november economic overview

Policy, Research & Strategic Planning; November 2011 Report

NORTH CAROLINA ECONOMIC OVERVIEW: NOVEMBER 2011

North Carolina’s unemployment rate decreased this month as holiday job seekers found employment. Nonfarm employment also saw a slight increase this month behind gains in the Government, Business, and Education & Health Services sectors. Existing home sales and authorizations were up this month compared to the same month last year.

National employment data for October displayed an uptick in employment alongside a decrease in unemployed workers as the unemployment rate fell to 9.0 percent for the first time in 4 months. US Real GDP grew 2.0 percent according to the second estimate for the 3rd quarter of 2011, a downgrade from the “advance” 3rd quarter growth estimate of 2.5 percent.

Employment increases as workers find seasonal employment

The number of employed workers in North Carolina this month was slightly higher than last month. The small bump in employment combined with a larger drop in unemployment to decrease the size of the labor force compared to September. Whether the number of employed workers continues to increase will be an indicator of consumer confidence for this holiday season. If businesses see stronger sales they may add workers to meet demand. As the chart to the right shows, the number of unemployed workers is still higher than it was in October 2010, but lower than the 2009 peak. The higher number of unemployed workers is a possible sign that workers are more optimistic about job opportunities than in years past. It also demonstrates that North Carolina is not close to pre-recession unemployment levels.

North Carolina Seasonally Adjusted Labor Force Statistics

Sep-11 Oct-11(revised) (preliminary) Change % Change Change % Change Change % Change

Labor Force 4,507,377 4,504,834 (2,543) -0.1% 37,909 0.8% (55,563) -1.2%

Employed 4,032,536 4,038,266 5,730 0.1% 12,041 0.3% (295,892) -6.8%Unemployed 474,841 466,568 (8,273) -1.7% 25,868 5.9% 240,329 106.2%

N.C. Department of Commerce, Division of Employment Security, Labor Force Statistics

Start of Recess ion

(10/11 compared to 12/07)

Previous Month

(10/11 compared to 9/11)Last Year - Same Month


KEY INDICATORS AT A GLANCE N.C. Unemployment rate decreased

0.1% 10.4% in October from 10.5% in September

Consumer Confidence Index increased

15.1 pts From 40.9 in October to 56.0 in November

N.C Existing Home Sales decreased

7.4% From 6,800 in September to 6,298 in October

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North Carolina Unemployed Workers from July to DecemberStart of Recession to Present


http://www.conference-board.org/data/consumerconfidence.cfm


The decrease in unemployed workers in the labor force pushed the unemployment rate for the State down this month, from 10.5 percent in September to 10.4 percent in October on a seasonally adjusted basis. The decline is the first drop in the unemployment rate since March of this year. The U.S. unemployment rate fell from September to October as well. The current November release of U.S. unemployment shows the rate at 8.6 percent, reflecting a nationwide increase in employment and decrease in unemployment.

Initial unemployment benefit claims are a leading indicator of future unemployment rates. New initial claimants totaled 53,752 in October, an increase of 2,503 from September. The number of claimants was significantly lower than October 2010 with nearly 4,000 fewer first time claimants. Since hiring and firing tend to follow seasonal trends (more activity in the spring and fall) the lower October 2011 claims compared to the previous year is a positive sign for the economy.

North Carolina Nonfarm Employment growth remains flat

Preliminary data1 suggest:

Since last month (September 2011) the economy experienced a net gain of 5,500 jobs. o Leisure and Hospitality comprised 44 percent of gross job losses. o The Government sector saw the largest growth over the period.

Over the past twelve months employment has risen by over 11,000 jobs. o Only 2 sectors (Government and Construction) have experienced declines of over 4,000 jobs. o Manufacturing has posted its 10th consecutive month of year-over-year growth after showing

continuous year-over-year declines since August of 1998.

Since the start of the recession o Government sector employment has been below pre-recessionary levels since September 2010.

