ACE Report: July jobs growth continues region’s slow, steady path

That 1.03% jump is the fifth increase in the last six months. Since January, the number of people employed in the private sector in the seven counties of the Cleveland metropolitan area has grown by 12,014, to 1,178,449. The only decline was in June, when employment dropped by 1,138 to 1,174,474 jobs.

Jack Kleinhenz, the Cleveland Heights economist who created the ACE model, noted that U.S. Bureau of Labor Statistics reports also indicated that, in July, there are more people joining the workforce and that average hourly earnings and average weekly hours increased as well.

“Consequently, there are more people employed, working longer hours and earning larger pay,” Kleinhenz said.

Kleinhenz said that second-quarter U.S. economic growth was well below expectations, rising at an annualized rate of 1.2%, nearly half the gain anticipated by consensus forecasts. He said growth slowed primarily because of an ongoing slump in business investment and slowdowns globally, especially in the energy sector.

Separately, in a report on the economy of the Cleveland metropolitan area released last Thursday, Aug. 25, the Federal Reserve Bank of Cleveland said employment in the metropolitan area grew by 0.5% for the year ending September 2015, lower than employment growth in the state (1.2%) or the country (2.0%).

The report, by economist Joel Elvery, noted that in the 12 months ended September 2015, three sectors added more than 2,000 jobs: education and health services (2,531 jobs); trade, transportation and utilities (2,446); and hospitality (2,364). Two sectors had significant job losses over that 12-month period: professional and business services (2,265) and manufacturing (600).

Elvery attributed the weak employment growth in the Cleveland region relative to the state and country to “sustained population loss. However, population loss slowed greatly in 2013 and 2014. Hopefully, this headwind will fade.”

Looking ahead, another Cleveland Fed economist, senior vice president Mark Schweitzer, said the regional economic outlook is for steady, if modest, growth.

“We’ve had three quarters of relatively weak growth” in the Cleveland Fed’s district, Schweitzer said at a regional economic outlook session on Aug. 18 at the Cleveland Fed. “We’re still expecting things to be better in the coming quarter.”

The Cleveland Fed’s district includes all of Ohio, eastern Kentucky and parts of western Pennsylvania and northern West Virginia.

Seaonally adjusted

Month Non-Farm Small (1-49) Mid-Sized (50+) Goods-producing Service Producing
Dec 1,169,198   475,677   693,522 216,446 952,753
Jan (est.) 1,166,435   474,565   691,870 215,754 950,681
Feb (est.) 1,168,282   475,385   692,897 215,118 953,164
Mar (est.) 1,168,421   475,440   692,981 215,157 953,264
Apr (est.) 1,170,593   476,314   694,278 215,700 954,893
May (est.) 1,175,612   478,324   697,288 217,094 958,518
June (est.) 1,174,474   477,808   696,666 217,637 956,838
July (est.) 1,178,449   479,380   699,069 219,023 959,426

August 26, 2016

ACE Report: Despite job losses, other signs suggest economic growth

A projected decline of 2,343 jobs in June ended a five-month string of Northeast Ohio job gains, though the loss may only reflect a summertime blip since other indicators suggest job and economic growth, according to data in the latest Ahola Crain’sEmployment (ACE) Report.

Also, the month-to-month, 0.02%, drop in seasonally adjusted employment for the seven-county Akron-Cleveland region, is balanced against a year-over-year gain of 6,249 jobs, a 0.54% increase from June 2015 to June 2016.

“It’s hard to gauge whether or not the expected pullback in payrolls point to a sea change in regional economic activity,” said Jack Kleinhenz, the Cleveland Heights economist who created the ACE model. “Payroll growth has been choppy.  A similar pattern was evident in 2015 as payrolls fell off in the summer but then rebounded in the fall.”

Private-sector employment in the metro area dropped 0.22%, or 2,589 jobs, between June 2015 and July 2015, according to the ACE model, before recovering.

The report projects that service producing firms account for about 2,279 lost jobs, while the goods producing sector shows only a loss of about 64 jobs.

Kleinhenz noted that the stronger dollar “has shown to be a significant speed bump for regional, state and U.S. manufacturing exporters and has created a drag on domestic employment, income and spending.”

He said the research office of the Ohio Development Services Agency estimates that Ohio merchandise exports declined 3%, or $50.7 billion, between 2014 and 2015. But, Kleinhenz reported, other indicators of the economy do point in a positive direction.

