montgomery county quarterly economic indicators july 2018...montgomery county economic indicators...
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-
Montgomery County Quarterly Economic Indicators July 2018
1
The purpose of this report is to keep policy makers apprised of changes in
the national and local economies that
the Montgomery County Department of Finance
believes may impact current and/or future revenues and expenditures.
This report is also available through the Internet
on the Montgomery County Web Page:
http://www.montgomerycountymd.gov
For questions regarding this report, please contact:
David Platt
Chief Economist
Montgomery County Department of Finance
101 Monroe Street, 15th Floor
Rockville, Maryland 20850
Phone: (240) 777-8866
Email: [email protected]
-
Montgomery County Quarterly Economic Indicators July 2018
2
INTRODUCTION
This quarterly report provides an analysis of national, state, regional, and
Montgomery County economic indicators for the month of July 2018, the second quarter of
calendar year 2018, and completed fiscal year 2018. For this report, data for the second
quarter cover the April to June period of the calendar year, and data for the fiscal year
cover the July 2017 to June 2018 period. The data presented in this report are not
seasonally adjusted to ensure comparability among the national, state, regional and
Montgomery County economic indicators. Since the data are not seasonally adjusted, the
comparative periods for the quarterly data are the second quarter of this calendar year
and the second quarter of calendar year 2017. The only data that are seasonally adjusted
are the national real gross domestic product (GDP) and its components.
NATIONAL ECONOMY
According to the advance estimate by the Bureau of Economic Analysis (BEA), U.S.
Department of Commerce, real gross domestic product (GDP) increased at a 4.1 percent
seasonally adjusted annual rate during the second quarter of 2018. That increase followed an
increase of 2.2 percent during the first quarter and is the largest quarterly increase since the third
quarter of 2014 (+4.9%). Based on the Wall Street Journal (WSJ) July survey of sixty
economists, the average of the responses expects economic growth to increase 3.0 percent during
the current third quarter, and 2.9 percent during the fourth quarter of this year. Based on the
forecast for the next two quarters of 2018, the survey of economists by The Wall Street Journal
estimates that real GDP will increase 2.9 percent in 2018. The results of the survey also forecast
an increase of 2.3 percent in 2019 and 1.8 percent in 2020. Following its June 2018 meeting, the
Federal Open Market Committee (FOMC, Committee) of the Board of Governors of the Federal
Reserve System released its latest economic projections from 2018 to 2020. Real GDP is
expected to increase 2.8 percent in 2018, 2.4 percent in 2019, and 2.0 percent in 2020.
Data released by BEA for the second quarter showed that the increase in real GDP was
largely attributed to an increase in personal consumption expenditures (↑4.0% - compared to an
increase of only 0.5% during the first quarter). Purchases of nondurable goods increased 4.2
percent and purchases of durable goods were up 9.3 percent. Exports were up 9.3 percent while
real non-residential fixed investment increased 7.3 percent which followed an 11.5 percent
increase during the first quarter. Federal and state and local government spending were up 3.5
percent and 1.4 percent, respectively. However, residential real estate decreased during the
second quarter with residential fixed investment decreasing 1.1 percent which followed a
decrease of 3.4 percent in the first quarter but an increase of 11.1 percent during the fourth
quarter of 2017.
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Montgomery County Quarterly Economic Indicators July 2018
3
1.5%
3.7%3.0%
2.0%
-1.0%
2.9%
-0.1%
4.7%
3.2%
1.7%0.5% 0.5%
3.6%
0.5%
3.2% 3.2%
-1.0%
5.1% 4.9%
1.9%
3.3% 3.3%
1.0%0.4%
1.5%2.3% 1.9% 1.8% 1.8%
3.0% 2.8%2.3% 2.2%
4.1%3.0% 2.9% 2.5% 2.5%
-10.0%
-8.0%
-6.0%
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%2
01
0:I
201
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7:I
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7:I
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8:I
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8:I
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8:I
II (
est.
)
201
8:I
V (
est
.)
201
9:I
(est
.)
201
9:I
I (e
st.)
Pe
rce
nt
Ch
an
ge
Year:Quarter
Percent Change in Real GDP
SOURCE: Bureau of Economic Analysis, U.S. Department of Commerce. Hatched bars from Wall Street Journal survey conducted July 2018.
NOTE: Percent changes are at annual rates.
