniel Lee

Cause for Concern

The previous June report incorrectly stated the number of employed residents in Coos County, which was caused by a data entry error. The loss in the number of employed residents in the County was about 100 in June, instead of 1000. Consequently, the report overstated the decline in the County Index. Nonetheless, the corrected data showed that the storyline remained the same; the recovery continued to fade away. In July, instead of June as previously reported, the Coos economy declined for the first time since the end of the recession on a monthly year-over-year basis. The labor market continued to struggle; the number of employed residents had fallen faster on a monthly year-over-year basis. So did estimated wages and salaries. The decline in the manufacturing activity became increasingly regular; industrial electricity sales contracted two straight months on a monthly year-over-year basis. The hospitality sector appeared to be the only bright spot in the County economy; estimated rooms and meals revenue was the only indicator that was up from prior year. July data for average Saturday traffic counts has yet to be released by the New Hampshire Department of Transportation. So the Indexes were constructed assuming no change in the variable.

In New Hampshire, the economic recovery continued to slow down. The State Index fell from prior month and, on a monthly year-over-year basis, the pace of its growth declined for the fourth month in a row. The manufacturing sector appeared to be slowing; the monthly year-over-year growth in industrial electricity sales kept falling. The State’s labor market seemed to be heading south as well, the number of employed residents in the State contracted three months in a row on a month-to-month basis. Although it remained up from prior year, its year-over-year growth rate slid for the third consecutive month. Historically in New Hampshire, persistent and pronounced declines in the number of employed residents (12 month percent changes) tend to precede job losses and recession. Should this downward trend in the number of employed residents continue and fall into a negative territory on a year-over-year basis, the State may become vulnerable to a double dip recession.

The real estate market analysis can be found at the end of this report.

July 2011

July 30th, 2011 by Daniel Lee

Number of Employed Residents Plunged

In June, the Coos economy set a new low. The Index declined for the first time since the end of the past recession on a monthly year-over-year basis. Four out of the five component indicators were down from prior year. The manufacturing sector contracted; industrial electricity sales fell down from prior year for the first time since March 2010. The rebounding hospitality sector struggled as well; average Saturday traffic counts had fallen at a faster clip for the last four months, while the year-over-year growth rate of estimated rooms and meals revenue edged down three months in a row. But, it was the struggling labor market that was the biggest drag on the economy. The number of employed residents, after seasonal adjustment, plunged to 13,897 from 14,879 in May. The estimated loss of nearly a thousand employed residents in the County comprised nearly half of the total estimated loss in New Hampshire, which lost 2,090 employed residents during the same period. It remains to be seen whether this is only a temporary statistical fluke. The number of recalled workers in the reopened Gorahm mill was not included in the data since the U.S. Bureau of Labor Statistics employment survey was conducted in the calendar week that contains the 12th of the month, which was before the reopening of the paper mill. However, even if it did, it would not have made up for this large loss.

The State economy struggled to sustain a recovery. Although the State Index continued to expand on a monthly year-over-year basis, its growth rate had declined two month in a row. Four of the five component indicators fell down from prior month, while all five component indicators still remained up compared to where they stood a year earlier. It may reflect recent developments in the data that economic recovery in the State may be losing steam. The struggling labor market is particularly worrisome. The number of employed residents contracted two months in a row on a month-to-month basis. Its year-over-year growth rate has steadily declined for the second month in a row as well. The increasing number of the unemployed in the State, coupled with falling home prices, would dampen consumer confidence.

The real estate market analysis can be found at the end of this report.

June 2011

June 30th, 2011 by Daniel Lee

Economy Shifting into Lower Gear

In May, signs of economic slowdown spread to the broader economy not only in the Coos County but also in the State. The Coos County Index, although it remained up from prior year, slowed in its year-over-year growth rate for the third consecutive month. All five component indicators exhibited slowing growth or accelerating decline. The manufacturing sector cooled down after leading the county economy out of recession; the year-over-year growth rate of industrial electricity sales was steadily reduced to 0.6% from its peak in last December when it marked 8.4% growth. The rebounding hospitality sector appeared to be facing a tougher fight as well; average Saturday traffic counts had fallen at a faster clip last three months, while the year-over-year growth rate of estimated rooms and meals revenue edged down two months in a row. The labor market never fully recovered from the past recession; the number of employed residents kept falling on a year-over-year basis.

The State economy followed suit. For the first time since August 2010, the State Index slowed in its monthly year-over-year growth rate. Like in the case of the Coos economy, all five component indicators showed signs of slowing growth. Contrary to what the decline in the state’s unemployment rate may suggest, the rebounding labor market may have hit the ceiling in May. The unemployment rate declined in May not because more residents found a job, but because some job seekers dropped out of the labor force and thus no longer counted as unemployed. The labor force contracted partially because some residents quit seeking employment due to gloomy job prospects, and perhaps because some people in the public sector retired for concerns over the ongoing collective bargaining issues. In fact, the number of employed residents, after seasonal adjustment, declined from prior month for the first time since the end of the past recession. There has been mounting evidence that the economy may be shifting into lower gear in both Coos County and the State of New Hampshire. Continued troubles in the housing sector are another reason for concern.

