Tennessee Economic Overview, February 2000

ENNESSEE
T
ECONOMIC
OVERVIEW
February 2000 Index as of May 2000
TENNESSEE
months.
Initial claims for unemployment
insurance fell 35.0 percent (SAAR), posting its
second loss in five months.
The two
components serving to depress the index were
average weekly manufacturing hours and the
U.S. leading index. In February, the former
slipped 13.8 percent (SAAR) posting its first loss
of 2000 and its seventh loss in a year, and the
U.S. leading index dipped 3.3 percent (SAAR)
marking its first loss since September of 1999.
A glance at the national economy shows
personal income climbed 5.1 percent (SAAR) in
February to eclipse the $8.08 trillion mark.
While U.S. consumer sentiment slipped 7.2
percent (SAAR) to mark its seventh loss since
February of last year, retail sales nonetheless
rose 8.8 percent (SAAR) to further its upward
trend.
In the national labor market, the
unemployment rate dropped one-tenth of a
FIGURE 1
Monthly Percent Change in the
Tennessee Leading Index
(Seasonally Adjusted at Annual Rate)
he index of leading economic activity
for Tennessee rose at a seasonallyadjusted annual rate (SAAR) of 6.3
percent in February to mark its third increase in
four months.
The index, a measure of
expected economic activity in six to nine
months, rose on the strength of three of its five
components. Inflation-adjusted taxable sales
soared 152.7 percent (SAAR) in February for
its third increase in four months, while
construction employment climbed 24.6 percent
(SAAR) to mark its tenth increase in eleven
(Continued on page 2.)
T
INSIDE
TN ECONOMIC DATA . . . . . . . . . . . . 3
U.S. ECONOMIC DATA . . . . . . . . . . . 4
MSA PERSPECTIVE . . . . . . . . . . . . . . 5
CHATTANOOGA . . . . . . . . . . . . . . . . . 6
KNOXVILLE . . . . . . . . . . . . . . . . . . . . . 7
MEMPHIS . . . . . . . . . . . . . . . . . . . . . . 8
NASHVILLE . . . . . . . . . . . . . . . . . . . . . 9
TRI-CITIES . . . . . . . . . . . . . . . . . . . . 10
SELECTED CBER PUBLICATIONS . 11
CENTER FOR BUSINESS AND ECONOMIC RESEARCH
COLLEGE OF BUSINESS ADMINISTRATION
THE UNIVERSITY OF TENNESSEE
http://cber.bus.utk.edu
(Continued from page 1.)
FIGURE 2
Tennessee Quarterly Leading Index
percentage point to 4.0 percent in February.
Nonagricultural employment rose 3.7 percent
in February, and manufacturing employment
rose 1.0 percent (SAAR).
The Tennessee labor market was a
mixed bag in February.
While the
unemployment rate remained unchanged at
3.5 percent, manufacturing employment
slipped 3.0 percent (SAAR) to mark its fourth
consecutive decline.
Nonagricultural
employment rose 1.9 percent (SAAR) in
February to post its fifth gain in as many
months.
February saw the state’s leading index
rebound nicely from January’s decline.
Inflation-adjusted taxable sales and initial
claims for unemployment insurance showed
significant improvement, and in general, the
labor market performed well. The state’s
manufacturing sector, however, continues to
be problematic.
In February, 1,300
manufacturing jobs were lost. News that the
U.S. leading index declined in February for
the first time since September of last year
should temper overly optimistic expectations
of growth. Expect the state economy to show
modest strength in the months to come.
FIGURE 3
Total Nonagricultural Employment
FIGURE 4
Real Personal Income
(1996 Dollars)
2
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ebruary brought good news to all five
Tennessee Metropolitan Statistical
Areas (MSAs) as all areas saw
significant gains in their respective
indices. Knoxville, the Tri-Cities, Memphis, and
Nashville enjoyed double-digit growth, while the
Chattanooga index showed slower growth of 5.4
percent (SAAR). Inflation-adjusted taxable sales
gained notable ground in February, as all five
MSAs recorded impressive gains in this
component, ranging from a 325.6 percent (SAAR)
increase in the Tri-Cities to a 37.6 percent
(SAAR) gain in Memphis.
Labor markets remain tight in all of the
state’s major metropolitan areas.
