ACE Report: Economy is ‘inching forward’ this year

The seven counties of Northeast Ohio added 943 jobs in February, a modest number, but the second straight month of job increases, according to the Ahola Crain’s Employment (ACE) Report.

Year-over-year, payrolls were up by 5,422 jobs on a seasonally adjusted basis, a 0.46% increase.

February payrolls for the Cleveland Akron Metropolitan Area equaled 1,180,415 on a seasonally adjusted basis. Between February 2016 and February 2017, most of the increase in jobs came from the service section, 5,137 jobs, while the goods-producing sector showed a gain of 285 jobs.

“Recent economic data releases are very encouraging about the near-term outlook for the U.S. economy, and (we) should in turn have a similar expectation for economic activity in Northeast Ohio,” said Jack Kleinhenz, the Cleveland Heights economist who created the ACE model.

“The data in many cases continues on a roller coaster pattern, which makes the strength of the momentum hard to detect,” Kleinhenz said. “Nonetheless, (the data) include the NFIB’s small business optimism index that remains elevated; housing starts increased in February; the job opening and labor turnover survey was unchanged but positive; February’s retail sales were tepid; business inventories increased; and industrial production was unchanged after dipping in January.”

That forecast agrees with a recently released estimate from economists at Pittsburgh-based PNC Financial Service Group, which described the Northeast Ohio economy as “inching forward” during the first quarter of 2017.

“The region’s economic growth is hamstrung, however, by a manufacturing industry that is struggling on multiple fronts,” the report stated. “Steel production and employment in 2016 had been hit hard by cheap imports and the collapse in energy prices that reduced investment in oil and gas wells.”

The PNC economists did see hopeful signs — the oil and gas rig count began to edge up in the last half of 2016, high steel tariffs are expected to help domestic producers, and the auto industry is coming off a record year — at least in the short term.

“Longer term, continued population loss will cause Northeast Ohio to be a below-average performer in terms of job growth,” the report stated before ending on a more optimistic note.

“Though still only in their early development stages, manufacturing hubs for the machinery of new energy technologies and transportation equipment hold great promise for those regions that can attract and cultivate them,” according to the report. “The (Northeast Ohio) region’s lower costs and availability of underutilized assets will be an important tool in attracting new industries and opportunities into the region in the years ahead.”

Seaonally adjusted data

Month Non-Farm  Small  (1-49) Mid-Sized (50+) Goods-producing Service Producing
Sept 2016 (act) 1,175,448  478,642   696,805   211,538 963,910
Oct (est) 1,173,393  477,608   695,784   213,994 959,399
Nov (est) 1,174,298  477,939   696,359   214,709 959,589
Dec (est) 1,172,037  476,994   695,043   214,643 957,394
Jan (est) 1,179,472  480,031   699,441   215,846 963,626
Feb (est) 1,180,415  480,404   700,011   216,172 964,243
 By  March 24, 2017

Dr. Jack Kleinhenz, Winner of Pulsenomics Crystal Ball Award 2017

Dr. Jack Kleinhenz of Kleinhenz & Associates placed first for his 2-year, 3-year, and 4-year horizon projections ending in 2016 based on the Pulsenomics Home Price Expectation Survey.  He will receive the Crystal Ball Award from Pulsenomics for the accuracy of his projections.

Pulsenomics® is an independent economics research and consulting firm that delivers product strategy and marketing solutions for corporate and institutional clients. Their expertise is in the U.S. housing and capital markets, and in data analytics and exchange-traded financial products.

Pulsenomics also conducts primary research via scientific household surveys and expert survey panels, and develops authoritative indexes that provide unique insight concerning the economy. It was founded by Terry Loebs, and its Honorary Advisors are Chip Case and Robert Shiller.

RETAIL SALES GREW 0.2 PERCENT IN FEBRUARY

February retail sales grew 0.2 percent seasonally adjusted over January and 0.8 percent unadjusted year-over-year, according to calculations released today by the National Retail Federation. The numbers exclude automobiles, gasoline stations and restaurants.

“Sales growth held up well, given warmer than normal weather and tax refund delays,” NRF Chief Economist Jack Kleinhenz said.