Real final sales of domestic product (real GDP less the change in private inventories)
increased 5.1 percent in the second quarter compared to an increase of 1.9 percent during the first
quarter. Real final sales are a good measure of future production. If the growth rate in real final
sales exceeds the growth rate for GDP over an extended period of time, it indicates strong
demand and an expansion of the national economy. For the second quarter, the percent increase
in real final sales (5.1%) was above the percent increase in real GDP (4.1%) which suggests
sustained growth in real GDP through the remainder of 2018 as forecast by the July WSJ survey.
Sales of existing homes decreased 2.5 percent during the second quarter compared to the
second quarter of 2017. Median home prices for existing homes increased 5.1 percent year-over-
year during the second quarter of 2018 compared to a 6.1 percent increase during the same
period in 2017. The inventory level decreased 3.6 percent during the second quarter compared to
the same quarter in 2017. That decline is the thirteenth consecutive quarterly decrease in
inventory levels. With home prices increasing and inventory decreasing during the second
quarter, the national real estate market continues to show signs of improvement. Both the
National Association of Realtors (NAR) and the Mortgage Bankers Association (MBA) forecast
that sales of existing homes will increase 2.1 percent and 3.8 percent in 2018 and 2019,
respectively. Thirty-year fixed rate mortgages are expected to average 5.1-5.3 percent in
CY2019.
Monthly national employment, as measured by the survey of establishments (Current
Employment Statistics), averaged 149.3 million (not seasonally adjusted) during the second
quarter of this year – an increase of nearly 2.4 million or 1.6 percent from the second quarter of
2017. Employment reached nearly 147.8 million in fiscal year 2018 – an increase of nearly 2.3
million or 1.5 percent from fiscal year 2017.
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Montgomery County Quarterly Economic Indicators July 2018
4
134,404
130,203 131,005133,082
135,209137,565
140,447143,122
145,519147,771
120,000
125,000
130,000
135,000
140,000
145,000
150,000
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
No
nfa
rm E
mp
loym
en
t (i
n t
ho
usa
nd
s)
Fiscal Year
Total U.S. Nonfarm Employment(in thousands)
SOURCES: Bureau of Labor Statistics, U.S. Department of LaborMontgomery County Department of Finance
The unemployment rate during the second quarter stood at 3.8 percent (not seasonally
adjusted) and was an improvement from the 4.2 percent in the second quarter of 2017. For fiscal
year 2018, the unemployment rate declined 0.6 percentage points from 4.7 percent in fiscal year
2017 to 4.1 percent in fiscal year 2018. The July WSJ survey expects the jobless rate to be at 3.8
percent by December 2018. Both the WSJ July survey and the economic projections by the
FOMC in June suggest that the unemployment rate will gradually decrease to 3.5-3.6 percent by
the end of 2019.
7.6%
9.8% 9.3%8.5%
7.8%6.8%
5.7%5.0% 4.7% 4.1%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Un
em
plo
ym
en
t R
ate
Fiscal Year
U.S. Unemployment Rate
SOURCES: Bureau of Labor Statistics, U.S. Department of LaborMontgomery County Department of Finance
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Montgomery County Quarterly Economic Indicators July 2018
5
Inflation, as measured by the personal consumption expenditure (PCE) index, the preferred
measure of inflation used by the FOMC, will increase from 1.6 percent in 2017 to 2.0 percent by
2018. The July WSJ survey suggests that inflation, as measured by the consumer price index
(CPI), will increase from 1.8 percent in December 2017 to 2.3 percent by December 2018.
Subsequent to the July 31-August 1 meeting of the FOMC, they stated that “information
received since the FOMC meeting in June indicates that the labor market has continued to
strengthen and that economic activity has been rising at a strong rate. Job gains have been
strong, on average, in recent months, and the unemployment rate has stayed low. Household
spending and business fixed investment have grown strongly. On a 12-month basis, both overall
inflation and inflation for items other than food and energy remain near 2 percent. Indicators of
longer-term inflation expectations are little changed, on balance.” Based on the review of the
outlook for the economic activity and the labor market, the Committee voted to maintain the
targeted federal funds rate at the current 1.75 to 2.00 percent range.
Following its June meeting, the FOMC released its latest forecast of rate increases - the “dot
plot”. The median of responses indicated increasing the target federal funds rate to 2.4 percent in
2018, 3.1 percent in 2019, 3.4 percent in 2020, and 2.9 percent thereafter. While the increase in
2018 exceeds that of the federal funds futures market (2.2-2.3 percent by December 2018), it
should be noted that all of the responses ranged from 2.1 percent to 2.4 percent. According to
the Chicago Mercantile Exchange’s implied probability data, the next rate increase would occur
in September followed by another increase in December. The July WSJ survey projects on
average that the federal funds rate will reach 3.3-3.4 percent by December 2018 and 3.0 percent
by December 2019.