The
unemployment rate of all areas but the Tri-Cities
fell in February. At the same time, all areas lost
nonagricultural jobs. Only Knoxville saw a gain in
its manufacturing employment level. The jobs
data suggest that further drops in the
unemployment rate may be unlikely.
FIGURE 6
MSA Employment Growth
February 2000
FIGURE 5
MSA Index Growth
February 2000
FIGURE 7
MSA Unemployment Rate
February 2000
F
(seasonally adjusted)
Tennessee’s Largest MSAs
5
he index of leading economic activity
for the Chattanooga Metropolitan
Statistical Area (MSA) climbed 5.4
percent (SAAR) in February on the strength of two
of its four components to post its third gain in four
months. Inflation-adjusted taxable sales soared
135.4 percent (SAAR) in February to record its
second increase in as many months. Further
strengthening the index was Tennessee’s leading
index, which rose 6.3 percent in February.
Dampening the index’s performance were average
weekly manufacturing hours and construction
employment, both of which lost ground in
February. Average weekly manufacturing hours
dropped a significant 26.8 percent (SAAR) in
February to mark the end of two months of
consecutive increases, and
construction
employment slipped 2.5 percent (SAAR) for its
second monthly decline.
Employment data not used to construct the
index show mixed signals. The unemployment
rate shed one-tenth of a percentage point, down
from 2.8 to 2.7 percent in February.
Nonagricultural employment lost ground when it
slipped 1.7 percent (SAAR) in February to end two
months of consecutive increases. Manufacturing
employment also suffered a setback in February
when it fell a notable 5.9 percent (SAAR) to post its
seventh decline since February of last year.
February saw inflation-adjusted taxable sales
help carry Chattanooga’s leading index into
positive territory. With losses in construction
employment and average weekly manufacturing
hours, the Chattanooga labor market showed
weaknesses.
Losses in manufacturing
employment levels sent nonagricultural
employment levels in negative territory. The
Chattanooga index showed some volatility in the
last quarter of 1999 and seems to suffer from the
same problem two-thirds of the way through the
first quarter of 2000. Expect slow to modest
growth in the coming months.
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FIGURE 8
Chattanooga Quarterly Leading Index
6
he index of leading economic
activity f or the Knoxville
Metropolitan Statistical Area (MSA)
climbed 21.4 percent (SAAR) in
February on the strength of all four of its
components marking its fourth increase in as
many months. Leading the way was inflationadjusted taxable sales, which in February
rocketed 200.3 percent (SAAR) for the fourth
increase in five months.
Construction
employment rose a significant 43.0 percent
(SAAR) in February posting its second
increase in as many months. Average weekly
manufacturing hours also rose 6.6 percent
(SAAR) for the second consecutive increase.
Further strengthening the index was
Tennessee’s leading index, which rose 6.3
percent (SAAR) in February for its third
increase in four months.
Employment data not used to construct
the index show mixed signals, consistent with
the pattern in other metropolitan areas of the
state
The unemployment rate shed onetenth of a percentage point, down from 2.9
percent in January to 2.8 percent in February.
Nonagricultural employment lost ground in
February, down 9.5 percent (SAAR) for its
third loss in four months. Manufacturing
employment, however, gained ground in
February, up from its 10.8 percent (SAAR)
loss in January to record a gain of 2.8 percent
(SAAR). The situation in manufacturing
provides modest encouragement, as this
sector has been battered in recent years.
The Knoxville leading index has
generated notable momentum through the
first quarter of 2000. With significant gains in
inflation-adjusted taxable sales and
construction employment, the index appears
strong. The labor market seems strong, as
well, buoyed by some surprising strength in
manufacturing. The unemployment rate fell in
February to a level not seen since October of
last year. Expect a continuation of modest
growth in the months to come.
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FIGURE 9
Knoxville Quarterly Leading Index
7
he index of leading economic
activity for the Memphis
Metropolitan Statistical Area (MSA)
rose 14.3 percent (SAAR) in
February on the strength of four of its five
components to post its sixth gain in as many
months. The Memphis help-wanted index
soared 245.7 percent (SAAR) in February for
the first gain since October of 1999. Inflationadjusted taxable sales grew 37.6 percent
(SAAR) for the third increase in four months.
Construction employment rose a significant
17.4 percent (SAAR) in February to record its
sixth consecutive increase.