The real estate market analysis can be found at the end of this report.

May 2011

May 31st, 2011 by Daniel Lee

Rising Energy Costs May Be Slowing Recovery.

In April, the Coos economy continued to show signs of slowing recovery. Although the Index advanced twelve straight months on a monthly year-over-year basis, its growth rate has slowed two consecutive months. Slowing growth was felt on individual sectors as well. The manufacturing sector, which had been one of the few brightest spots of the Coos Economy since the Great Recession, saw its growth rate edging down steadily since November on a monthly year-over-year basis. The rebounding hospitality sector, while doing better than prior year, appeared to have reached a plateau. Average Saturday traffic counts retreated two straight months on a monthly year-over-year basis, while the growth rate of the estimated rooms and meals revenue remained flat since October. High gas prices, along with an increasingly probable double dip in the real estate market, threatened the fledgling economic recovery.

The State economy fared better. All five component indicators remained up from a year earlier. Its growth rate had inched up steadily since August. The labor market continued to improve; the number of employed residents kept climbing up at a faster clip on a monthly year-over-year basis. However, there were some preliminary signs of slowing in the manufacturing and hospitality industry. Growth in industrial electricity sales appeared to have reached a plateau since last year on a monthly year-over-year basis. Similarly, growth in average Saturday traffic counts had steadily declined since last year on a monthly year-over-year basis. High energy costs may be taking a toll on the economy. The struggling housing sector, which appeared to head for deeper troubles, is another reason for concern.

The real estate market analysis can be found at the end of this report.

April 2011

May 1st, 2011 by Daniel Lee

Economic growth slows

In March, although continuing its long-term course to recovery, the Coos economy grew at a rate slower than it did in February. More telling may be easing growth in the manufacturing and hospitality industry, both of which had been an engine of the county’s economic recovery since the end of recession. The year-over-year growth rate of industrial electricity sales had slowed steadily since November. A similar pattern was observed in estimated rooms and meals revenues. Furthermore, the average Saturday vehicle traffic counts dipped below the level seen a year ago for the first time since September. The labor market continued to show a mixed picture. Number of employed residents was down from where it was a year ago, while estimated wages and salaries were up.

The State economy continued its course to recovery. All five component indicators remained up from a year earlier. Its growth rate had inched up steadily since August. The improving labor market led economic recovery in March. Both number of employed residents and estimated wages and salaries grew at an increasing pace. On a more cautionary note, though, there were some signs of slowing in the manufacturing and hospitality industry. Industrial electricity sales fell from prior month, although it remained up from where it was a year earlier. So did both indicators of the hospitality industry – estimated rooms and meals revenues and average Saturday vehicle traffic counts. It remains to be seen whether they were just a temporary statistical fluke or the beginning of a new slump in the industry. In addition, the struggling housing industry remains a trouble spot of the economy.

The real estate market analysis can be found at the end of this report.

March 2011

April 1st, 2011 by Daniel Lee

Long Road to Recovery

In February, the Coos economy struggled to stay on course to recovery. Four out of five component indicators fell from prior month, January 2011, although the same number of indicators was up from prior year, February 2010. It indicates that, while the county economy remained on the long-term growth path, recovery would be long and slow. A strong recovery would require a robust rebound in the labor market. In February, number of employed residents continued to fall, while estimated wages and salary disbursements posted a year-over-year gain for the first time since the latest recession. All other sectors – manufacturing and hospitality – remained strong compared to prior year. Both indicators of the hospitality industry – estimated rooms and meals revenues and the average Saturday vehicle traffic counts – kept expanding on a year-over-year basis. As a sign of a rebounding manufacturing sector, industrial electricity sales remained up from a year earlier.

There was little sign of change in the State economy’s strong rebound it’d shown since the last recession. The State Index advanced six months in a row on a year-over-year basis. More impressively, the pace of increase has been on the rise as well. All five component indicators unanimously point up to improving economic conditions. All remained up from where they were a year ago. However, uncertainties around the proposed budget cuts and large layoffs in the state and local governments could impact the recovery down the road. The struggling real estate market remains as a threat to recovery as well.

The real estate market analysis can be found at the end of this report.