0.00%0.25%0.50%0.75%1.00%1.25%1.50%1.75%2.00%2.25%2.50%2.75%3.00%3.25%3.50%3.75%4.00%
Jan-08
Apr-08
Jul-08
Oct-08
Jan-09
Apr-09
Jul-09
Oct-09
Jan-10
Apr-10
Jul-10
Oct-10
Jan-11
Apr-11
Jul-11
Oct-11
Jan-12
Apr-12
Jul-12
Oct-12
Jan-13
Apr-13
Jul-13
Oct-13
Jan-14
Apr-14
Jul-14
Oct-14
Jan-15
Apr-15
Jul-15
Oct-15
Jan-16
Apr-16
Jul-16
Oct-16
Jan-17
Apr-17
Jul-17
Oct-17
Jan-18
Apr-18
Jul-18
Oct-18
Jan-19
Apr-19
Jul-19
Oct-19
Fed
Fund
s R
ate
Date
Effective Federal Funds Rate (solid bars) and Federal Funds Futures (hatched bars)
SOURCES: Federal Reserve Bank of St. Louis (solid bars) and theChicago Mercantile Exchange (hatched bars) as of July 28, 2018
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Montgomery County Quarterly Economic Indicators July 2018
6
After experiencing a weak performance during the first quarter of 2018, the returns in the
stock market strengthened during the second quarter. The Dow-Jones Industrial Average (DJIA)
was up 0.70 percent in the second quarter compared to a decrease of 2.5 percent in the first
quarter; the Standard & Poor’s 500 (S&P 500) increased 2.9 percent compared to a decrease of
1.2 percent increase in the first quarter; the NASDAQ also continued to increase in the second
quarter with an increase of 6.3 percent compared to an increase of 2.3 percent during the first
quarter resulting in an increase of 8.8 percent for the first half of 2018; and the Russell 2000
increased 7.4 percent in the second quarter that followed a decrease of 0.4 percent in the first
quarter. Overall, three of the four indices increased during the first half of 2018 with the DJIA
index experiencing a decrease during the first half of this year. Since the end of the second
quarter, all four indices continued to increase in July. The DJIA increased 4.7 percent,
NASDAQ increased 2.2 percent for the month, the S&P 500 increased 3.6 percent for the month,
and the Russell 2000 increased 1.7 percent for the month.
STATE AND REGIONAL ECONOMY
Each month, the Federal Reserve Bank of Richmond (Baltimore Branch) provides the results
of the Maryland Survey of Business Activity. According to the latest survey results dated July
26, 2018 “Maryland business activity dampened in July.” According to the survey:
“Firms saw slowing growth in sales and in business expenditures. However, respondents
were optimistic that conditions will improve in the coming months.
Survey results suggest slightly slower employment growth in July, and firms continued to
struggle to find workers with the skills they required. They expect this difficulty to persist in
the next six months, and a larger portion of firms also expect to see a decrease in the
workweek than an increase.
Growth of both prices paid and prices received increased slightly among Maryland firms in
July, and growth in prices paid continued to outpace growth of prices received. Respondents
expect this trend to continue in the coming months.”
According to the latest data from BEA, real gross domestic product, or gross state product,
for Maryland increased 1.5 percent during the first quarter of this year – an increase from the 1.2
percent during the fourth quarter of last year and an increase from the -2.9 percent during the
first quarter of 2017. The increase was attributed to 5.4 percent increase in construction, a 4.7
percent increase in manufacturing, a 3.5 percent increase in educational services, a 3.4 percent
increase in retail trade, and a 2.3 percent increase in health care and social assistance.
