third quarter forecast
TRANSCRIPT
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Volume82,Number3 | ThirdQuarter2013
AlabamaNonfarmEmploymentandUnemploymentRate
Employment
(Thousands),
Unemployment
(Percent)
Source: AlabamaDepartmentofLabor.
0
2
4
6
8
10
12
1,500
1,600
1,700
1,800
1,900
2,000
2,100
1990 1993 1996 1999 2002 2005 2008 2011 2013
Employment
Unemployment Rate
AlabamaForecast(AnnualPercentChange)
Probability: forecast(60percent)andrange(90percent)
2011 2012 2013 2014
RealGDP 1.1 2.1 2.2 3.2
range
1.5to3.0 2.0to4.0
Employment 0.4 0.7 1.0 1.4
range
0.5to1.5 0.7to2.0
TotalTaxReceipts,FY 5.0 3.8 3.8 4.2
range 3.5to5.0 3.0to6.0
Source: CenterforBusinessandEconomicResearch,TheUniversityofAlabama.
CenterforBusinessandEconomicResearch,CulverhouseCollegeofCommerce,TheUniversityofAlabama
Economic
Outlook:
ThirdQuarter2013
AlabamaEmployment. Nonfarmjobstotaled1,909,700inJune2013,117,000belowtheprerecessionpeakof2,026,700reachedinDecember2007. Accordingtotheestablish
mentsurvey,overthe12monthperiodendinginJune
2013thestategainedatotalof14,400jobs. Goods
producingbusinessesadded5,300workerswhilethe
serviceprovidingsectorsawanetgainof9,100. Among
goodsproducingindustries,manufacturingadded3,600
workersandconstructionhadanetincreaseof1,700.
Constructionrelatedbusinessesexperiencedjobgrowth
acrosstheboard: specialtytradecontractorsadded1,200
workers,whileheavyandcivilengineeringconstruction
gained400jobsandbuildingconstructionadded100.
Twoindustriesaccountedforallofthenetmanufac
turingjobgrowthduringthepastyeartransportation
equipmentmanufacturerscreated4,900positions,while
plasticsandrubberproductsmanufacturersadded500.
Payrollsintheremainingindustrieseitherdeclinedor
wereflatduringthe12monthperiodendinginJune
2013. Sizeablejoblosseswerereportedintextilesand
appareland
primary
and
fabricated
metals
manufacturing
(1,000each);computerandelectronicproducts(800);
woodproductsandfoodmanufacturing(500each);and
inaerospaceproductsandpartsandfurnitureandrelated
productsmanufacturing(400each).
Amongserviceprovidingfirms,employmentgains
betweenJune2012andJune2013wereprimarily
HighlightsThestategained14,400nonfarmjobsbetween
June2012andJune2013,whileseasonally
adjustedtotalemploymentroseby33,990,
increasingfrom1,995,962to2,029,952.
Accordingtotheestablishmentsurvey,nonfarm
payrollsinthestatetotaled1,909,700inJune
2013,upfrom1,895,300ayearago.
Seasonallyadjusted,thenumberofunemployed
workersfellfrom163,982inJune2012to
140,148inJune2013. Althoughthecivilianlabor
forceexpandedfrom2,159,944to2,170,100,
totalemploymentgrewfaster. Thestates
unemploymentratedeclinedto6.5percentin
June2013,downfrom7.6percentayearearlier.
Totalnonfarmemploymentisforecastedto
risebetween0.8and1.2percentin2013. Gains
willbestrongestintransportationequipment
manufacturing,professionalandbusiness
services,
health
services,
and
in
food
services
anddrinkingplaces.
Overall,thestateseconomyisestimatedto
expandbyaround2.2percentin2013,about
thesameastherateofgrowthseenin2012.
Afterincreasingby3.8percentinFiscalYear
20112012,statetaxrevenuesareexpectedto
bearound4.0percenthigherinFY2013.
Nonfarm
Employment
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2 | ThirdQuarter2013 AlabamaBusiness
associatedwithleisureandhospitality(9,500),
professionalandbusinessservices(3,100),healthcare
andsocialassistance(2,100),andtrade(500inwholesale
and400inretail). Manyofthejobsaddedwerein
accommodationandfoodservices(5,900)andin
administrativesupport,wastemanagement,and
remediationservices(3,800),sectorsthatpayrelatively
lowerwages,offerlimitedbenefits,andtendtohire
temporaryor
part
time
workers.