“Both the Institute of Supply Management’s manufacturing and non-manufacturing indexes showed a pickup in the pace of growth in June and registered expansionary readings for survey’s employment component,” he said. “This bodes well for area income and spending.”

The U.S. manufacturing sector showed strong growth in June according to the latest monthly survey conducted by the Institute for Supply Management. Manufacturing supply executives indicated a Purchasing Managers’ Index increase of 1.9%

Of the 18 manufacturing sectors tracked by ISM, 13 reported growth in June led by printing, textiles, petroleum and coal products and food, beverage and tobacco products. The three industries reporting contractions are electrical equipment, appliances and components; transportation equipment; and rubber and plastic products.

Month Non-Farm Small (1-49) Mid-Sized (50+) Goods-producing Service Producing
Dec (actual) 1,169,198    475,677   693,522 216,446 952,753
Jan (est.) 1,165,378    474,177   691,201 214,962 950,416
Feb (est.) 1,167,066    474,922   692,143 214,430 952,635
Mar (est.) 1,167,163    474,950   692,213 214,622 952,541
Apr (est.) 1,169,020    475,698   693,323 215,075 953,945
May (est.) 1,173,765    477,613   696,152 216,172 957,593
June (est) 1,171,422    476,634   694,788 216,108 955,313

 

By

July 29, 2016

ACE Report: Northeast Ohio job growth paces ahead of state

The increase in the number of people employed in Northeast Ohio between April and May — 4,543 jobs — was greater than the employment growth between April 2015 and April 2016, when the region added 3,780 jobs, as tracked by the Ahola Crain’s Employment (ACE) Report.

The accelerating growth in May, an increase of 0.39% in the regional workforce, might not be a one-month blip.

Jack Kleinhenz, the Cleveland Heights economist who created the ACE Report model, said that it “portends an acceleration in regional economic activity.”

Kleinhenz’s analysis showed that the employment growth came, in raw numbers, more from the service sector than the manufacturing sector, since 80% of the region’s jobs are classified as service.

But on a percentage basis, more were created in the goods-producing sector. The region added 3,538 service jobs, a 0.37% increase, and 1,006 goods-producing, or manufacturing jobs, a 0.47% increase.

Strong growth in new manufacturing orders and modest gains in production and exports, Kleinhenz said, helped account for the growth in goods-producing jobs.

Employment growth in Northeast Ohio, the seven-county Cleveland-Akron area, outperformed on a percentage basis the growth in employment statewide.

In Ohio, nonagricultural employment increased 9,200 in May over April, from 5,477,600 to 5,486,800, a 0.17% increase, according to the Ohio Department of Jobs and Family Services, compared with Northeast Ohio’s 0.39% increase.

The growth in jobs and the declining unemployment rate — metro Cleveland’s unemployment rate is down to 4.8%, while Akron’s is 4.7% — hides a concern among economists about the declining participation of so-called prime-age men — males ages 25 to 54 — in the workforce.

A study released earlier in June by the White House Council of Economic Advisors found that only 88% of the men in that key age group are either working or looking for work. That’s down dramatically from a peak of 98% in 1954.

The study concludes, not surprisingly, that the demand for the labor of lower-skilled men is an important factor in the decline and reflects changing technology and automation and the globalization of the U.S. economy.

This decline in the prime-age male labor force participation rate, the study found, is particularly troubling since workers at this age are at their most productive.

“(B)ecause of this, the long-run decline has outsized implications for individual well-being as well as for broader economic growth,” the study found. “A large body of evidence has linked joblessness to worse economic prospects in the future, lower overall well-being and happiness, and higher mortality, as well as negative consequences for families and communities.”

The economic advisers recommend increasing investment in public infrastructure, creating construction jobs, would help boost prime-age male labor force participation. It also suggests reforming community colleges and other job-training systems.