-
Montgomery County Quarterly Economic Indicators July 2018
7
1.3%
4.0%
-2.4%
-4.4%
-2.4%
6.4%
1.7%
3.8%
2.5%
3.4%
2.1%
6.4%
-2.7%
2.7%
3.9%
0.4%
1.3%
-3.1%
2.6%
-5.2%
3.7%
-0.5%
1.1%
2.7%
-2.4%
5.7%
4.0%
-3.8%
5.9%
-1.8%
1.0%
3.1%
2.1%
4.8%
2.6%2.2%
-2.9%
2.6%
5.4%
1.2%1.5%
-8.0%
-6.0%
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
2008:Q1
2008:Q2
2008:Q3
2008:Q4
2009:Q1
2009:Q2
2009:Q3
2009:Q4
2010:Q1
2010:Q2
2010:Q3
2010:Q4
2011:Q1
2011:Q2
2011:Q3
2011:Q4
2012:Q1
2012:Q2
2012:Q3
2012:Q4
2013:Q1
2013:Q2
2013:Q3
2013:Q4
2014:Q1
2014:Q2
2014:Q3
2014:Q4
2015:Q1
2015:Q2
2015:Q3
2015:Q4
2016:Q1
2016:Q2
2016:Q3
2016:Q4
2017:Q1
2017:Q2
2017:Q3
2017:Q4
2018:Q1
Pe
rce
nt
Ch
an
ge
Year: Quarter
Percent Change in Real Maryland Gross State Product
SOURCE: Bureau of Economic Analysis, U.S. Department of Commerce
According to payroll employment data from the Bureau of Labor Statistics (BLS), U.S.
Department of Labor and based on the survey of establishments, monthly payroll employment in
the State of Maryland averaged 2.751 million during the second quarter of 2018 – an increase of
0.5 percent from the second quarter of 2017. In fiscal year 2018, payroll employment in
Maryland reached nearly 2.728 million - an increase of 0.5 percent from fiscal year 2017.
0.0
500.0
1,000.0
1,500.0
2,000.0
2,500.0
3,000.0
3,500.0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Em
plo
ym
en
t (t
ho
usan
ds)
Fiscal Year
Nonfarm Payroll Employment and Resident Employment (Labor Force)
State of Maryland
Payroll Resident
SOURCES: Bureau of Labor Statistics, U.S. Department of LaborMontgomery County Department of Finance
According to the labor force data, the State’s resident employment increased 0.2 percent
from 3.091 million during the second quarter of 2017 to 3.098 million in the second quarter of
-
Montgomery County Quarterly Economic Indicators July 2018
8
this year. The State’s unemployment rate increased from 4.0 percent in the second quarter of
2016 to 4.1 percent in the second quarter of this year. On a fiscal year basis, employment
increased 0.9 percent and the unemployment rate declined from 4.3 percent in FY2017 to 4.2
percent in FY2018.
5.8%
7.5% 7.4% 7.1% 6.9%6.2%
5.5%4.7% 4.3% 4.2%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Uem
plo
ym
en
t R
ate
Fiscal Year
Unemployment Rate State of Maryland
SOURCES: Bureau of Labor Statistics, U.S. Department of LaborMontgomery County Department of Finance
Monthly payroll employment for the Silver Spring-Frederick-Rockville (SSFR) metropolitan
division averaged 600,900 during the second quarter and was above the average employment
level in the second quarter of 2017 (↑1.0%). The rate of growth was also above the second
quarter growth rate for the State (↑0.5%). On a fiscal year basis, payroll employment increased
0.8 percent over FY2017 to 594,300. Resident employment, as measured by the household
survey, averaged over 667,900 during the second quarter – an increase of 0.6 percent over the
second quarter of 2017. On a fiscal year basis, resident employment was over 667,800 in
FY2018 – an increase of 1.1 percent.
-
Montgomery County Quarterly Economic Indicators July 2018
9
0.0
100.0
200.0
300.0
400.0
500.0
600.0
700.0
800.0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Em
plo
ymen
t
Fiscal Year
NonFarm Employment and Resident Employment (Labor Force)
Silver Spring-Frederick-Rockville Metropolitan Division
Payroll Resident
SOURCES: Bureau of Labor Statistics, U.S. Department of LaborSOURCES: Bureau of Labor Statistics, U.S. Department of Labor
The unemployment rate for the division is either the lowest or one of the lowest among the
34 national metropolitan divisions and the monthly average was 3.4 percent during the second
quarter of 2018 – slightly above the rate during the second quarter of 2017 (3.3%). For fiscal
year 2018, the unemployment rate was 3.4 percent compared to 3.5 percent in fiscal year 2017.
Both the unemployment rates for the second quarter and the fiscal year were below the State’s
unemployment rates.
4.5%
5.9% 5.6% 5.4% 5.3%4.7%
4.3%3.7% 3.5% 3.4%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Une
mpl
oym
ent
Rat
es
Fiscal Year
Unemployment Rates Silver Spring-Frederick-Rockville Metropolitan Division
SOURCES: Bureau of Labor Statistics, U.S. Department of LaborMontgomery County Department of Finance
The resale housing market across the region experienced growth in prices, on a year-over-
year basis, between May 2017 and May of this calendar year. Based on the S&P/Case-Shiller®
Home Price Index for the Washington region, prices in May increased 3.1 percent over the
twelve-month period.