“While consumers benefit by purchasing more for less, the top-line retail numbers reflect a lack of pricing power and, in many cases, hide underlying consumer demand.”

“While consumer spending in the first quarter has been erratic and most often weak, it registers positive improvement as the year continues,” Kleinhenz said.

On a three-month moving average year-over-year, retail sales have grown 2.8 percent. When looking at business lines, performance in February was very mixed as electronics and appliance stores saw declines while building materials and garden supplies saw solid growth.

A few specifics from the report include:

  • Online and other non-store sales increased 1.2 percent over the previous month and increased 8.2 percent unadjusted year-over-year.
  • Sales at clothing and accessories stores decreased 0.5 percent seasonally adjusted from the previous month and decreased 1.1 percent unadjusted year-over-year.
  • Sales at general merchandise stores decreased 0.2 percent seasonally adjusted over the previous month and decreased 1.4 percent year-over-year.
  • Electronics and appliances stores’ sales decreased 2.8 percent seasonally adjusted over the previous month and decreased 9.8 percent unadjusted year-over-year.
  • Furniture and home furnishings stores’ sales increased 0.7 percent over the previous month and increased 1.4 percent unadjusted year-over-year.
  • Sales at building materials and supplies stores increased 1.8 percent seasonally adjusted over the previous month and increased 3.7 percent unadjusted year-over-year.
  • Sporting goods stores’ sales decreased 0.4 percent seasonally adjusted over the previous month and decreased 6.7 percent unadjusted year-over-year.
  • Sales at health and personal care stores increased 0.7 percent seasonally adjusted over the previous month and increased 2.7 percent unadjusted year-over-year.

FOLLOWING JOB GAINS IN JANUARY, RETAILERS SCALE BACK IN FEBRUARY

Retail industry employment decreased by 31,300 jobs in February from January, offsetting gains made the previous month, the National Retail Federation said today. The retail numbers exclude automobile dealers, gasoline stations and restaurants. Despite the correction in retail, the overall economy gained 235,000 jobs in February, the Labor Department said.

“Mild weather contributed to retailers scaling back employment in February, reversing the gains the industry made in January,” NRF Chief Economist Jack Kleinhenz said. “However, the surge in consumer and business optimism may have propelled the economy-wide increase in jobs last month and supports our prediction for stronger consumer spending and retail sales for 2017.”

Average hourly earnings were up 2.8 percent year-over-year, compared with 2.5 percent in January.

The Labor Department said February unemployment fell to 4.7 percent, down from 4.8 percent in January.

ACE Report: Service sector keys Northeast Ohio job growth

Employment in the Cleveland-Akron metropolitan area was up by 8,017 jobs in January, recovering from a decline in December, according to an estimate from the Ahola Crain’s Employment (ACE) Report.

Seasonally adjusted, the region saw employment rise to 1,179,851 from 1,171,834 a month earlier, a 0.68% increase. Most of the growth, 6,900 jobs, was in the service sector, though the goods producing sector saw a rise of 1,196 jobs. In December, the region lost 1,879 jobs.

The estimates also show a 0.35% increase over the number of people working a year earlier, an increase of 4,102 jobs.

“January’s employment estimates exceeded both the three-month and six-month average,” said Jack Kleinhenz, the Cleveland Heights economist who created the ACE model. “The pace of job creation suggests that growth in regional economic activity appears to be at a modest pace early in 2017.”

Kleinhenz attributed that optimism to key regional and national trends affecting the estimates. He said unemployment claims for the region decreased by 20% compared with the like month a year ago, and, nationally, construction and retail sales both show growth.

Despite the occasional month-to-month wobble, employment in the region has been rising steadily, if slowly. Since January 2013, the region’s seasonally adjusted employment has grown by 30,654 jobs, a 2.67% increase. During the same time period, the unemployment rate has dropped from 7.8% to 5.1%, according to the Ohio Department of Jobs and Family Services.

That labor market tightening may be putting pressure on wages to rise. Wal-Mart Stores Inc., for example, said in late January that it would shrink a training program that new employees must complete to earn $10 an hour to three months from six months. Two years ago, the company increased its minimum wage to $9 an hour.

More broadly, the Society for Human Resource Management reported at the end of January that wages are forecast to grow by an average of 3.2% year over year during the first quarter of 2017. Over 2016, the federal Bureau of Labor Standards reported, the average hourly wage grew by 2.9%.