1 The Bureau of Labor Statistics releases a preliminary estimate of sector employment on a monthly basis. These values are revised with a rolling 3 month lag.

Seasonally Adjusted Unemployment Rates

Sep-11 Oct-11(revised) (preliminary) % Point Change % Point Change % Point Change

North Carolina 10.5% 10.4%

United States 9.1% 9.0%


0.5%

-0.6%-0.1%

-0.2%

Start of Recession


5.4%

4.0%

Last Year - Same Month


Previous Month


Initial Unemployment Benefit Claimants

Change % Change Change % Change

North Carolina 51,249 53,752 2,503 4.9% (3,392) -5.9%

N.C. Department of Commerce, Division of Employment Security; Labor Market Information

57,858

12 Month Average(Beg. of 11/10 - End of 10/11)

Sep-11 Oct-11

Previous Month




North Carolina Seasonally Adjusted Nonfarm Employment Trends by Supersector

Sep-11 Oct-11(revised) (preliminary) Change % Change Change % Change Change % Change

Mining & Logging 5,700 5,700 0 0.0% 0 0.0% (1,200) -17.4%

Construction 172,400 170,600 (1,800) -1.0% (4,900) -2.8% (81,600) -32.4%

Manufacturing 433,200 431,500 (1,700) -0.4% 1,100 0.3% (101,500) -19.0%

Trade, Transportation, & Utilities 715,400 714,200 (1,200) -0.2% 5,300 0.7% (66,200) -8.5%

Information 68,300 68,100 (200) -0.3% (200) -0.3% (4,100) -5.7%

Financial Activities 200,600 201,200 600 0.3% 1,200 0.6% (10,700) -5.0%

Professional & Business Services 494,600 498,200 3,600 0.7% 9,400 1.9% (7,800) -1.5%

Education & Health Services 537,400 540,900 3,500 0.7% 4,400 0.8% 7,400 1.4%

Leisure & Hospitality 405,900 402,200 (3,700) -0.9% 6,600 1.7% (3,200) -0.8%

Other Services 154,800 156,400 1,600 1.0% (1,600) -1.0% (19,100) -10.9%

Government 677,500 682,300 4,800 0.7% (10,000) -1.4% (12,500) -1.8%

Total Nonfarm Employment 3,865,800 3,871,300 5,500 0.1% 11,300 0.3% (300,500) -7.2%U.S. Bureau of Labor Statistics, Economy at a Glance Data, Nonfarm Wage and Salary Employment



Start of Recess ion


Previous Month

(10/11 compared to 9/11)Sector


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North Carolina Existing Home SalesJanuary 2008 to Present

Source: N.C. Association of Realtors, Existing Home Sales Data

Existing home sales and Housing Authorizations improve compared to October 2010

Data from the NC Association of Realtors show existing home sales and building permits in October decreased compared to September, but were both higher than their levels in October 2010. On another positive note, the foreclosure filings for October were below their 2010 level as well. As the chart to the right indicates, year-over-year comparisons are a more important indicator of vitality for housing numbers due to heavy seasonal variations. Housing activity tends to peak in the summer and decline towards the end of the year. Housing sales continue to be lower than 2008 but have improved compared to sales in 2010 after the housing tax credit expired.

Index falls to lowest level of 2011 behind declines in building permits and manufacturing hours and earnings

The NC State University Index of North Carolina Leading Economic Indicators (the “Index”), a forecast of the economy’s direction four to six month ahead, rose in October, the first gain in the Index since June. All of the North Carolina-based components of the Index improved, with the leader being a 31% jump in building permits. Only the nation index (ECRI-WLI) retreated. The Index’s gain ends a multi-month decline and puts its level only slightly below the reading of a year ago. In the past year, the Index has wavered within a narrow band, resulting in a “start-stop” pattern to the state economy. Without a significant “breakout” – either up or down – the outlook is for more of the same.