Seaonally adjusted

Month Non-Farm Small (1-49) Mid-Sized (50+) Goods-producing Service Producing
Dec (actual) 1,169,198 475,677   693,522 216,446 952,753
Jan (est.) 1,165,273 474,139   691,134 214,872 950,402
Feb (est.) 1,166,961 474,881   692,080 214,395 952,567
Mar (est.) 1,167,019 474,892   692,127 214,583 952,437
Apr (est.) 1,168,968 475,679   693,289 215,034 953,934
May (est.) 1,173,511 477,516   695,996 216,040 957,471
Recent Month’s Estimated Change
Apr ’16 to May ’16 4,543  1,836.96   2,706 1,006 3,538
Diff from May 2015 5,946  2,617   3,329 (1,736) 7,682
Trend
3-month 1,169,833  476,029   693,804 215,219 954,614
6-month 1,168,489  475,464   693,025 215,228 953,260

By

ACE Report: Energy slowdown leads to a down March in region

By Jay Miller

Continuing its roller-coaster ride, Northeast Ohio lost 375 jobs in March, according to the latest Ahola Crain’s Employment (ACE) Report. The March loss was preceded by a February increase, which was preceded by a January loss and a December increase.

The longer, year-over-year gain, however, is positive, with Northeast Ohio employment up 3,316 jobs, a gain of 0.29%.

“The regional economy is expanding and is in better shape than many expected (given the) uncertainty caused by the volatile financial markets that disrupted economic activity earlier this year,” said economist Jack Kleinhenz, who compiles the ACE data, referring to stock market ups and downs that followed the price of oil.

Employment growth came entirely from the service sector, with employment in that sector growing by 6,397 jobs, a 0.7% increase. That was offset by a loss of 3,081, or 1.5%, in the smaller industrial sector.

Loretta Mester, president of the Federal Reserve Bank of Cleveland, explained the weakness in industrial sector employment in an April 1 speech to the New York Association for Business Economics after noting that the slowdown in the energy sector was affecting employment in northern Ohio and western Pennsylvania.

“Regional firms with international exposure, such as steel producers, also continue to struggle in the wake of dollar appreciation and lower commodity prices that reflect weak global demand,” she said.

“While manufacturers with ties to energy and steel production have faced challenges, the weakness in that segment has been offset by production increases at manufacturers supplying the construction industry and by the auto industry.”

The ACE Report surveys only Cuyahoga County and the six counties that surround it, while the Fed’s Cleveland-based Fourth District comprises Ohio, western Pennsylvania, eastern Kentucky and the northern panhandle of West Virginia.

Michael Teshome, an economist who covers the Midwest for PNC Financial Services Group, agrees with Mester but also sees a future of employment growth in other sectors.

“Layoffs in the steel industry will restrain employment growth in manufacturing,” he wrote. “Health care, finance and professional services will add to the area’s economic growth.”

PNC forecasts employment growth in Northeast Ohio at 1% for 2016 and 1.1% for 2017. Longer term, PNC’s economist sees opportunity for greater growth.

“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,” Teshome wrote.

“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.”

Month Non-Farm Small (1-49) Mid-Sized (50+) Goods-producing Service Producing
September (Actual) 1,164,804   473,914    690,890   215,278 949,526
Oct (est.) 1,165,339   473,967    691,371   217,727 947,611
Nov (est.) 1,162,090   472,798    689,292   214,944 947,146
Dec (est.) 1,164,636   473,839    690,797   215,335 949,301
Jan (est.) 1,164,051   473,610    690,441   215,102 948,949
Feb (est.) 1,165,721   474,355    691,366   214,476 951,246
Mar (est.) 1,165,346   474,200    691,147   214,441 950,905
Recent Month’s Estimated Change
Feb ’16 to Mar ’16    (375)   (154.98)    (220)    (34)    (341)
Diff from Mar 2015    3,316   1,607    1,709    (3,082)    6,397
Trend
3-month    1,165,040    474,055    690,985    214,673    950,366
6-month    1,164,531    473,795    690,736    215,338    949,193

ACE Report: Northeast Ohio posts another modest jobs gain

The Northeast Ohio workforce gained 682 paychecks in February. A small number, but in a jobs picture on a roller coaster, any gain is better than the alternative.

The latest Ahola Crain’s Employment (ACE) Report projects that private-sector employment in the Cleveland-Akron metropolitan region’s private sector grew to 1,164,001 jobs in February from 1,163,319 in January on a seasonally adjusted basis, an increase of 0.06%.

The economy of the seven-county metro area seems to be settling into a new normal of year-to-year slow job growth with month-to-month ups and downs, even when seasonal fluctuations are smoothed out. Over the last 12 months, employment is up 1,433 jobs, a slight 0.12% gain since February 2015, when the region employed 1,162,568 people.

Employment peaked in July at 1,167,490, then slid for four months to 1,161,984 before recovering.