Glassdoor, the online job site, reported on Jan. 31 that annual median base pay hit 3.2%.“The tight U.S. labor market continues to drive wages up in many cities across the country,” said Glassdoor chief economist Andrew Chamberlain in a news release. Glassdoor labor market reports, he said, “show a picture of a strong labor market.”

SEASONALLY ADJUSTED DATA

Month Non-Farm Small (1-49) Mid-Sized (50+) Goods-producing Service Producing
June 2016 1,167,272   475,237    692,035   211,159    956,113
July  (est) 1,175,426   478,218    697,208   217,488    957,938
Aug (est) 1,171,406  476,740    694,667   214,497    956,909
Sept (est) 1,170,029  476,266    693,763   213,003    957,026
Oct (est) 1,173,327   477,567    695,759   214,185    959,142
Nov (est) 1,174,185  477,878    696,306   214,891    959,294
Dec (est) 1,171,834  476,901    694,934   214,765    957,070
Jan (est) 1,179,851  480,192    699,659   215,821    964,031

Recent Month’s Estimated Change

Month Non-Farm Small (1-49) Mid-Sized (50+) Goods-producing Service Producing
Dec ’16 to Jan ’17 8,017 3,291.49   4,725   1,056   6,961
Diff from Jan 2016 4,102 1,733   2,369   (160)   4,262

Trend

Date Non-Farm Small (1-49) Mid-Sized (50+) Goods-producing Service Producing
3-month 1,175,290  478,324   696,967    215,159    960,131
6-month 1,173,439  477,591   695,848    214,527    958,912

By

February 24, 2017

RETAIL SALES UP 0.4 PERCENT IN JANUARY

January retail sales grew a solid 3.8 percent unadjusted year-over-year and 0.4 percent seasonally adjusted from an already-strong December, according to calculations released today by the National Retail Federation. The numbers exclude automobiles, gasoline stations and restaurants.

“The healthy monthly gain was driven by January’s strong payroll gains, retail employment gains and business sentiment.”
Jack Kleinhenz
NRF Chief Economist

“The retail industry started the year on a high note, continuing the momentum from the 2016 holiday season. The healthy monthly gain was driven by January’s strong payroll gains, retail employment gains and business sentiment,” NRF Chief Economist Jack Kleinhenz said.

“We haven’t seen strong January growth in several years, which indicates that consumers are increasing their spending and remain the leading driver of the economy,” Kleinhenz said.

There were broad-based monthly increases across the majority of sectors, with the exception of non-store, which was flat in January.

A few specifics from the report include:

  • Online and other non-store sales were flat over the previous month and increased 14.5 percent unadjusted year-over-year.
  • Sales at clothing and accessories stores increased 1 percent seasonally adjusted from the previous month and increased 0.4 percent unadjusted year-over-year.
  • Sales at general merchandise stores increased 0.9 percent seasonally adjusted over the previous month and decreased 1.4 percent year-over-year.
  • Electronics and appliances stores’ sales increased 1.6 percent seasonally adjusted over the previous month and decreased 1.7 percent unadjusted year-over-year.
  • Furniture and home furnishings stores’ sales were flat over the previous month and decreased 0.3 percent unadjusted year-over-year.
  • Sales at building materials and supplies stores increased 0.3 percent seasonally adjusted over the previous month and increased 6.6 percent unadjusted year-over-year.
  • Sporting goods stores’ sales increased 1.8 percent seasonally adjusted over the previous month and decreased 3.7 percent unadjusted year-over-year.
  • Sales at health and personal care stores increased 0.7 percent seasonally adjusted over the previous month and increased 9.4 percent unadjusted year-over-year.

ACE Report: NE Ohio job-creation engine sputtered at the end of 2016

by SCOTT SUTTELL
The end of 2016 was not kind to Northeast Ohio’s job market, according to the latest Ahola Crain’s Employment (ACE) Report.

Seasonally adjusted employment in December for the seven-county area of Cleveland and Akron measured by the report was 1,170,985, a decline of 1,879 jobs from 1,172,864 in November. And November was no great shakes, either; its total job number was just 286 higher than the October figure calculated in the ACE Report.