North Carolina Housing Market Statistics

Sep-11 Oct-11

(revised) (Preliminary) Change % Change Change % Change

Properties with Foreclosure Filings 2,183 2,939 756 34.6% (1,879) -39.0%

Existing Homes - Units Sold 6,800 6,298 (502) -7.4% 586 10.3%

Housing Units Auth. by Bldg. Permit 2,060 1,873 (187) -9.1% 176 10.4%

12 Month Average (Beg. of 11/10 - End of 10/11)

6,642

1,972

2,869

Previous Month


RealtyTrac; N.C. Assoc. of Realtors, Existing Homes Sales Data; U.S. Census, Table 2-New Privately Owned Housing Units Authorized



The index was developed by Dr. Michael Walden ([email protected]) at NC State. Dr. Walden has a PhD in economics and over thirty years of experience studying the North Carolina economy. Special thanks to Dr. Walden for allowing the reproduction of the Index (November 2011, volume 2, number 11) in this publication. The complete online version of the index may be found here.

mailto:[email protected]

http://www.ag-econ.ncsu.edu/faculty/walden/index/november2011.pdf


NATIONAL ECONOMIC UPDATE

Moving into the fourth quarter of 2011, growth appears to be rising as solid gains are expected in consumer spending and business fixed investment. Efforts to reduce the U.S. budget deficit were also discussed this month when the Super Committee meeting on Nov. 23 ended with no final decision. The Euro zone appears to be entering into a recession, which could affect U.S. interest rates.

National Gross Domestic Product (GDP)

In the third quarter of 2011, real GDP increased at an annual rate of 2.0 percent, according to the "second” estimate released by the Bureau of Economic Analysis.

The increase in real GDP in the second quarter primarily reflected positive contributions in personal consumption expenditures, nonresidential fixed investment, exports and federal government spending that were partly offset by negative contributions for private inventory investment and state and local government spending.

Manufacturer’s Shipments, Inventories and Orders

New orders for manufactured durable goods decreased $1.4 billion or 0.7 percent to $197.7 billion in October, according to the U.S. Census Bureau.

Shipments of manufactured durable goods in October, up five of the last six months, increased $2.6 billion or 1.3 percent to $203.0 billion after falling 0.5 percent in September.

Personal Income & Consumer Spending

Real disposable income increased 0.3 percent in October, compared to a 0.1 percent decrease in September, according to the Bureau of Economic Analysis.

Personal income increased $48.1 billion, or 0.4 percent, in October.

Personal consumption expenditures increased $8.2 billion or 0.1 percent in October, smaller than the $15.5 billion increase seen in September.

Housing

Sales of new single-family houses in October 2011 were at a seasonally adjusted annual rate of 307,000, with a median sales price of $212,300 according to estimates released jointly by the U.S. Census Bureau and the Department of Housing and Urban Development.

Single-family housing starts, an indicator of current economic activity, were at a seasonally adjusted rate of 425,000 in September which was higher than in August.

Single-family authorizations (building permits), an indicator of future economic activity, were at a seasonally adjusted rate of 434,000 in October, 5.1 percent above the revised September figure of 413,000.

Consumer Confidence

National consumer confidence increased in November by 15.1 points to 56.0, a notable increase over the September (46.4) and October (39.8) readings.

If you would like to be added to the distribution list please contact: Derek Ramirez, Economist, PRSP ([email protected], 919-715-2358) Report Author: Derek Ramirez – Economist Contributing Author: Kristin Bunn - Economist

Previous Monthly Overviews are available on Commerce’s website by clicking here or at the link below: http://www.nccommerce.com/en/AboutDOC/PublicationsReports/EconomicDevelopmentReports/MonthlyOverview.htm

mailto:[email protected]

http://www.nccommerce.com/en/AboutDOC/PublicationsReports/EconomicDevelopmentReports/MonthlyOverview.htm

http://www.nccommerce.com/en/AboutDOC/PublicationsReports/EconomicDevelopmentReports/MonthlyOverview.htm

november economic overview

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