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

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

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

ACE Report: Service sector sparks October jobs gain

The region reversed two months of job declines in October, adding 2,498 jobs, according to the Ahola Crain’s Employment (ACE) Report.

Seasonally adjusted, the region saw employment rise to 1,171,849 from 1,169,351 a month earlier, a 0.2% increase.

While the service-producing sector shows a year-over-year gain of 5,407 jobs, the goods-producing sector declined by 2,181 jobs. Smoothing out the month-to-month figures, on a year-over-year basis, the seven-county workforce increased 3,226 jobs, a gain of 0.3%, since October 2015.

The regional decline in the goods-producing sector echoes the national pattern. The United States lost 9,000 manufacturing jobs in October, according to the Bureau of Labor Statistics.

“Service employment has been growing, but manufacturing payrolls are either sluggish or declining,” reported Jack Kleinhenz, the Cleveland Heights economist who created the ACE model. “The factory sector continues to face stiff headwinds, including weak global demand due to sluggish growth abroad, a strong dollar and low commodity prices.

Longer term, employment in the goods-producing sector peaked in July 1979 at 25,163,000. Since then, sector employment has declined by 5,548,000 — or 22% — to its current level of 19,615,000. Those jobs have been lost largely to automation and shop-floor tracking systems that increase efficiency and, to a lesser degree, to globalization.

A bright spot at the national level, Kleinhenz said, is the 0.4% gain in average hourly earnings, up 2.8% over the past year.

Economists at Pittsburgh-based PNC Financial Services Group called that growth in average hourly earnings the fastest increase in seven years.

“As the job market gets tighter, firms are responding to tougher competition for workers by raising pay,” the financial services firm said in its Nov. 4 economic report. “This is very good news for incomes and consumer spending.”

The Federal Reserve Board’s most recent Beige Book, which gathers anecdotal information on each region of the country, said of the Cleveland region, “Wage pressures were most evident in the construction and retail sectors across skill levels. Reports from staffing firms about job openings and placements were mixed, though all contacts noted an increase in the number of temporary positions.”

Seaonally adjusted data

Custom-Chart-1
Month Non-Farm Small (1-49) Mid-Sized (50+) Goods-producing Service Producing
Mar-16(actual) 1,175,919   478,541   697,378 215,829 960,090
April (est) 1,169,858   476,032   693,826 215,323 954,536
May (est) 1,174,111   477,748   696,363 216,312 957,799
Jun (est) 1,172,025   476,883   695,141 216,156 955,869
Jul (est) 1,175,213   478,117   697,096 217,662 957,551
Aug (est) 1,171,067   476,593   694,474 214,553 956,515
Sept (est) 1,169,351   475,985   693,367 212,954 956,398
Oct (est) 1,171,849   476,981   694,868 213,697 958,152

ACE Report: Jobs drop in September, but outlook is optimistic

For the second straight month, Northeast Ohio registered a decline in the size of its payrolls, as calculated in the Ahola Crain’s Employment (ACE) Report.

In September, seasonally adjusted employment decreased by 1,657 jobs, to 1,172,402 last month from 1,174,059 in August, according to the ACE Report data. That followed a decrease of more than 3,600 jobs from July to August.

Both goods-producing and service-producing companies in Northeast Ohio shed jobs in September, the ACE Report found. Payrolls related to goods production fell by 1,539, and service-related regional payrolls fell 118.

September’s payroll number of 1,172,402 was below the region’s three-month (1,174,728) and six-month (1,174,286) averages, according to the ACE Report data.

However, Jack Kleinhenz, the Cleveland Heights economist who created the ACE Report model, noted that employment in Northeast Ohio “continues to remain in positive territory for the year, as there were 6,012 more jobs in the seven-county Cleveland/Akron region than the (like) month a year ago.”

Kleinhenz said in an analysis of the most recent data that there are “a lot of moving parts impacting Northeast Ohio economic activity, including seasonal forces in August and September, thus making it difficult to infer that slower growth is ahead.”

He noted that while employment measures “are important, they leave out other key information (that is) included in other economic series.”

For instance, Kleinhenz said he keeps a close eye on a “coincident economic index” produced for each state by the Federal Reserve Bank of Philadelphia. The index includes four factors: employment; average hours worked in manufacturing by production workers; the unemployment rate; and wage and salaries incorporating employment.

In August, he said, the coincident index for Ohio increased 0.3%, and it has risen by 3.4% over the past 12 months. These “are favorable figures when compared to the nation’s 0.24% and 3%, respectively,” Kleinhenz said.

He also found reason for optimism in the results of the Institute for Supply Management’s nonmanufacturing index. That index “rebounded strongly in September to 57.1 from 51.4 in August, well above market expectations and its highest reading since October 2015,” Kleinhenz said.

Meanwhile, he said, the ISM manufacturing index rose to 51.5 from 49.4, which “suggests a modest pickup in business activity in September.”

Kleinhenz concluded, “The improvement as measured by these indexes, though a bit uneven, holds out hope that a pickup in economic activity is underway for the remainder of 2017 and should provide the basis for future payroll gains for the Northeast Ohio region.”