-
Montgomery County Quarterly Economic Indicators July 2018
10
-30.0%
-20.0%
-10.0%
0.0%
10.0%
20.0%
30.0%
Jan-
05A
pr-0
5Ju
l-05
Oct
-05
Jan-
06A
pr-0
6Ju
l-06
Oct
-06
Jan-
07A
pr-0
7Ju
l-07
Oct
-07
Jan-
08A
pr-0
8Ju
l-08
Oct
-08
Jan-
09A
pr-0
9Ju
l-09
Oct
-09
Jan-
10A
pr-1
0Ju
l-10
Oct
-10
Jan-
11A
pr-1
1Ju
l-11
Oct
-11
Jan-
12A
pr-1
2Ju
l-12
Oct
-12
Jan-
13A
pr-1
3Ju
l-13
Oct
-13
Jan-
14A
pr-1
4Ju
l-14
Oct
-14
Jan-
15A
pr-1
5Ju
l-15
Oct
-15
Jan-
16A
pr-1
6Ju
l-16
Oct
-16
Jan-
17A
pr-1
7Ju
l-17
Oct
-17
Jan-
18A
pr-1
8
Y-o
-Y P
ct. C
hg.
Month.Year
Year-over-Year Percent Change in
S&P/Case-Shiller® Home Price Index
Washington MSA
NOTE: S&P/Case-Shiller price index is a registered trademark of Standard and Poor's.
As measured by the Consumer Price Index for All Urban Consumers (CPI-U), inflation in the
Washington Metropolitan Statistical Area (MSA) increased an estimated 2.5 percent on a year-
over-year basis in June of this year over June 2017. Consumer prices excluding food and energy
purchases (Core CPI) were up 2.4 percent in the area (on the same year-over-year basis).
-0.50%
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
2,01
3.01
2,01
3.03
2,01
3.05
2,01
3.07
2,01
3.09
2,01
3.11
2,01
4.01
2,01
4.03
2,01
4.05
2,01
4.07
2,01
4.09
2,01
4.11
2,01
5.01
2,01
5.03
2,01
5.05
2,01
5.07
2,01
5.09
2,01
5.11
2,01
6.01
2,01
6.03
2,01
6.05
2,01
6.07
2,01
6.09
2,01
6.11
2,01
7.01
2,01
7.03
2,01
7.05
2,01
7.07
2,01
7.09
2,01
7.11
2,01
8.01
2,01
8.03
2,01
8.05
Y-o
-Y P
ct.
Chg
.
Year-over-Year Percent Change in Consumer Price Index
Washington MSA
All Items
SOURCE: Bureau of Labor Statistics, U.S. Department of Labor
According to the Stephen S. Fuller Institute (Institute) in its July report, “the May 2018
performance of the Washington region’s Coincident and Leading Indices, while continuing their
respective positive trends from 2017, appear to have stabilized at a somewhat more moderate
growth rate than registered over the previous year. The economy’s current performance, as
measured by the Coincident Index, while still growing has not grown as rapidly during the
-
Montgomery County Quarterly Economic Indicators July 2018
11
second quarter as it has during the past three quarters. The Leading Index’s positive trajectory
points to the region’s economic growth continuing into the fourth quarter of 2018.”
The Washington Coincident Index, which represents the current state of the metropolitan
area economy, increased 1.46 percent from April to May and three of the four components of the
index increased on a month-to-month basis. Total wage and salary employment, domestic
airport passenger volume, and purchases of nondurable goods increased from their April levels
while consumer confidence declined (↓11.5%).
80.0
85.0
90.0
95.0
100.0
105.0
110.0
Jan-
01
Jul-0
1
Jan-
02
Jul-0
2
Jan-
03
Jul-0
3
Jan-
04
Jul-0
4
Jan-
05
Jul-0
5
Jan-
06
Jul-0
6
Jan-
07
Jul-0
7
Jan-
08
Jul-0
8
Jan-
09
Jul-0
9
Jan-
10
Jul-1
0
Jan-
11
Jul-1
1
Jan-
12
Jul-1
2
Jan-
13
Jul-1
3
Jan-
14
Jul-1
4
Jan-
15
Jul-1
5
Jan-
16
Jul-1
6
Jan-
17
Jul-1
7
Jan-
18
Inde
x
Month-Year
Washington MSA Monthly Coincident Economic Indicator and Six-Month Moving Average
Coincident Six_Month
SOURCE: Center for Regional Analysis(CRA), George Mason UniversityNOTE: Coincident indicator respresents the current state of the economy and includes total wage and salary employment, consumer confidence, domestic airport passengers,
and purchases of nondurable goods.