February 2011

March 1st, 2011 by Daniel Lee

Hospitality Sector Keeps Recovery Alive

In January, the Coos economy showed a glimpse of an accelerating recovery. The Coos Index advanced at the fastest pace on a year-over-year basis since the latest recession. A strong rebound in the hospitality sector continued to be an engine of economic recovery in the county’s economy. The estimated rooms and meals revenues kept expanding on a year-over-year basis. However, the rising gasoline prices could threaten the revitalizing tourism industry down the road. The average Saturday vehicle traffic counts were not reported by the New Hampshire Department of Transportation, perhaps due to the ongoing budget and personnel issues. The manufacturing sector contributed to the recovery as well. The industrial electricity sales remained strong. However, the recovery had yet to show signs of gaining traction. In particular, the labor market remained weak. While both indicators of the labor market – number of employed residents and the estimated total wages and salaries – stopped falling, there were no signs of a strong and sustained rebound either.

On the contrary, State recovery appeared to be well under way. The State Index advanced five months in a row on a year-over-year basis at an increasing pace. All available component indicators remained up from where they were a year ago. A strong rebound in the labor market largely accounts for the recovery. Both the number of employed residents and the estimated total wages and salaries were up from prior year. The manufacturing sector continued its expansion as well. So did the hospitality sector. The estimated rooms and meals revenues expanded two months in a row on a year-over-year basis.

The real estate market analysis can be found at the end of this report.

January 2011

January 31st, 2011 by Daniel Lee

Recovery Spinning Wheels in Mud

As announced in December report, the methodology page has been revised to briefly describe how the new NCEI is constructed and how well it conforms to the business cycle. In December, the County Index advanced for the seventh consecutive month on a year-over-year basis. However, the recovery still appeared to be fragile. The pace of growth remained too small to build up momentum. A major drag came from the labor market. The estimated wages and salaries continued to slide, suggesting job losses had not stopped. On the other hand, the number of employed residents appeared to have been stabilized after a slide during the recession. This diversion between the two labor market indicators may indicate that some of the unemployed may have become self-employed or domestic help, instead of looking for a job. On a positive note, the hospitality sector continued to register gains. In particular, the estimated rooms and meals revenues continued with its impressive expansion. The production activity remained strong; the industrial electricity sales series was up from prior year.

On the contrary, the impending recovery for the State’s economy looked ever more credible. The State Index advanced four months in a row on a year-over-year basis at an increasing pace. All of the Index’s component indicators turned up from where they were a year ago. The encouraging signs were apparent in the labor market. Both the number of employed residents and the estimated total wages and salaries were up from prior year. The manufacturing sector continued its expansion as well. December data brought good news to the hospitality sector as well. In addition to the average Saturday traffic counts, the estimated rooms and meals revenues turned up from prior year for the first time since the beginning of the recession.

Starting this month, we upgraded the analysis on the real estate market by adding median home prices to the list that already includes home sales. The report can be found below.

December 2010

January 3rd, 2011 by Daniel Lee

Slowly Looming Recovery

I’m glad to announce that a paper on the NCEI project was presented to an academic conference in November. Before and after the presentation, the NCEI methodology had been carefully reviewed. As a result, two major modifications were made. First, 12 month moving average was adopted for all the component indicators, except for number of employed residents. By far, the biggest challenge in the NCEI’s inaugural year was the volatility in the data, which made very difficult to interpret month-to-month changes. Analyses showed that the use of 12 month moving average dramatically reduced the volatility problem while still approximating the business cycle. In addition, it avoided errors associated with seasonal adjustment process, thus increasing the accuracy of the report. Secondly, home sales series was excluded from the construction of the NCEI index in order to improve its conformity to the business cycle. Home sales series appears to have been decoupled from the business cycle for the past two decades. However, it will still be included in the report due to the importance of the real estate market to the economy. We believe these measures will make it easier to read changes in the direction of the economy. The detailed information will be posted in the methodology page in January.

The new and improved NCEI exhibits that the Coos economy had been stagnant in much of the early 2010, but slowly advanced in the second half. In November, the County Index advanced for the fifth consecutive month on a year-over-year basis. The production activity remained strong; the industrial electricity sales series was up from prior year. The hospitality sector did better than last year as well. Both the estimated rooms and meals revenues and the average Saturday vehicle traffic counts marked higher than where they were a year ago. In particular, a rebound in rooms and meals revenues was remarkable; it recuperated its pre-Great Recession level. However, the news from the labor market was mixed. The number of employed residents was up from where it was a year ago, while the estimated total wages and salaries continued to slide.

The signs of recovery were much clearer in the State’s economy. The State Index advanced three months in a row on a year-over-year basis at an increasing pace. The recovery seemed to have gained traction. The encouraging signs were apparent in the labor market. Both the number of employed residents and the estimated total wages and salaries are up from prior year. The manufacturing sector continued its expansion as well. However, the recovery wasn’t so strong in the hospitality sector. The estimated rooms and meals revenues remained stagnant.