Custom-Chart-1

Seaonally adjusted data

Month Non-Farm Small (1-49) Mid-Sized (50+) Goods-producing Service Producing
Mar-16(actual) 1,175,919   478,541   697,378 215,829 960,090
April (est) 1,171,228   476,564   694,664 215,938 955,290
May (est) 1,175,950   478,462   697,489 217,154 958,796
Jun (est) 1,174,351   477,788   696,562 217,180 957,170
Jul (est) 1,177,724   479,087   698,637 218,863 958,861
Aug (est) 1,174,059   477,748   696,311 216,000 958,059
Sept (est) 1,172,402   477,160   695,242 214,460 957,941

Recent Month’s Estimated Change

Date Non-Farm Small (1-49) Mid-Sized (50+) Goods-producing Service Producing
Aug ’16 to Sept ’16 (1,657)   (588)   (1,069) (1,539) (118)
Diff from Sept 2015 6,012   2,592   3,420 (980) 6,992

Trend

Date Non-Farm Small (1-49) Mid-Sized (50+) Goods-producing Service Producing
3-month 1,174,728   477,998   696,730 216,441 958,287
6-month 1,174,286   477,802   696,484 216,599 957,686

ACE Report: Region’s jobs drop in August, but increase year-over-year

The monthly tally of Northeast Ohio private payrolls in August continued on its roller coaster of up one month and down the next, with the Ahola Crain’s Employment (ACE) Report showing a decrease of 3,626 jobs from July, a 0.31% decline.

Longer term, though, employment in the seven-county Akron-Cleveland metro area was 8,340 jobs higher in August than a year ago, a 0.71% increase.

“The economy is in its eighth year of economic recovery and still remains in its expansion phase of a payroll cycle,” reported Jack Kleinhenz, the Cleveland Heights economist who created the ACE model. “It has been on a slow path of economic growth, but the labor market continues to maintain momentum.”

Statewide, nonagricultural wage and salary employment grew by 77,000 jobs year-over-year, a 1.35% increase, based on a survey by the U.S. Bureau of Labor Statistics released last Tuesday, Sept. 20 by the Ohio Department of Jobs and Family Services.

Employment in all 88 Ohio counties decreased by 2,000 positions, from 5,505,400 in July to 5,503,400 in August.

Analyzing the state data, the nonprofit Policy Matters Ohio think tank, which is supported by foundations, community organizations and unions, reported that Ohio’s 12-month job growth rate of 1.35% continues to trail the national average of 1.7%, but it represents an improvement over the pace of job creation since the official start of the last national recession in 2007.

“Ohio needs many more months of five-figure employment growth to close the job gap, so (August’s) losses are disappointing,” said researcher Hannah Halbert in a press release. “However, the August loss is slight, and didn’t come close to wiping out recent gains. That’s an improvement from the earlier trend.”

Although Northeast Ohio and the state posted job losses, Kleinhenz noted that the country posted a less-than-expected gain of 151,000 jobs. CNBC reported that Wall Street economists were expecting the nonfarm payrolls report to show a gain of 180,000 in August.

“This figure still remains above the required gain to keep the unemployment rate moving down on a slow, yet steady, pace,” Kleinhenz said. “It is important to note that as the economy gets closer to its full employment — and we are getting close — finding workers increases in difficulty.”

Kleinhenz cited Bureau of Labor Statistics data that show job openings “rose sharply in July, and the rate of openings was a record high. Meanwhile, the increase in hiring was not as great. Openings have grown faster than hires for nearly every month over the last year and a half.”

Hirings differ from job gains since job gains are net of hirings, firings and employment lost from deaths.

“All in all the data suggest that firms are having a challenging time filling positions but also indicating that workers are moving to jobs that better suit them and their efficiencies,” Kleinhenz reported.

Seaonally adjusted

Ace-Report-Aug
Month Non-Farm Small (1-49) Mid-Sized (50+) Goods-producing Service Producing
Mar-16 1,175,919   478,541   697,378  215,829 960,090
Apr (est) 1,171,007   476,478   694,529  215,846 955,161
May (est) 1,176,132   478,537   697,595  217,167 958,965
Jun (est) 1,174,496   477,833   696,663  217,419 957,077
Jul (est) 1,178,355   479,348   699,007  218,912 959,442
Aug (est) 1,174,729   478,016   696,713  216,188 958,541
Recent Month’s Estimated Change Non-Farm Small (1-49) Mid-Sized (50+) Goods-producing Service Producing
July ’16 to Aug ’16 (3,626)  (1,331.90)  (2,294) (2,724) (902)
Diff from Aug 2015 8,340  3,484  4,856 244 8,096
Trend Non-Farm Small (1-49) Mid-Sized (50+) Goods-producing Service Producing
3-month 1,175,860 478,399 697,461  217,507  958,353
6-month 1,175,106 478,125 696,981  216,894  958,213

September 23, 2016

Photo by COLE GOLDBERG

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

 

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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

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