According to the Institute, “the Washington Leading Index, which is designed to forecast the
performance of the metropolitan area economy six to eight months in advance, registered a small
increase for the second consecutive month, increasing 0.36 percent from May 2017 after
increasing 0.5 percent in April. For both months, their performances were dampened by double-
digit declines in residential building permits. In spite of this volatility in residential permits, the
Index’s positive long-term performance continues pointing to the region’s expansion extending
into at least the fourth quarter of 2018.”
-
Montgomery County Quarterly Economic Indicators July 2018
12
85.0
90.0
95.0
100.0
105.0
110.0Ja
n-0
1
Jul-0
1
Jan
-02
Jul-0
2
Jan
-03
Jul-0
3
Jan
-04
Jul-0
4
Jan
-05
Jul-0
5
Jan
-06
Jul-0
6
Jan
-07
Jul-0
7
Jan
-08
Jul-0
8
Jan
-09
Jul-0
9
Jan
-10
Jul-1
0
Jan
-11
Jul-1
1
Jan
-12
Jul-1
2
Jan
-13
Jul-1
3
Jan
-14
Jul-1
4
Jan
-15
Jul-1
5
Jan
-16
Jul-1
6
Jan
-17
Jul-1
7
Jan
-18
Ind
ex
Month-Year
Washington MSA Monthly Leading Economic Indicator and Six-Month Moving Average
Leading Six_Month
SOURCE: Center for Regional Analysis(CRA), George Mason UniversityNOTE: Leading indicator is designed to forecast economic performance six to eight months in advance and includes residential building permits, consumer expectations, help wanted index, initial claims for unemployment insurance, and purchases of durable goods.
MONTGOMERY COUNTY
ECONOMIC INDICATORS
Montgomery County’s economy experienced a mixed economic performance during the
second quarter of this year. The reasons for a mixed performance include an increase in resident
employment, a slight increase in the unemployment rate, a decrease in existing home sales, and
an increase in median prices for an existing home. Residential construction experienced an
increase in single-family homes (↑12.4%) and a significant increase in multi-family units
(↑200.0%). Construction in the number of non-residential projects increased (↑53.0%) and the
value of added non-residential increased to nearly 110.1%.
Employment Situation
Based on data from the Maryland Department of Labor, Licensing and Regulation (DLLR),
the Bureau of Labor Statistics, U.S. Department of Labor, the County’s resident employment for
the second quarter increased by nearly 3,800 from the second quarter of 2017 (↑0.7%). On a
fiscal year basis, resident employment was slightly over 541,000 in fiscal year 2018 compared to
nearly 534,700 during the previous fiscal year – an increase of 1.2 percent.
-
Montgomery County Quarterly Economic Indicators July 2018
13
497,446 496,971
506,665509,912
514,946518,424
524,935 527,795534,694
541,040
470,000
480,000
490,000
500,000
510,000
520,000
530,000
540,000
550,000
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Em
ploy
men
t
Fiscal Year
Resident Employment (Labor Force) Montgomery County
SOURCES: Bureau of Labor Statistics, U.S. Department of LaborMontgomery County Department of Finance
The County’s average monthly unemployment rate during the second quarter was 3.3 percent
and slightly above the rate during the second quarter of 2017 (3.2%). The rate was the same in
fiscal year 2018 compared to fiscal year 2017 (3.4%). Throughout fiscal year 2018, the County’s
unemployment rate remained one of the lowest in the State.
4.3%
5.7% 5.4% 5.2% 5.1%4.6%
4.2%3.6% 3.4% 3.4%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Un
emp
loym
ent
Rat
es
Fiscal Year
Unemployment Rates Montgomery County
SOURCES: Bureau of Labor Statistics, U.S. Department of LaborMontgomery County Department of Finance
Construction Activity
After experiencing a weak second quarter performance in 2017, construction of residential
units experienced a strong performance during the second quarter of 2018. Construction of
single-family homes increased 12.4 percent and construction of multi-family units increased over
200 percent. Residential construction starts added a total value of $385.8 million during the
second quarter compared to $157.3 million during the second quarter of last year (↑145.3%).