Growth
in
these
types
ofjobsputsdownwardpressureonwages,thereby
restrictingconsumerandbusinessdemand.
Overthesame12monthperiod,anumberofservice
providingsectorssawsignificantjoblosses,withthe
largestinstategovernmentinstitutions(2,500)andthe
informationsectorincludingtelecommunications(1,100).
Financialservices;professional,scientific,andtechnical
services;andfederalgovernmententitiesshed900jobs
each,whilefirmsineducationalservicesandintruck
transportationservicesbothlost800employees.
Relativelysluggishconsumerandbusinessspending
growthcontinues
to
hamper
demand
for
these
services.
DuringtheyearendinginJune2013,sixAlabama
metroareasexperiencedjobgains. Nonfarmemploy
mentincreasedinMobile(2,100),Tuscaloosa(1,900),
Montgomery(1,500),AuburnOpelika(800),Florence
MuscleShoals(500),andBirminghamHoover(100).
Metroareasthatlostjobsoverthesameperiodincluded
AnnistonOxford(300),Dothan(200),andHuntsville
(100),whilepayrollsinDecaturandGadsdenwereflat.
Despiterelativelystronggrowthinpayrolls,Mobilehad
thehighestmetrounemploymentrateinJuneat7.8
percentstillaconsiderableimprovementover9.5
percentunemploymentayearearlier. Unemployment
wasthe
lowest
in
the
Auburn
Opelika
area
at
5.8
percent,
followedcloselybyBirminghamHooverandHuntsville
with5.9percentunemployment.
WhileallofAlabamas67countiesexperienceda
significantdeclineinunemploymentcomparedtoyear
agolevels,12countiesstillsawratesof10.0percentand
over. WilcoxCountyhadthehighestunemploymentat
15.8percentwhileShelbyCountysrateof4.5percent
wasthe
lowest.
Over
the
past
three
years,
all
Alabama
countiesandmetroareashaveshownsignificant
improvementinunemploymentrates.
Exports. AccordingtotheU.S.Departmentof
CommercesInternationalTradeAdministration,Alabama
exportsdeclined2.7percentduringthefirstthreemonths
of2013comparedtothesameperiodin2012,slipping
from$4.8billionto$4.7billion. WhileCanadaremained
ourlargesttradingpartnerearlyin2013,Chinaassumed
thepositionofsecondlargest,surpassingbothGermany
andMexico. ExportstoCanadaincreasedfrom$925
millioninthefirstquarterof2012toaround$947million
forthefirstquarterof2013. Firstquarter2013exportsto
Chinatotaled$596million,followedbyGermany($522
million)andMexico($484million). Exportstoallthreeof
thesecountrieswerebelowthelevelsseeninthefirst
quarterof2012. Othermajortradingpartnersinthefirst
quarterof2013includedJapan($173million),theUnited
Kingdom($165million),SouthKorea($153million),and
Brazil($139million).
AlabamaEmploymentLevelComparedto
theBeginningofEachRecession
(PercentofPreRecessionLevel)
Source: AlabamaDepartmentofLabor.
90
92
94
96
98
100
102
1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 55 58 61 64 67
1980
1981
1990
2001
2007
NumberofMonthsPostRecession
AlabamaNonfarmEmploymentChangeinNumberofJobs
June2011 June201
toJune2012 toJune201
TotalNonfarmEmployment 17,100 14,40
NaturalResourcesandMining 100
Construction
-1,800 1,70Manufacturing 5,900 3,60
DurableGoodsManufacturing 6,400 2,20
NondurableGoodsManufacturing -500 1,40
Trade,Transportation,andUtilities 2,500 30
WholesaleTrade 1,100 50
RetailTrade -300 40
Transportation,Warehousing,Utilities 1,700 -60
Information -500 -1,10
FinancialActivities -200 -90
ProfessionalandBusinessServices 6,100 3,10
EducationalandHealthServices 3,300 1,30
LeisureandHospitality 6,100 9,50
OtherServices
1,800 -30
Government -6,200 -2,80
FederalGovernment -1,700 -90
StateGovernment -4,100 -2,50
LocalGovernment -400 60
Source: AlabamaDepartmentofLaborandCenterforBusinessandEconomicResearch.