“The estimated job growth indicates a modest pace of business activity,” reports economist Jack Kleinhenz, who devised the ACE model. “The world economies were not well behaved in the early months of 2016, impacting the outlook for the U.S. and probably creating some drag on the regional economy.”

The metro area growth lags slightly the growth in state employment.

According to the Ohio Department of Jobs and Family Services, employment statewide grew by 53,000 jobs, a 0.98% gain from 5,344,000 in February 2015 to 5,397,000 in February 2016.

Manufacturing has been sluggish, stemming from slower growth overseas and the stronger U.S. dollar, Kleinhenz said, though he believes that gains in consumer spending, income, employment and housing prices will counter the manufacturing slowdown.

“Consumer spending is off on a strong start this year,” said Kleinhenz, who is the chief economist for the National Retail Federation, a major retail trade association. “Housing should get the benefit of a better labor market and growing incomes. The early Easter should also pull spending into the first quarter.”

The Federal Reserve Board’s March Beige Book, the Fed’s eight-times-a-year assessment of economic conditions across the country, concurs with the ACE characterization. It lumps its Cleveland-based Fourth District — which includes Ohio, Western Pennsylvania and Eastern Kentucky — among the majority of the Fed’s 12 districts that are reporting “modest” growth in the labor market.

The Fed noted reports from the Fourth District that low-skilled jobs were becoming increasingly difficult to fill.

The ACE Report is based on payroll data from about 3,000 predominantly small and midsize employers that is gathered by The Ahola Corp., a Brecksville payroll and human capital management firm and on other economic indicators, including construction data and retail sales.

ACE Report February

Month Non-Farm  Small (1-49)   Mid-Sized (50+) Goods-producing Service Producing
September(Actual) 1,164,804   473,914   690,890 215,278 949,526
Oct(est) 1,163,125   473,123   690,002 216,507 946,618
Nov(est.) 1,161,984   472,760   689,224 214,844 947,140
Dec(est) 1,164,239   473,693   690,546 215,039 949,201
Jan(est) 1,163,319   473,318   690,000 214,876 948,443
Feb(est) 1,164,001   473,686   690,314 213,703 950,298
Recent Month’s Estimated Change
Jan ’16 to Feb ’16 682   367.95   314 (1,172) 1,854
Diff from Feb 2015 1,433   888   544 (4,114) 5,547
Trend
3-month 1,163,853   473,566   690,287 214,539 949,314
6-month 1,163,579   473,416   690,163 215,041 948,538

By

March 25, 2016

ACE Report: Region loses 650 jobs in January, but year-over-year employment is up slightly

Employment in Northeast Ohio took a slight dip in January, with a loss of 650 jobs from December to January. That represents a loss of 0.06% of the region’s jobs, according to the Ahola Crain’s Employment (ACE) Report, with the number employed dropping to 1.16 million.

That January number, however, is a gain of 1,244 jobs, or 0.11%, from the number of people employed in the region in January 2015.

There is usually a falloff of employment in the early months of the year, said Jack Kleinhenz, the Cleveland Heights economist who compiles the ACE data.

Still, Kleinhenz sees regional employment on an upward trajectory.

“The employment data is consistent with an economy that downshifted during the month” of January, he reported. “The rate of improvement in labor market conditions remains erratic for both the nation and the region, but the labor market continues to move in the right direction.”

But where Northeast Ohio saw an actual drop in employment, Ohio and the nation saw only a decline in the pace of job growth. Nationally, the growth in payrolls was 151,000 for the month, according to U.S. Department of Labor estimates. That was below expectations since 262,000 jobs were created in December.

Similarly, job growth in Ohio was off slightly. The state saw growth of 7,888 jobs between November and December, according to data compiled by ADP, a national payroll firm, but only a gain of 6,837 between December and January, an increase of 0.15%.

Longer term, a report released in late January by the Brookings Institution showed that job growth in Northeast Ohio — it divides the region into Akron and Cleveland-Elyria metropolitan areas — has languished for a decade. Brookings is a Washington, D.C., think tank.

The organization publishes a periodic “Metro Monitor” that tracks growth, prosperity and inclusion in the 100 largest U.S. metropolitan areas. The report calls the recovery from the 2007-2009 recession as “slow and uneven,” with growth strongest along the West Coast, the Intermountain West and Texas and weak in the Sun Belt.