-
Montgomery County Quarterly Economic Indicators July 2018
14
However, on a fiscal year basis, the number of new residential construction starts decreased 11.7
percent in fiscal year 2018 largely attributed to the decline in multi-family units (↓21.2%)
although the total value added was $874.2 million which was 10.1 percent above FY2017 and
largely attributed to the total value added by single-family homes (↑26.6%).
1,159 1,056
2,2752,825
3,9954,553
4,9415,230
4,3943,881
$0
$200,000,000
$400,000,000
$600,000,000
$800,000,000
$1,000,000,000
$1,200,000,000
0
1,000
2,000
3,000
4,000
5,000
6,000
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Val
ue
($00
0)
Un
its
Fiscal Year
New Residential Construction Starts: Units and Value (Montgomery County)
Units Value
SOURCES: McGraw-Hill ConstructionMontgomery County Department of Finance
During the second quarter of 2018, the number of non-residential starts (projects) increased
nearly 53 percent from the second quarter of 2017. The total value increased from $175.5
million to $368.6 million (↑110.1%). On a fiscal year basis, the number of non-residential
projects increased 88.2 percent and the total added value increased from $1,055.4 million to
$1,154.2 million from fiscal year 2017 to fiscal year 2018 – an increase of 9.4 percent.
Residential Real Estate
During the second quarter of this calendar year, existing home sales decreased 0.5 percent on
a year-over-year basis following a decrease of 2.5 percent during the second quarter of 2017.
However, median sales prices for existing homes increased 5.8 percent during the second quarter
2018 following an increase of 3.9 percent during the second quarter of 2017. On a fiscal year
basis, sales of existing homes decreased 3.3 percent but median prices increased 3.7 percent.
-
Montgomery County Quarterly Economic Indicators July 2018
15
8,437
11,0809,457 9,206
10,255 10,81711,150
12,315 12,644 12,227
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018
Sal
es
Fiscal Year
Sales of Existing Homes
Montgomery County
SOURCES: Metropolitan Regional Information System, Inc.
Montgomery County Department of Finance
Retail Sales
Using sales tax receipts as a measure of retail sales activity in the County, retail sales
decreased 1.6 percent in fiscal year 2018. In FY2018, purchases of nondurable goods, which
include food and beverage, apparel, general merchandise, and utilities and transportation,
decreased 2.5 percent during this period and sales of durable goods were down 0.1 percent. The
decrease in nondurable goods purchases was largely attributed to the decrease in purchases of
general merchandise (↓6.0%) and utilities/transportation (↓11.5%), while the decrease in
purchases of durable goods was largely attributed to a decrease in furniture and appliances
(↓6.6%) possibly reflecting weaker existing home sales.
-
Montgomery County Quarterly Economic Indicators July 2018
16
$416,162$402,752
$416,843
$436,289 $431,411 $435,303$453,520 $457,864
$468,996$461,387
$300,000
$320,000
$340,000
$360,000
$380,000
$400,000
$420,000
$440,000
$460,000
$480,000
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Sa
les
Ta
x R
ec
eip
ts ('0
00
$)
Fiscal Year
Total Sales Tax Receipts Montgomery County
SOURCES: Maryland State ComptrollerMontgomery County Department of Finance
CONCLUSION
The major economic indicators confirm that the County’s economy experienced mixed
economic performance during the second quarter of this year compared to the same period in
2017. Employment measured by the survey of households increased 0.7 percent, but the
unemployment rate at 3.3 percent was a slight increase from the second quarter of 2017.
Residential construction increased for both single-family and multi-family homes. Sales of
existing homes declined 0.5 percent but median prices were up 5.8 percent during the second
quarter compared to the second quarter of last year.
While data for the second quarter suggests a mixed performance in the County’s economy
during this period, data on a fiscal year basis suggest that the economy experienced growth in the
period July 2017 to June 2018 particularly in employment, the total value of new construction for
both residential and non-residential properties, and median sales prices for existing homes.