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AlabamaBusiness ThirdQuarter2013 | 3
Shipmentsoftransportationequipment,thestates
topexportproduct,rose$153milliontoalmost$1.9
billioninthefirstquarterof2013,anincreaseof0.9
percentcomparedtoyearagolevels. Othermajor
exportsinthefirstquarterof2013werechemicals($677
million),mineralsandores($372million),primarymetals
($328million),paperproducts($225million),machinery
($216million),fabricatedmetals($173million),food
products($143
million),
and
computer
and
electronic
products($128million). Exportsofprimarymetal
productsandnonelectricalmachinerypostedsteep
declinescomparedtothefirstquarterof2012,with
bothdownaround25percent.
TaxReceipts. Inthefirstninemonthsofthecurrentfiscalyear(FY2013),Alabamastaxrevenuestotaled
around$7.2billion,up4.6percent,orslightlyover
$315million,fromthesameperiodayearearlier. Sales
taxrevenuesrose0.9percent(almost$15million)to
about$1.52billion,withtheweakgainaclearindication
thatconsumers
are
still
very
cautious
about
spending.
At
around$370million,corporateincometaxreceiptswere
$35millionabovethefirstninemonthsofFY2012.
Individualincometaxrevenuesrose7.1percent,up
$194milliontoabout$2.9billionduringthefirstthree
quartersofFY2013.
ForthefirstninemonthsofFY2013comparedtothe
sameperiodinFY2012,appropriationstotheAlabama
EducationTrustFund,whichareprimarilyderivedfrom
incomeandsalestaxes,rosebyonly$13.5million(0.3
percent)tototalabout$4.3billion. Forthesameperiod,
appropriationstothestatesGeneralFund,directed
MonthlyEmploymentIndicators(June2013)
NotSeasonallyAdjusted SeasonallyAdjustedAlabamaCivilianLaborForce 2,169,797 2,170,100 PercentChangefromYearAgoLevel 0.7% 0.5%
AbsoluteChangefromYearAgoLevel 15,906 10,156
Employed 2,023,217 2,029,952
PercentChangefromYearAgoLevel 0.9% 1.7%
AbsoluteChangefromYearAgoLevel 17,824 33,990
Unemployed 14 6,580 140,148
PercentChangefromYearAgoLevel 18.7% 14.5%
AbsoluteChangefromYearAgoLevel 33,730 23,834
AlabamaUnemploymentRate 6.8% 6.5% UnemploymentRate(June2012) 8.2% 7.6%
U.S.Unemployment Rate 7.8% 7.6% UnemploymentRate(June2012) 8.4% 8.2%
Source: AlabamaDepartmentofLabor,LaborMarketInformationDivision.
towardsnoneducationrelatedspending,declinedby
approximately$51milliontoabout$1.2billion,adrop
of4.1percent.
Outlookfor2013InflationadjustedAlabamaGDPshouldgrowbyabout
2.2percent
in
2013,
close
to
the
pace
of
expansion
seen
in2012. Transportationequipmentmanufacturingwill
continuetobeoneofthefastestgrowingindustries.
Relativelystrongdemandforvehiclesproducedin
Alabamaisexpectedtokeepproductionatcurrentlevels
fortheremainderofthisyear. Nonfarmemploymentis
forecastedtorise0.8to1.2percent,withthestateadding
between15,000and20,000jobsin2013. Mostjobgains
willbeintransportationequipmentmanufacturing;food
servicesanddrinkingplaces;administrativesupport,
wastemanagement,andremediationservices;educa
tionalservices;healthcareandsocialassistance;and
finance
and
insurance
related
services.
Graduallyimprovingresidentialandcommercialreal
estatemarketsareexpectedtohelpthestateregainsome
oftheconstructionjobsthatwerelostduringrecent
years. However,givenstillrelativelysluggishconsumer
spendinggrowth,thepaceofpayrollgainsintheleisure
andhospitalitysector,includingrestaurantsandother
foodserviceestablishments,isexpectedtoslowinthe
secondhalf ofthisyear.
