1st Quarter 2015
RALEIGH
JOB SITUATION
The Raleigh market, which we define as the Raleigh,
Durham, Goldsboro and Rocky Mount metro areas,
is one of the strongest within PNC’s footprint with job
growth in 2014 almost a percentage point faster than
the U.S. Professional services, which include highwage and technical employment, have proven to be
powerful job generators and account for about half of
the job growth in 2014. Education and healthcare
continue to be reliable drivers as well while retail,
leisure and hospitality are being boosted by
moderate income growth and stronger consumer
confidence. Manufacturing, though a smaller share of
the economy than average, has also contributed to
the economic recovery. The recovery has been
strong enough that now, payroll employment is about
4.7 percent higher than its early-2008 peak. By
comparison, payroll employment in the U.S. is just
1.4 percent above its pre-recession peak.
The regional unemployment rate declined to 5.2
percent in late 2014 from 6.0 percent a year ago
(Chart 1). The labor force rose modestly during that
time. At the metro level, Raleigh and Durham metros
experienced both strong job growth and strong labor
force growth. Rocky Mount and Goldsboro, however,
have been struggling with a combination of declining
or weak job growth and labor force contraction.
9%
Chart 1
Job Growth, (% change year ago)
& Unemployment Rate, (%, SA)
P NC fore cast
8%
7%
6%
5%
4%
3%
2%
1%
0%
-1%
-2%
-3%
12
13
14
15
Unemployment Rate
Total
Manufacturing
Services (ex. Ed. & HC)
Chart sources: Bureau of Labor Statistics; The PNC Financial
Services Group
Chart 2
Median Household Income (Ths. $, SA)
$50.0K
PNC fore cast
$49.5K
$49.0K
$48.5K
INCOME
The local median income is 5 percent higher than the
national average, thanks to a high concentration of
tech industries in Durham and Raleigh metro areas
(Chart 2). Anchored by Research Triangle Park, the
area boasts some of the largest technology, research,
and development operations in the country. In Durham
and Raleigh, high-tech employment accounts for 13.8
percent and 8.9 percent of employment, respectively.
Nationwide, tech accounts for less than 5 percent of
employment. Faster job growth and a tighter labor
$48.0K
$47.5K
$47.0K
$46.5K
12
13
14
15
Median Household Income
Chart sources: Bureau of Census; Moody’s Analytics; The PNC
Financial Services Group
RALEIGH
market in 2015 will lead to a pickup in wage income.
Over the long-term, strong population growth will drive
above average total personal income growth.
Chart 3
Home Sales (Ths., SAAR)
& Price Growth, (% change year ago)
33K
4.5%
PNC fore cast
4.0%
HOUSING
Home prices are rising moderately, according to
estimates of the Case-Shiller index (Chart 3). Singlefamily home sales moderated in 2014 but will likely
pick up again, thanks to continued jobs and income
growth. Housing demand will also being buttressed by
low mortgage rates and increased access to credit.
Price increases in recent years have eroded
affordability in Raleigh but housing remains affordable
in Durham and especially so in Rocky Mount and
Goldsboro. With construction subdued, supply is
steadily being absorbed. Although local home prices
will rise more slowly in 2015 than the national
average, they are now slightly higher than their prerecession peak. Nationally, prices are still down about
11 percent from their pre-recession peak. A relatively
stronger jobs recovery and faster household
formations provide some upside potential to the
housing outlook. The longer-term picture for the
region’s housing market is bright. Household
formations have outpaced construction for several
years and this implies that there is potential for pentup demand to be released and to drive strong
construction activity.
32K
3.5%
31K
3.0%
2.5%
30K
2.0%
29K
1.5%
28K
1.0%
27K
0.5%
26K
0.0%
12
15
14
13
Case-Shiller Price Index (L)
Existing Home Sales (R)
Chart sources: National Association of Realtors; Fiserv, Inc.; The
PNC Financial Services Group
Chart 4
Demographic Growth, (% change year ago)
& Net Migration, (Ths., SA)
7.6K
PNC fore cast
2.15%
2.05%
DEMOGRAPHICS
The Raleigh market’s bright long-term outlook is
supported by strong population growth (Chart 4). The
agglomeration of corporate offices, high-tech,
educational and research institutions attracts migrants,
usually from other Southern metro areas. The
workforce is educated as well, which entices firms to
expand employment in high value-added industries.