Finally,
Tennessee’s leading index further
strengthened the Memphis index with a 6.3
percent (SAAR) increase in February. On the
down side, average weekly manufacturing
hours slipped 9.2 percent (SAAR) continuing
the roller-coaster trend that began in June of
last year.
Employment data not used to construct
the index show mixed signals.
The
unemployment rate fell one-tenth of a
percentage point, down from January’s mark
of 3.4 percent to 3.3 percent in February.
Nonagricultural employment was down 1.7
percent (SAAR) in February to end two
months of consecutive growth. A prime
contributor was the manufacturing sector
which shed a notable 8.8 percent (SAAR) of
its jobs in February for its third decline in four
months.
February saw the Memphis index
sustain six months of broad-based gains.
The area’s unemployment rate fell to its
lowest point in five months, although losses in
the manufacturing sector continue to be a
problem for the region. Volatility in the helpwanted index provides little firm guidance on
the future path of the local labor market.
However, the six months of index expansion
suggests the potential for further growth in the
months to come.
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FIGURE 10
Memphis Quarterly Leading Index
8
he index of leading economic
activity for the Nashville
Metropolitan Statistical Area
(MSA) rose 12.8 percent (SAAR)
in February on the strength of four of its five
components to post its ninth gain since
February of last year. Inflation-adjusted
taxable sales soared 205.2 percent (SAAR)
in February to record the third increase in five
months.
Nashville’s help-wanted index
climbed 9.9 percent (SAAR) in February to
mark the end of two months of consecutive
decline. Tennessee’s leading index climbed
6.3 percent (SAAR) in February and
construction employment rose a modest 0.3
percent (SAAR) to mark its fifth increase in
seven months. However, average weekly
manufacturing hours slipped 8.4 percent
(SAAR) in February for the fourth decline in
five months.
Employment data not used to
construction Nashville’s index show mixed
signals. On the upside, the unemployment
rate shed two-tenths of a percentage point in
February. On the downside, nonagricultural
employment lost 2.4 percent (SAAR) to post
its third loss in four months and
manufacturing employment slipped 7.0
percent (SAAR) in February for its third loss
in four months.
Nashville’s leading index rebounded
strongly from January’s loss to resume an
upward trend firmly established in June of
1999. In February, the area’s unemployment
rate fell to a level not seen since August of
last year, despite persistent problems in the
manufacturing sector of the labor market.
February was particularly kind to the taxable
sales component of Nashville’s index, with its
biggest gain of the year. Despite the area’s
strengths, tight labor markets will hem in
growth through the summer. Expect the
economy to remain strong with somewhat
slower rates of growth on key economic
barometers.
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FIGURE 11
Nashville Quarterly Leading Index
9
T
he index of leading economic
activity for the Tri-Cities Metropolitan
Statistical Area (MSA) rose 15.6
percent (SAAR) in February on the strength of
two of its four components to post its eighth
increase in nine months. Serving to strengthen
the index were inflation-adjusted taxable sales
and Tennessee’s leading index, both of which
saw significant gains in February. Up 325.6
percent (SAAR), inflation-adjusted taxable sales
rose for only the second time in the past five
months. Tennessee’s leading index climbed 6.3
percent (SAAR) in February. On the down side,
average weekly manufacturing hours fell 10.8
percent (SAAR) for its first decline since June of
1999. And construction employment lost 8.9
percent (SAAR) for its first slip since August of
last year.
Employment data not used to construct the
Tri-Cities index show mixed signals. The area’s
unemployment rate moved up two-tenths of a
percentage point, up from January’s mark of 3.6
percent to February’s 3.8 percent.
Nonagricultural employment fell 8.4 percent
(SAAR) in February for its third decline in four
months as manufacturing employment fell 4.9
percent (SAAR) in February for its fourth loss in
five months.
The Tri-Cities index has generated notable
momentum in the past year. Rebounding nicely
from January’s loss, the index resumed its
uninterrupted upward trend began last June with
a significant gain in inflation-adjusted taxable
sales for the month of February. The labor
market, however, shows some signs of
weakening.
In February, the area’s
unemployment rate rose with losses in
nonagricultural employment levels. The key
weak spot in the region continues to be the
manufacturing sector, where monthly job losses
have been commonplace. The regions ability to
expand despite these losses in testimony to its
underlying strength. Slow growth is likely in the
cards through the summer.