Lookingatnotseasonallyadjusteddata,therecent
improvementinAlabamasunemploymentratehasbeen
duetomoderateemploymentgrowthcoupledwitha
slightlylargerdecreaseinthecivilianlaborforce. Theloss
ofalmost
16,000
labor
force
participants
over
the
12
monthsendinginJune2013likelyresultsfromanumber
offactors,includingdiscouragedworkerswhohavegiven
uplookingforajob,workerswhohaveretired,and/or
workerswhohavemovedoutofstateforemployment
opportunities. Sluggishconsumerandbusinessspending
growth,coupledwithuncertaintiesconcerningfederal
fiscalpoliciesandupcomingimplementationofthe
healthcarelegislation,willkeepmanyofthestates
employerscautiousaboutnewhiringandcapital
investmentduringtheremainderofthisyear.
Businesssentiment,measuredquarterlybytheCenter
for
Business
and
Economic
ResearchsAlabama
Business
ConfidenceIndex(ABCI),rose5.2pointsto52.9onthethirdquarter2013survey. Thatsthefirsttimethestates
businesscommunityhashadapositiveoutlookoverall
sincethethirdquarteroflastyear. However,business
sentimenthasnotyetregainedtheprerecessionlevelof
56.8recordedinthethirdquarterof2007. Business
executivesaremuchmoreoptimisticaboutprospectsfor
thestatethanthenationaleconomy. AnAlabama
economyindexreadingof55.2forecastsmoderate
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4 | ThirdQuarter2013 AlabamaBusiness
expansioninthethirdquarter,whiletheU.S.economy
couldperformslightlybetterthanlastquarterwiththe
indexat50.6.
Expectationsforsalesroseto57.8,upfrom53.9for
thepreviousquarter,butstillbelowtheindexreadingof
61.8registeredayearearlier. Theprofitsindexincreased
3.2pointsto53.2. Hiringshouldproceedataboutthe
samepaceasinthesecondquarter,withtheindexup3.2
pointsto
aneutral
50.
Capital
expenditures
could
pick
up
slightlytheindexrose3.0pointsto50.7. Thefinancial
activitiessectorshowedthemostoptimismlookingahead
tothethirdquarter,whilefirmsinconstruction;
transportation,information,andutilities;wholesaletrade;
andotherservicesweremoderatelyoptimistic.
AmongthemetroareastrackedbytheABCIsurvey,
Mobilehadthehighestconfidenceindexof59.0this
quarter,followedbyMontgomeryat56.6andBirming
hamHooverwith54.4. Althoughconfidencerosein
everymetro,Huntsvilleareabusinessexecutiveshavea
moderatelynegativeoutlookwithathirdquarterABCI
of45.7.
UnitedStatesTheU.S.economyhasnowgrownfor15consecutive
quarterssince
the
end
of
the
recession,
but
the
rate
of
growth,ataround2.0percent,hasbeenamongthe
weakestofanyrecoverysinceWorldWarII. After
expandingbyonly0.4percentinthefourthquarterof
2012,theeconomygrewataslightbetterpaceof1.8
percentinthefirstquarterof2013. Consumerspending,
whichaccountsfortwothirdsofU.S.economicactivity,
largelydroveoverallgainsinthefirstthreemonthsofthis
year. Anincreaseinhousingactivity,strongautomobile
sales,andgraduallyimprovingpayrollsaresomeofthe
currentbrightspots. However,despitesomehelpfrom
thehousingrecoveryanditseffectsonwealthand
housingrelatedpurchases,thecurrentpaceofconsumer
spendingwillbedifficulttomaintaingoingforward.
Consumersfaceanincreaseinpayrolltaxesduetothe
expirationofBusherataxcutsandwagesremain
relativelystagnant. Householdshavelostapproximately
1.0percent
of
their
disposable
income
($12
to
$13
billion)
thisyearduetoexpirationofthepayrolltaxcut. Inspite
ofrecentdeclines,householddebtburdensremainhigh
andnetnonmortgageconsumerdebtisexpectedto
increasefromabout$2.8trillionin2012toover$3.0
trillionin2013.
Thestrengthoftherecoveryisnothelpedbythefact
thatmanyofthejobsbeingaddedareparttimeor
temporaryinnature. Withaseasonallyadjustedincrease
of322,000inJune,8.2millionAmericansareworking
parttimedespitewantingfulltimework. Ifthese
workersareincluded,theunemploymentrateis14.3
percentinstead
of
the
reported
7.6
percent.