“The manufacturing economies of the eastern Great Lakes, like those in Northeast Ohio or Upstate New York, also saw weak recoveries,” the report stated.

Using data from Moody’s Analytics, Brookings puts employment growth in the two Northeast Ohio metros among the lowest third of the 100 metropolitan areas in the country. The report shows that employment in the Akron metro has been flat for the decade ending in 2014.

For the last five years, since the recession, Akron saw employment growth of 3.5%. For the last year, employment grew by and 1.5%, according to Brookings’ analysis.

In the Cleveland-Elyria metro, employment still is below a decade ago, by 3.3%, though it has picked up since the recession, with 3.6% growth for the last five years.

Brookings reports no employment growth in the Cleveland metro for 2014, the last year in the survey.<br

Seasonally Adjusted Data

Month Non-Farm  Small      (1-49)   Mid-Sized (50+)   Goods-producing   Service Producing
June(Actual) 1,163,941   473,458    690,483   216,623  947,318
July(est.) 1,157,861   470,937    686,924   216,173  941,688
Aug(est.) 1,158,709   471,291    687,418   216,196  942,513
Sept(est.) 1,159,375   471,571    687,805   216,203  943,172
Oct(est) 1,162,009   472,658    689,351   216,462  945,547
Nov(est.) 1,161,126   472,402    688,724   214,819  946,307
Dec(est.) 1,163,443   473,357    690,086   215,071  948,372
Jan(est.) 1,162,791   473,090    689,701   214,971  947,820
 

 

Recent Month’s Estimated Change
Dec ’15 to Jan ’16 (652)  (267)  (385)  (99)  (553)
Diff fromJan 2015 1,244  733  512  (3,014)  4,259
 

 

Trend
3-month 1,162,453  472,950  689,504  214,954  947,500
945,622 945,622  945,622  945,622  945,622  945,622

By Jay Miller

February 26, 2016

ACE Report: Regional Job Market Closes 2015 on a High Note

The job market in the seven-county Cleveland-Akron metropolitan area closed 2015 with a relatively strong performance, adding 2,350 jobs from November on a seasonally adjusted basis.

The latest Ahola Crain’s Employment (ACE) Report projects that the region’s private sector grew to 1,162,540 jobs in December from 1,160,190 in November, an increase of 0.2%. Compared with December 2014, the Northeast Ohio workforce also is in positive territory, as it has posted a modest gain of 2,438 jobs since then.

Local economist Jack Kleinhenz, who compiles the ACE Report data, wrote in an analysis accompanying the December report that the month’s non-seasonally adjusted estimate of 1,171,636 jobs “is ahead of the 3-month and 6-month averages, which indicates further economic activity and job growth.”

But Kleinhenz offered a caveat, noting, “In looking forward, however, it is typical for the trajectory of monthly employment in the region in the early months of the year to be pared significantly back. Seasonal adjustment of this series masks that fact. …

“We expect a similar pattern to take place and recognize that some dampening of the pace of employment gains is projected,” he wrote. “This near-term development is not surprising in that the manufacturing sector has been battered and bruised.”

The not-bad, not-great nature of the December ACE Report is consistent with the state of Ohio’s jobs report for the month, which found unemployment rose to 4.7% from 4.5% in November.

Nonagricultural wage and salary employment increased 15,200 over the month, to 5,451,500 in December from a revised 5,436,300 in November, according to data from the Ohio Department of Job and Family Services.

However, the number of workers unemployed in Ohio in December was 269,000, up from 255,000 in November.

On balance, through, the state is better off than it was a year ago, as the number of unemployed has decreased by 23,000 in the past 12 months from 292,000. In December 2014, Ohio’s unemployment rate was 5.1%

Crain’s partners with The Ahola Corp., a payroll and human resources services company in Brecksville, and Kleinhenz for the ACE Report to provide monthly data about the size of Northeast Ohio’s workforce.