-
Montgomery County Quarterly Economic Indicators July 2018
17
SELECTED ECONOMIC INDICATORS Reporting Current Prior Year's Year To-Date Annual
Period Period Period 2018 2017 2017
Leading Indicators
National (1) June '18 1.4% 1.5% 1.5% 1.5%
Maryland (1) June '18 0.9% 0.6% 2.2% 1.5%
Washington MSA (2) May '18 0.6% 1.6% 1.6% 1.8%
Coincident Indicators
National (1) June '18 0.1% 2.8% 2.8% 2.8%
Maryland (1) June '18 0.1% 2.1% 3.4% 3.6%
Washington MSA (2) May '18 1.5% 2.2% 2.7% 2.7%
Consumer Confidence Index
National July '18 0.2% 7.7% 23.6% 20.7%
South Atlantic Region July '18 -11.5% 8.2% 24.5% 21.1%
Consumer Sentiment (University of Michigan) July '18 -0.3% 2.3% 5.0% 5.4%
Consumer Price Index
All Items (nsa)
National June '18 2.9% 2.5% 2.2% 2.1%
Washington - MSA (3) May '18 2.5% 2.1% 0.9% 1.1%
Core CPI (nsa)
National June '18 2.3% 2.1% 2.0% 1.8%
Washington - MSA (3) May '18 2.3% 2.1% 0.3% 0.6%
Retail Trade
National (sales - nsa) June '18 6.3% 5.3% 3.9% 4.2%
Maryland (sales tax)(1) June '18 4.2% 3.2% 1.8% 1.4%
Montgomery County (sales tax)(4) June '18 -2.4% -0.4% 2.2% -0.4%
Employment
Maryland (labor force data - nsa) June '18 3,117,386 3,108,200 3,084,163 3,071,897 3,086,246
- Percent Change 0.3% 0.4% 1.6%
Silver Spring-Frederick-Rockville (labor force data - nsa) June '18 673,072 669,919 667,413 663,047 665,637
- Percent Change 0.5% 0.7% 1.8%
Montgomery County (labor force data - nsa) June '18 545,143 542,303 540,525 536,710 539,132
- Percent Change 0.5% 0.7% 1.8%
Montgomery County (QCEW)(5) Dec. '17 474,542 472,358 469,126 463,967 463,967
- Percent Change 0.5% 1.1% 0.9%
Unemployment Rates
Maryland (nsa) June '18 4.5% 4.3% 4.3% 4.3% 4.1%
Silver Spring-Frederick-Rockville (nsa) June '18 3.8% 3.6% 3.6% 3.4% 3.3%
Montgomery County (nsa) June '18 3.8% 3.6% 3.5% 3.3% 3.3%
Construction
Construction Starts - Montgomery County
Total ($ thousands) June '18 $128,207 $50,407 $1,067,843 $708,009 $1,545,328
- Percent Change 154.3% 50.8% -13.0%
Residential ($ thousands) June '18 $78,768 $21,916 $513,934 $439,369 $669,002
- Percent Change 259.4% 17.0% -4.3%
Non-Residential ($ thousands) June '18 $49,439 $28,491 $553,909 $268,640 $876,326
- Percent Change 73.5% 106.2% -18.7%
Building Permits (Residential)
Maryland June '18 1,334 1,565 8,713 8,496 16,008
- Percent Change -14.8% 2.6% -5.4%
Montgomery County (units) June '18 99 110 788 953 1,637
- Percent Change -10.0% -17.3% -24.6%
Building Permits (Non-Residential)
Montgomery County June '18 170 195 1,006 942 2,024
- Percent Change -12.8% 6.8% -4.0%
Construction Cost Index July '18 8,773.50 8,273.40 8,580.37 7,544.60 7,841.41
Baltimore 6.0% 13.7% 9.1%
Real Estate
Case-Shiller Home Price Index®(nsa) May '18 227.49 220.74 223.68 217.61 220.14
3.1% 2.8% 3.1%
Maryland
Sales June '18 8,745 9,291 39,956 40,901 82,624
- Percent Change -5.9% -2.3% 3.2%
Average Price June '18 $356,494 $346,353 $330,535 $320,293 $325,781
- Percent Change 2.9% 3.2% 4.0%
Montgomery County
Sales June '18 1,414 1,519 6,093 6,300 12,434
- Percent Change -6.9% -3.3% -0.3%
Average Price June '18 $575,509 $545,893 $538,720 $524,221 $520,318
- Percent Change 5.4% 2.8% 3.6%
Median Price June '18 $477,750 $440,000 $441,042 $418,567 $417,371
- Percent Change 8.6% 5.4% 3.6%
Months of Inventory June '18 1.8 1.8 2.0 2.2 2.3
NOTES:
(nsa): not seasonally adjusted
(1) Philadelphia FRB
(2) Stephen Fuller Institute
(3) Bureau of Labor Statistics, U.S. Department of Labor, established a new data series starting in January 2018
(4): Data include miscellaneous and assessment collections.
(QCEW): Quarterly Census of Employment and Wages
(5) SOURCE: Bureau of Labor Statistics, U.S. Department of Labor: Year to Date through fourth quarter for 2016 and 2017, annual data for 2017