Jack Kleinhenz, the Cleveland Heights economist who created the ACE Report model, noted in an analysis of the December data that the seasonally adjusted jobs figure for last month “is below its three-month and six-month average and suggests economic activity and job growth has lost some momentum from the faster pace that was evident in prior months.”
But it’s impossible to draw firm conclusions from one subpar month in one statistical category.

Kleinhenz wrote in his analysis, “We are not sure that the regional economy has made a fundamental change, nor has the national economy, since employment is only one gauge that measures economic activity.” He noted, for instance, that a gauge of economic activity created by the Federal Reserve Bank of Philadelphia rose in Ohio by 2.2% on a year-over-year basis, and recent construction and retail sales data “also show gains.”

Kleinhenz added that “choppy employment” around the end of a calendar year “is not unusual given shifting seasonal hiring patterns. It is typical for the trajectory of monthly employment to be pared significantly back. We expect a similar pattern to take place and recognize that some dampening of the pace of employment gains is projected.”

Kleinhenz wrote in his analysis that regional initial unemployment claims, a factor in the ACE Report model, had been at “historically low levels” but then “kicked up in the middle of December.” Such claims “are usually variable around the holidays because of winter weather, school closures and shifting seasonal hiring patterns,” according to Kleinhenz.

Meanwhile, he wrote, January employment “looks to be a better month based upon a reduction in initial unemployment claims.” Also, he noted that “most measures” of consumer and business sentiment “have shown notable improvement since the November election, raising expectation that economic activity will accelerate at the national and regional levels.”

The national economy “is expected to gain further traction in 2017,” according to Kleinhenz. “Regional growth during 2016 might have been stronger had it not been for weakness in metals production and the energy industry. In addition, the weak global economy and a strong dollar hurt export related firms output and associated employment.”

Despite these developments, he wrote, “the regional outlook (is) promising as national indexes tracking production and new orders in the most recent ISM (Institute for Supply Management) survey rose to levels posted in late-2014.”

Month Non-Farm Small(1-49) Mid-Sized Goods Service
(50+) Producing Producing
June 2016 (act) 1,167,272 475,237 692,035 211,159 956,113
July (est) 1,175,080 478,077 697,003 217,432 957,648
Aug (est) 1,171,211 476,665 694,546 214,391 956,821
Sept (est) 1,169,702 476,139 693,563 212,852 956,851
Oct (est) 1,172,614 477,287 695,327 213,914 958,700
Nov (est) 1,172,864 477,358 695,506 214,400 958,463
Dec (est) 1,170,985 476,588 694,397 214,137 956,848

Recent Month’s Estimated Change
Nov ’16 to Dec ’16 (1,879) (770.15) (1,108) (264) (1,615)
Diff from Dec 2015 1,757 883 874 (2,085) 3,842

Trend
3-month 1,172,154 477,078 695,077 214,150 958,004
6-month 1,172,076 477,019 695,057 214,521 957,555

ACE Report: Northeast Ohio posts small employment gain in November

Northeast Ohio eked out a small employment gain in November, according to the latest Ahola Crain’s Employment (ACE) Report.

Seasonally adjusted employment in November for the seven-county area of Cleveland and Akron measured by the report was 1,172,672, a gain of just 286 jobs from 1,172,386 in October.

The change is small, but Jack Kleinhenz, the Cleveland Heights economist who created the ACE Report model noted it was unusual in this respect: The region lost 152 service jobs from October to November, but it added 438 jobs in goods-producing fields.

“The offset is a turnaround from recent trends where the growth in service jobs offset losses in manufacturing,” Kleinhenz wrote in an analysis of the November ACE Report data.

The region remains in positive jobs territory from a year ago. Kleinhenz said November employment in Northeast Ohio was up by 4,570 jobs from the like month of 2015.

November’s jobs figure also is above the ACE Report’s seasonally adjusted three- and six-month averages, which “suggests economic activity and job growth has picked up some momentum from the slower pace of job growth the region experienced in the second quarter,” according to Kleinhenz.

Underlying November’s ACE Report  figures are some positive regional and national trends.