Seasonally Adjusted Data

Month Non-Farm Small (1-49) Mid-Sized (50+) Goods-producing Service Producing
June(Actual) 1,163,941   473,458   690,483   216,623   947,318
July(est.) 1,157,178   470,669   686,508   215,899   941,279
Aug(est.) 1,157,981   471,009   686,973   215,870   942,111
Sept(est.) 1,158,628   471,285   687,343   215,797   942,831
Oct(est) 1,161,187   472,346   688,841   215,991   945,195
Nov(est.) 1,160,190   472,052   688,138   214,203   945,987
Dec(est.) 1,162,540   473,031   689,509   214,310   948,229
Recent Month’s Estimated Change
Nov ’15 to Dec ’15 2,350   978.92   1,371   107   2,243
Diff from Dec 2014 2,438   1,221   1,217   (2,831)   5,269
Trend
3-month 1,161,305   472,476   688,829   214,835   946,470
6-month 944,272   944,272   944,272   944,272   944,272

By Scott Suttell

January 29, 2016

ACE Report: Northeast Ohio Has First Job Drop Since July

Employment in the seven-county Cleveland-Akron metropolitan area is being projected to dip ever-so-slightly in November. The estimated decline — 1,400 jobs or 0.1% of the employment in an economy of nearly 1.2 million jobs — reflects an annual slowdown in the manufacturing, or goods-producing, sector, according to the latest Ahola Crain’s Employment (ACE) Report.

The decline is the first drop since July and reflects an estimated increase of 834 jobs in service employment that is offset by a loss of 2,233 jobs in goods-related businesses.

Year-over-year, though, employment is up, according to the ACE numbers, with a modest gain of 5,427 since November 2014, a 0.58% seasonally adjusted increase.

“The region in recent history registers softer employment gains for the goods-related sector, typically in the later months of the year, and we are not overly concerned about the contractionary reading (for November) as the region remains in expansion territory,” said economist Jack Kleinhenz, who compiles the ACE data.

“The recent trend of performance is indicating further economic activity and job growth, but perhaps at a slower pace,” Kleinhenz said.

The regional economy continues to lag the national economy. Private employment nationally rose by 2.1% over the last 12 months, according to current employment data compiled by the federal Bureau of Labor Statistics.

The two sub-metro areas in the region are performing similarly, though Cleveland is doing narrowly better than the Akron metropolitan area.

Estimates by the Ohio Department of Jobs and Family Services (ODJFS), which analyzes the BLS data, found that the number of people employed grew by 0.018% over the last year in its Akron metro area, which includes Portage and Summit counties. Employment in the five-county Cleveland metro grew 0.019% from November 2014 to November 2015. The ACE estimates cover only private sector employment; the BLS data include all non-farm employment, including the government workforce.

Similarly, unemployment for the Cleveland metro was 3.7%, according to ODJFS, down from 5% in November 2104, while the two-county Akron metro had an unemployment rate of 4.6%, down from 5.3% a year ago.

Regional employment is expected to continue to grow, though slowly. Economists at PNC Financial Services Group, parent of PNC Bank, found optimism in October when the company surveyed small and middle market business owners in Ohio.

Because of optimism about the outlook for their own businesses and for the local economy, 19% of business owners surveyed said they planned to hire in the months ahead, compared with only 10% who had plans to hire six months earlier.

In addition, 36% of those employers — PNC did not disclose the size of its sample — said they expected to increase employees’ pay, up from 26% who were planning pay raises in the spring. Of those planning raises, 59% said they planned to give raises of 3% or more during the next six months.

Seasonally Adjusted Data

Month Non-Farm Small (1-49) Mid-Sized (50+) Goods-producing Service Producing
June (actual) 1,161,467 472,360 689,108 217,477 943,991
July (est.) 1,159,789 471,691 688,097 216,957 942,831
Aug (est.) 1,161,200 472,304 688,896 216,667 944,533
Sept (est.) 1,162,105 472,702 689,403 216,408 945,697
Oct (est) 1,164,808 473,822 690,986 216,617 948,190
Nov (est) 1,163,408 473,390 690,018 214,384 949,024
Recent Month’s Estimated Change
Oct ’15 to Nov ’15 (1,400) (431.7) (968) (2,233) 834
Diff from Nov 2014 5,427 2,430 2,997 (2,174) 7,601
Trend
3-Month 1,163,440 473,305 690,136 215,803 947,637
6-Month 1,162,129 472,712 689,418 216,418 945,711

Crain’s Cleveland Business

MONTHLY ECONOMIC REVIEW: READY FOR A REBOUND

Until recently, we have either received mixed or disappointing economic data. However, the newfound strength in the U.S. labor market will serve as a key factor for optimism moving forward. With job growth averaging more than 200,000 a month and wage growth showing marked improvements, the U.S. economy is ripe for continued household spending.

