We won't say they're big trends yet, but two local economic indicators we track aren't as bullish as we'd like them to be heading toward 2016.
First, the initial September Nashville-area jobs data from the Bureau of Labor Statistics caught our eye for the wrong reasons. Other than the white-hot construction sector popping back to a double-digit yearly growth rate, there isn't a whole lot of good news to glean from the numbers. Job growth in the important manufacturing sector has been more than cut in half since July while leisure/hospitality and retail establishments have cooled their heels, too. Only the education/health sector is holding steady.
Second, take a peek at the latest (August) installment of the Freddie Mac Multi-Indicator Market Index of housing health for Nashville. Yes, it shows the region still up 10 percent from a year earlier but the month-to-month change that had been steadily positive since the spring went flat at a time when the big selling season hadn't yet ended. Something else to monitor — particularly if a housing slowdown hurts local consumer sentiment...
On the face of it, the restaurant sector is putting up good numbers, says research firm TDn2K in its third-quarter report, which covers more than 22,000 locations around the country. But look beyond the top-level same-store sales growth of 1.5 percent and there are dark clouds on the horizon: Same-store traffic was off 1.3 percent in the quarter versus the mark of the summer of 2014. And that number could get worse thanks to easy comparison last year versus 2013. The drop may be due to some very big-picture trends.
The economy is showing some signs of weakness regarding still stagnant growth in employment and wages. Both of these factors are critical in fueling the continued growth of consumer spending in the restaurant sector. The Q3 average for job gains was the lowest three-month average in the last two and a half years and suggests that restaurants could experience headwinds in their sales and traffic as we enter Q4.
HT: Seeking Alpha
Here's a local economic indicator we should probably watch more closely — especially as we discuss what to do about affordable housing and income inequality. Nashville-area seasonally adjusted average hourly earnings, as compiled here by MTSU's Business and Economic Research Center, have basically circled $23 for the past year and a half. And for the past five months, they've been below year-earlier levels, the longest such streak since the spring of 2013. This has happened as the average number of hours worked weekly also have dipped since early 2014.
It could be that the current downswing is nothing more than a cyclical breather after last year's pretty steep increases, when year-over-year increases topped 5 percent for seven straight months. But if it's a structural issue, it could point to an oversupply of labor — thanks to all our new friends moving here, perhaps? — or a potentially troubling reticence from many local employers to commit to raises because of concerns about their growth prospects in the coming year and beyond.
Here's the chart showing the year-over-year increases going back to the beginning of 2012.
Good news for Nashville-area homeowners: Housing market research firm CoreLogic says the average August home price in the region, including distressed sales, was 8.5 percent higher than a year earlier. That's up from the pace the market was setting earlier this year and also a little higher than CoreLogic's national number.
The Middle Tennessee housing market continues to heat up nicely — to the point where the year-over-year improvement in Freddie Mac's Multi-Indicator Market Index has reached double digits for the first time since June of last year. As in recent months, the biggest driver of those gains is an improvement in the payment-to-income ratios of local borrowers.
Here's Freddie Mac's national news release.
The Middle Tennessee economy grew at a 3.6 percent clip last year, up from 3.1 percent in 2013 and good enough for 53rd among the country’s 381 metropolitan areas.
The 3.6 percent number was almost double the overall growth of U.S. metropolitan areas and lifted Nashville’s GDP to $98.5 billion in 2009 dollars. Since 2009, the area’s economy has grown from $81.5 billion.
Four different sectors — trade, finance/insurance/real estate, business services and education/health care — contributed at least half a percentage point to the region’s growth last year. That helped Middle Tennessee comfortably outpace the state’s other major metro areas. Knoxville’s GDP grew 1.0 percent last year and Memphis’ 0.4 percent while Chattanooga’s economy shrank by 0.9 percent and Clarksville’s contracted by 1.2 percent.
Check out all the 2014 BEA metropolitan data here.
Slowdowns in the growth of Middle Tennessee's largest job grouping as well as in the important manufacturing sector pushed year-over-year employment growth below 3 percent in August, according to Bureau of Labor Statistics data. The professional and business services sector, which accounts for 15 percent of all Nashville-area jobs, grew by just 1.8 percent in August — its smallest number since June of last year. Meanwhile, job growth in the area's auto-heavy manufacturing industry slowed to 2.4 percent while the information and finance sectors went a little deeper into the red year over year. Offsetting some of those negative developments were strong months from the big leisure and education/health sectors.
Almots 12,800 Nashville-area homes with a mortgage were in negative equity at the end of June, meaning they were worth less than the debt still owed to the lender. That amounted to 3.6 percent of all mortgaged properties, which was down more than half a point from the end of March and 1.2 points below the year-prior number. The number of properties near negative-equity levels was 1.1 percent on June 30, versus 1.4 percent at the end of the first quarter and 2.0 percent in mid-2014.
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