For instance, Kleinhenz wrote in his analysis that  unemployment claims for the region “decreased by 22% over the same month a year ago. Coincidental measures for Ohio are up 2.2%, and  construction put in place and retail sales show gains in the last three months.”

National indicators show an economy that is picking up the pace.

U.S. Gross Domestic Product was revised higher to 3.2% for the third quarter, which Kleinhenz wrote is a “significant number relative to the average 2.2% growth we have seen  in this expansion.”

The Institute for Supply Management’s manufacturing index in November posted a reading of 53.2, which ties the fastest pace of this  manufacturing sector indicator over the past 18 months, according to Kleinhenz. (A reading above 50 indicates the sector is expanding.)

He also noted that the Federal Reserve’s Labor Market Conditions Index, a broader measure of the health of the labor market than provided by any single report, “indicates that the labor market is continuing its path of improvement.”

The Fed’s labor index increased by 1.5 points in November, about the same level of improvement as in October.

“All in all, these national trends should be a good indicator of what to expect at the state and regional levels,” Kleinhenz concluded.

Seaonally adjusted data

Month Non-Farm  Small (1-49)  Mid-Sized (50+) Goods-producing Service Producing
June 2016 (act) 1,167,272   475,237   692,035 211,159 956,113
July (est) 1,175,087   478,079   697,008 217,449 957,638
Aug (est) 1,171,162   476,645   694,518 214,389 956,773
Sept (est) 1,169,567   476,086   693,480 212,792 956,775
Oct (est) 1,172,386   477,203   695,183 213,748 958,638
Nov (est) 1,172,672   477,293   695,380 214,186 958,486
Recent Month’s Estimated Change
Oct ’16 to Nov ’16 286   89.50   197 438 (152)
Diff from Nov 2015 4,570   2,016   2,554 (1,403) 5,973
Trend
3-month 1,171,542   476,861   694,681 213,575 957,966
6-month 1,171,358   476,757   694,601 213,954 957,404

Retail Sales See Solid Gains in First Half of Holiday Season

November retail sales grew a solid 5 percent year over year and 0.1 percent from an already-strong October as consumers found the deals they were hoping for both online and in stores and showed their purchasing power during the first half of the holiday season, according to calculations released today by the National Retail Federation. Online and other non-store sales grew 15.3 percent year over year, reflecting the growth of online shopping. The numbers exclude automobiles, gasoline stations and restaurants.

“Consumers were able to take advantage of low prices throughout the first half of the holiday season, checking out with full baskets but paying less even though purchasing was up,” NRF Chief Economist Jack Kleinhenz said. “The combination of job and wage gains led to solid holiday spending by American households.”

“Consumers have the wherewithal to spend but households remain measured and rational, which is no surprise given their history since the recovery began in 2009,” Kleinhenz said.

There were broad-based monthly increases across the majority of sectors with the exception of sporting goods.

November’s results indicate that retail sales for the holiday season will meet or exceed NRF’s holiday sales forecast, which anticipates an increase of 3.6 percent over last year’s level for November and December. For a look into the art of forecasting, read Kleinhenz’s article: The Art and Science of Economic Forecasting.

A few specifics from the report include:

  • Online and other non-store sales increased 0.1 percent seasonally adjusted over the previous month and increased 15.3 percent unadjusted year-over-year.
  • Sales at clothing and accessories stores were flat from the previous month and increased 1.9 percent unadjusted year-over-year.
  • Sales at general merchandise stores increased 0.1 percent seasonally adjusted over the previous month and decreased 1.4 percent year-over-year.
  • Electronics and appliances stores’ sales increased 0.1 percent seasonally adjusted over the previous month and decreased 2.5 percent unadjusted year-over-year.
  • Furniture and home furnishings stores’ sales decreased 0.7 percent seasonally adjusted over the previous month and decreased 7.2 percent unadjusted year-over-year.
  • Sales at building materials and supplies stores increased 0.3 percent seasonally adjusted over the previous month and increased 7.5 percent unadjusted year-over-year.
  • Sporting goods stores’ sales decreased 1 percent seasonally adjusted over the previous month and increased 1.6 percent unadjusted year-over-year.
  • Sales at health and personal care stores increased 0.1 percent seasonally adjusted over the previous month and increased 7.7 percent unadjusted year-over-year.