Additionally, the rebound in retail sales in May serves as a positive indication of growth in Gross Domestic Product for the second-quarter. With consumer spending accounting for nearly 70 percent of economic growth, positive reports in our nation’s GDP will be a key determinant in the months ahead.

The economy struggled coming out of the gate in 2015 just like it did in 2014, and the economic outlook has not played out precisely as we had anticipated when we released our annual forecast earlier in the year. After a weak first quarter, the economy found its footing this spring and is expected to continue its rebound. Nonetheless, our forecast of 4.1 percent for the year will likely need to be updated to account for these changes.

This month’s full report includes these highlights:

Retail Sales

Consumer spending and retail sales rebounded in May signifying renewed momentum heading into the second half of the year.

Consumer Sentiment

June’s preliminary University of Michigan consumer sentiment index climbed 3.9 points from May’s 90.7 to 94.6, with much of the gain due to consumers’ belief that current economic conditions have improved.

Consumer Prices

The March headline Consumer Price Index rose 0.4 percent between April and May, somewhat slower than expected.

Gross Domestic Product

Net exports hampered GDP growth in the first quarter. Much of the volatility in the trade deficit was due to the West Coast port slowdown, taking off nearly 2 percentage points from GDP growth.

Housing

The June NAHB housing market index jumped to a reading of 59 from 54 in May, a much stronger than expected score.

Employment

The labor market received a surprise in June as the Bureau of Labor and Statistics reported private sector job growth of 260,000.

Retail Jobs and Openings

Employment, excluding auto, gas and restaurant sales, increased 23,800 in May to 12.81 million jobs seasonally adjusted, a gain of 242,700 from May 2014.

Personal Income and Spending

April Personal Income rose 0.4 percent and Personal Consumption Expenditures was flat. On a year-over-year basis, personal income is up 4.1 percent while consumption is up 2.7 percent.

Leading Economic Indicators

The Conference Board’s Leading Economic Index increased 0.7 percent in May, matching April’s increase.

MONTHLY ECONOMIC REVIEW: CONSUMERS ARE IN THE DRIVER’S SEAT

When it comes to the U.S. economy, one can’t help but feel a sense of déjà vu. Similar to last year, unseasonably cold weather and lingering caution among budget-conscious consumers have dampened economic activity since the first of the year. However, as we head into the second quarter, I expect we’ll see that the consumer is actually more in the driver’s seat compared to this time last year. Lower energy costs, rising home equity, job and income gains and increased buying power from the stronger U.S. dollar will all continue to positively contribute to greater consumer spending ability — a key factor for further economic gains.

Other positive factors that will continue to influence improved growth in consumer spending include growth in real disposable income, which has grown 4 percent on a year-over-year basis ending in February — the fastest rate seen in two years — and stock market gains that are about 12 percent above this time last year. Additionally, housing price appreciation and decreased household debt burdens are at their lowest in at least 35 years, contributing to bigger gains in consumer confidence.

Economic expansion in the United States is expected to continue, but the burden of carrying the world economy on its shoulders could be an obstacle on the path toward stronger U.S. gains.

This month’s full report includes these highlights:

Retail Sales

Retail sales (excluding automobiles, gasoline stations and restaurants) reversed course and increased 0.5 percent in March after dropping 0.4 percent in February.

Consumer Sentiment

The University of Michigan consumer sentiment index beat expectations in the first half of April, increasing to 95.9 from March’s average of 93.

Consumer Prices

The March headline Consumer Price Index rose 0.2 percent between March and February. This was the second positive reading in five months.

Gross Domestic Product

The third estimate of fourth-quarter GDP reflected no change to the 2.2 percent rate from the second estimate.

Housing

Single family starts rebounded by 4.4 percent to 618,000 units in March and homebuilding is off to a good start. Weather appeared to play a negative role earlier this year not only on starts but on completions.

Employment

Job growth slowed in March as private payrolls rose an anemic 129,000. Overall employment (public and private sectors combined) increased 126,000 in March.

Retail Jobs and Openings

Total retail employment across all industry segments increased 25,900 to 15.6 million in March. There were 463,000 job openings in the retail industry on the last business day of February.

Personal Income and Spending

Personal income rose by 0.4 percent in February while personal consumption inched up only 0.1 percent.

Chicago Fed National Activity Index

The economy was growing even slower last month according to the Chicago Fed National Activity Index which recorded activity dropped to -0.42 in March from -0.18 in February.

Download the full report (PDF)