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FIGURE 12
Tri-Cities Quarterly Leading Index
10
Center for Business and
Economic Research
College of Business Administration
The University of Tennessee, Knoxville
Director
William F. Fox
Associate Director
Matthew N. Murray
Assistant Professor
Donald Bruce
Research Associates
Mark Boyer
Vickie Cunningham
Patricia Price
Joan Snoderly
Betty Vickers
Word Processing Specialist
Pat Hunley
Program Resource Specialist
Betty Drinnen
Graduate Research Assistants
Karie Barbour
Paula Dowell
Lee Greer
David Guo
Kathleen Hoffman
Sanela Porca
Wei Zhao
For further information, contact CBER at
1000 Volunteer Blvd., Suite 100 Glocker
Bldg., Knoxville, TN 37996-4170; telephone
(865) 974-5441; fax (865) 974-3100. Data
reported herein are seasonally adjusted,
and therefore may not be directly
comparable to data reported elsewhere.
The five seasonally adjusted leading index
components are Tennessee construction
employment, initial claims for Tennessee
unemployment insurance, the U.S. leading
index, inflation-adjusted taxable sales and
Tennessee manufacturing hours. See the
Fall 1988 issue of the Survey of Business
or the 1994 Economic Report to the
Governor for a complete discussion of the
methodology underlying the Tennessee
economic indices.
Selected Economic Publications from CBER
The Location Decision of Automotive Suppliers in Tennessee and the Southeast. June
1999.
A Profile of the Automobile Sector in the U.S., and Southeastern States. June 1999.
Examining Supply Gaps and Surpluses in the Automotive Cluster in Tennessee. May
1999.
The Economic Benefits of the U.S. Department of Energy for the State of Tennessee,
Fiscal Year 1998. April 1999.
An Economic Report to the Governor of the State of Tennessee on the State’s
Economic Outlook. Annual.
A Study of the Changing Staffing Patterns in the Tennessee Department of Human
Services in Response to Families First. August 1998.
Adequacy of Tennessee’s Unemployment Insurance Trust Fund. July 1998.
Attitudes of Families First Recipients. May 1998.
The Impact of TennCare: A Survey of Recipients. March 1998.
Tennesseans’ Attitudes Toward Learning and the Workplace. March 1998.
Economic Effects of the Spallation Neutron Source (SNS) and the Joint Institute for
Neutron Sciences (JINS) on the State of Tennessee. February 1998.
Economic Effects of The University of Tennessee, Knoxville Athletic Department.
September 1997.
Business Recruitment and its Impact on the Knoxville and Knox County Economies.
May 1997.
An Economic and Fiscal Analysis of Industrial Development in Anderson County.
March 1997.
Analysis of the Basic Education Formula: Evaluation of its Stability, Equity, and
Adequacy. February 1997.
Tennessee Statistical Abstract. January 1997. Biennial.
Occupational Wage and Benefit Survey. January 1997.
The Nature and Consequences of Economic Development in the Loudon County
Economy. April 1996.
Aid to Families with Dependent Children: 1995 Case Characteristics Study. January
1996.
Survey of Health Care Status. November 1995.
Natural Gas Transportation Constraints in Tennessee. August 1995.
A Survey to Determine Insurance Status of Tennessee Residents. August 1994.
Economic Impact of The University of Tennessee on the State of Tennessee:
Academic Year 1992/93. June 1994.
Measuring the Extent of Health Insurance Coverage in Tennessee. November 1993.
Employment Security Issues. June 1993.
Monopoly Leveraging Theory: Implications for Post-Divestiture Telecommunications
Policy. March 1993.
Design of Economic Development Incentives. November 1992.
Factors to Consider in the Design of Economic Development Incentives. September
1992.
Rural Economic Prospects: Implications of Economic Forecasts for the South. April
1992.
Evaluation of the Methodology for Computing the Standard of Need for the Aid to
Families with Dependent Children Program in Tennessee. November 1991.
INTERESTED IN TRACKING THE TENNESSEE ECONOMY?
In addition to the Tennessee Economic Overview, CBER publishes the
Tennessee Business and Economic Outlook, a quarterly forecast update of
the Tennessee and U.S. economies. CBER also produces the Southeast
Economic Outlook, which can be found in the Southeast Section of the Wall
Street Journal. This article provides an economic forecast for Tennessee and
selected Southeastern states.
11
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