Of
195,000
jobsaddedinJune,75,000oralmost39percentwerein
theleisureandhospitalitysector;monthlyjobgrowthin
thissectorhasaveraged55,000sofarin2013. There
wereonemillionsocalleddiscouragedworkersinJune
whosaytheyarenotcurrentlylookingforworkbecause
theybelievenojobsareavailableforthem. Thatsan
increaseofmorethan200,000fromayearagoandisone
ofthereasonswhytheunemploymentratehasdropped.
Theincreaseindiscouragedworkerscouldbeahurdlefor
unemploymenttoreachthetarget6.5percentatwhich
theFedwouldlikelyenditsbondbuyingprogram.
Currently,about12millionAmericansarecountedas
unemployed.
ConsumerSpending,AnnualPercentChange(Chained2005Dollars)
Consumerspendingisexpectedtoincreaseby
approximately1.7percentinthethirdquarter,followed
6
4
20
2
4
6
8
10
12
14
1990 1994 1998 2002 2006 2010 2014
Total
DurableGoods
Services
AlabamaBusinessConfidenceIndexU.S.andAlabamaEconomiesExpectationsversusPriorQuarter
Source: CenterforBusinessandEconomicResearch,TheUniversityofAlabama.
35
40
45
50
55
60
Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
Alabama
United
States
55.2
50.6
2010 2011 2012 2013
Source: U.S.BureauofEconomicAnalysisandIHSGlobalInsight.
Index
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AlabamaBusiness ThirdQuarter2013 | 5
bya2.0percentriseinfourthquarter2013. Light
vehiclesaleswillremainabrightspotduetopentup
demand,relativelylowinterestrates,andmanufacturers
discounts. Overallbusinessspendingwillincreaseby5.5
percentinthethirdquarterand7.0percentinthefourth.
Spendingonequipmentandsoftwarecouldrisebyabout
7.5percentforthesecondhalfoftheyear. Expenditures
oninformationprocessingequipmentwillberelatively
strongin
the
remainder
of
2013,
increasing
by
slightly
over10percent. Afterconsistentlydeclininginrecent
years,spendingoncommercialandhealthcarerelated
structureswillincreaseamodest0.3percentinthethird
quarter,followedbyasizeable5.0percentincreaseinthe
fourthquarter.
Althoughtheeconomywillcontinuetoaddjobsinthe
comingmonths,thepaceofjobcreationisforecastedto
befairlysluggish. Mostnewjobswillbeinleisureand
hospitalityandprofessionalandbusinessservices,while
employmentgainsinmanufacturingwillremainweakdue
topoorexportgrowth. Aftergrowing1.8percentinthe
firstquarter
of
2013,
the
U.S.
economy
is
estimated
to
expandbyabout1.6percentinthesecondquarter,and
around2.0percentinthesecondhalfofthisyear. The
rateofgrowthshouldpickupslightlyfromthethirdto
thefourthquarter. For2013asawhole,realGDPis
forecastedtoincreasebyapproximately1.6percent,
comparedto2.2percentin2012. Someofthemajor
riskstothisforecastincludethesluggishgrowthbeing
experiencedbymajorEuropeaneconomiesandJapan.
Cutsindomesticspendingwillalsocontinuetoimpede
economicgrowththroughtheremainderof2013.
SamuelAddy,Ph.D. [email protected] [email protected]
Articlesreflecttheopinionsoftheauthorsbutnotnecessarily those
ofthestaffoftheCenter,thefacultyoftheCulverhouseCollegeof
Commerce, ortheadministrative officialsofTheUniversityofAlabama.
ConsumerSentimentIndex,UniversityofMichigan
Source: UniversityofMichiganandIHSGlobalInsight.
60
70
80
90
100
110
1990 1994 1998 2002 2006 2010 2014
SavetheDate!JANUARY2014
S M T W T F S1
2
3 4
5 6 7 8 9 10 11
12 13 14 15 16 17 1819 20 21 22 23 24 25
26 27 28 29 30 31
MakeplanstojointheCenterforBusinessandEconomic
Researchfortheir26thannualEconomicOutlookConferenceonJanuary15,2014inMontgomery.TheCenterwilllookbackathowthenational,Alabama,
andmetroareaeconomiesfaredin2013andpresentthe
forecastsfor2014.
Wellletyouknowwhenregistrationisavailable. Check
outinformationfromlastyearsOutlookandconference
onourwebsiteathttp://cber.cba.ua.edu.
205.348.6191. ContactCarolynTrentat205.348.3589to
inquireaboutcorporatesponsorships.