Nationwide, about 29 percent of the population over 25
years of age holds at least a bachelor’s degree. In the
region, educational attainment is about 42 percent in
the Raleigh metro area and 45 percent in Durham.
Besides strong in-migration, the natural rate of
population increase, the difference between births and
deaths, is also higher than average owing to the high
share of the population that is between ages 18 and
44. With lower labor force participation and educational
attainment, Rocky Mount and Goldsboro metro areas
have less favorable demographics.
7.1K
1.95%
6.6K
1.85%
1.75%
6.1K
1.65%
5.6K
1.55%
1.45%
5.1K
1.35%
4.6K
1.25%
12
13
14
15
Net Migration (L)
Population Growth (R)
Households Growth (R)
Chart sources: Bureau of Census; Bureau of Economic Analysis
Moody’s Analytics; The PNC Financial Services
Group
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RALEIGH
OUTLOOK SUMMARY
Payroll job growth in the Raleigh market area is set to top the nation’s growth again in 2015. Raleigh and
Durham metros will lead the pack as education, healthcare, tech and professional services drive above-average
payroll growth. With slightly less dynamic economic drivers and steep declines in government employment, the
smaller metros of Goldsboro and Rocky Mount had been lagging the economic recovery up to this point. For the
rest of 2015, both metro areas will likely experience stronger economic growth, as the public sector stabilizes.
On net, payrolls in the combined PNC market area will likely grow in line with the PNC Southeast region.
Overall, solid employment growth will attract job seekers into the labor market. Still, job growth will be strong
enough to lower the unemployment rate to 4.8 percent in the fourth quarter of 2015 from about 5.2 percent in
the fourth quarter of 2014.
Building activity will increase slowly but will likely remain well below normal levels in 2015. A combination of
favorable demographics, stronger jobs and income growth and high affordability will support housing demand
and stimulate moderate house price increases. Although home prices will rise less quickly than the national
average, the relatively small decline in prices during the recession means that local household wealth is on
better footing. Over the long term, the market area will be an above average performer in terms of jobs and
income growth, thanks to its low business costs, strong population growth and young and educated workforce.
FORECAST TABLE
REO Template
Table sources: Bureau of Census; Bureau of Labor Statistics; Bureau of Economic Analysis; National Association of Realtors;
National Association of Home Builders; FHFA; Moody's Analytics; The PNC Financial Services Group
REO Template
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RALEIGH
LONG-RUN EMPLOYMENT TRENDS
Chart 5
Total Employment, (% change year ago)
PNC fore cast
6%
6%
4%
4%
2%
2%
0%
0%
-2%
-2%
-4%
-4%
-6%
-6%
00
01
02
03
04
05
06
07
08
09
Raleigh
10
11
12
13
14
15
U.S.
Chart sources: Bureau of Labor Statistics; The PNC Financial Services Group
LONG-RUN DEMOGRAPHIC TRENDS
Chart 6
Population, (% change year ago)
PNC fore cast
3.5%
3.0%
2.5%
2.0%
1.5%
1.0%
0.5%
0.0%
00
01
02
03
04
05
06
07
08
09
Raleigh
10
11
12
13
14
15
U.S.
Chart sources: Bureau of Census; Moody’s Analytics; The PNC Financial Services Group
LONG-RUN HOUSE-PRICE TRENDS
Chart 7
Case-Shiller House Price Index, (% change year ago)
PNC fore cast
20%
20%
15%
15%
10%
10%
5%
5%
0%
0%
-5%
-5%
-10%
-10%
-15%
-15%
-20%
-20%
00
01
02
03
04
05
06
07
Raleigh
08
09
10
11
12
13
14
15
U.S.
Chart source: National Association of Realtors; Fiserv, Inc.; The PNC Financial Services Group
Visit http://www.pnc.com/economicreports to view the full listing of economic reports published by PNC’s economists.
Disclaimer: The material presented is of a general nature and does not constitute the provision of investment or economic advice to any person,
or a recommendation to buy or sell any security or adopt any investment strategy. Opinions and forecasts expressed herein are subject to change
without notice. Relevant information was obtained from sources deemed reliable. Such information is not guaranteed as to its accuracy. You
should seek the advice of an investment professional to tailor a financial plan to your particular needs.
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