Sunday, March 21, 2021

Transportation and warehousing industry job growth in Georgia demonstrate contrasts in employment during 2020

 


The U.S. Bureau of Labor Statistics has released their final employment estimates for 2020, and transportation and warehousing employment stands out as the bright spot in Georgia's employment picture. 

Although the industry suffered losses in the first months of 2020, it rebounded quickly and finished out the year with a net gain of 7,200 jobs, while overall private sector employment in the state fell by 185,700. 

Both the losses and gains in employment reflect the changes undergone by the state’s economy as the coronavirus impacted the state’s job market. As people turned away from travel and in-person shopping, they increased their online and food delivery purchases. These changes are clearly reflected in the state’s employment numbers. 

Within the transportation and warehousing industries, employment in air transportation fell by 6,600 and trucking jobs declined by 400. These losses were offset by gains of 5,500 in couriers and messengers, and 10,000 in warehouse and storage. 

Both couriers and messenger and warehouse and storage occupations hit their highest level in their statistical series, which began in 1990. 

As expected, the leisure and hospitality sector showed the most significant job losses in Georgia, with employment decreasing by 78,800 over the year, a drop of 15.8 percent. 

The next largest decline occurred in other services, where employment dropped by 17,200, or 10.3 percent. Other services include businesses involved in equipment and machinery repairs and maintenance; as well as providing personal services such as laundry and housekeeping; and organizations supplying religious, grantmaking, and advocacy services. 

While the private sector saw a 4.6 percent employment decline, the public sector was affected as well. Government jobs located in Georgia dropped by 21,200 or 3 percent. 

The unanswerable question is to what extent people will revert to their previous habits, or may choose to adopt their newer choices as their customs from this point forward. 

Effective with these data, all nonfarm payroll employment estimates for have been adjusted to 2020 benchmark by the U.S. Bureau of Labor Statistics. Not seasonally adjusted data beginning with April 2019 and seasonally adjusted data beginning with January 2016 were subject to revision. Some not seasonally adjusted and seasonally adjusted series may have been revised as far back as 1990.   


Financial-related jobs in Georgia escape the worse in 2020

 


Financial sector employment in Georgia ended the year in relatively good shape, especially when compared to other sectors in the state. 

The financial activities sector, ended 2020 with 253,900 jobs, representing a net loss of 900 jobs or 0.35 percent. The Bureau of Labor Statistics defines the sector as including jobs in banking, commercial and consumer lending, investment activities, insurance, real estate, and rental and leasing services. 

Financial activities employment accounts for approximately 5.5 percent of the state’s job market, but its key role in facilitating financial transactions -- involving the creation, liquidation, or change in ownership of financial assets – makes it a critical part of the state’s economy. 

Within the financial sector, losses were concentrated in the real estate and rental and leasing industry, which saw an employment decline 1,500 jobs while the other industries in the sector saw net growth of 2,400 jobs. About a quarter of the financial activities employment in the state is located within this industry. 

The relatively small loss in this sector compares to a net loss of nearly 207,000 jobs, or -4.4 percent in the state’s overall jobs market in 2020. 

Financial activities did record a net decline of 7,600 jobs over the first four months of the year, but then added 6,700 jobs in the remainder of 2020. Within the sector, the real estate and rental and leasing industry in the state suffered slightly lower losses in the first four months, declining by 6.800 jobs, but then recorded a slower recovery, adding 5,300 jobs over the following eight months. 

Georgia’s experience was very similar to the nation with financial activities nationally recording losses in the first four months followed by a rebound in the remainder of the year. Like in Georgia, financial activities across the U.S. recorded a small (-0.58 percent) net decline in 2020, while the national job market showed a 6 percent decrease compared to the previous year. 

Effective with these data, all nonfarm payroll employment estimates for have been adjusted to 2020 benchmark by the U.S. Bureau of Labor Statistics. Not seasonally adjusted data beginning with April 2019 and seasonally adjusted data beginning with January 2016 were subject to revision. Some not seasonally adjusted and seasonally adjusted series may have been revised as far back as 1990.    




Saturday, March 6, 2021

Georgia's employed population hits new low in 2020

 

Source: U.S. Bureau of Labor Statistics

The percentage of the population employed in Georgia reached its lowest level in 2020, according to new information provided by the U.S. Bureau of Labor Statistics. 

On average, only 57.1 percent of Georgians age 16 or older were employed during the year, the lowest number since BLS began its series in 1976. In 2019, the state’s average ratio was 60.5 percent. The ratio has been as high as 66.5 percent, set in 1999. 

In comparison, the national employment-population ratio in 2020 was 56.8. According to BLS, Georgia’s employment-population ratio in 2020 was not statistically different from that of the U.S. 

From 1976 through 2008, the state’s employment-population ratio had always been higher than or equal to the nation as a whole, but the state’s labor force recovery from the 2007 recession was slower than for the nation. In 2015, Georgia recorded an average employment-population ratio two percentage points lower than the nation; 2015 was the last time the state’s ratio significantly diverged from that of the U.S. 

The low employment-population level reflects both the state’s growing population as well as a combination of a larger number of people age 16 and older unemployed and actively seeking work and those outside the labor force. People can be outside the labor force for a number of reasons including due to retirement, full disability, pursuing education, discouraged workers, as well as other reasons. 

In 2020, annual average employment in the state totaled 4,741,191, while the state’s population of persons age 16 and older averaged 8,297,834. 

By comparison, in 1976, the first year in the series, employment in the state over the year averaged 2,084,229, while the state’s population averaged 3,557,750. In 1976, the state's employment-population ratio was 58.6 percent.

The number of unemployed persons in Georgia averaged 330,964 in 2020. People are classified as unemployed if they do not have a job, have actively looked for work in the prior four weeks, and are currently available for work.  

Even though Georgia’s employment-population ratio is the lowest on record, the state’s unemployment rate was not a record. In 2020, Georgia's unemployment rate averaged 6.5 percent. The state's record unemployment rate was set in 2010 when the state averaged 10.7 percent; that year Georgia reached an annual average unemployed people at 502,515.

 

Wednesday, March 3, 2021

Federal Reserve Bank of Atlanta reports moderate expansion of economic activity

The Federal Reserve Board has published (March 3, 2021) their latest edition of their Beige Book, which describes ecoomic conditions in the various Federal Reserve Bank Districts. Below is the report from the Federal Reserve Bank of Atlanta. You can see the complete report for all districts at https://www.federalreserve.gov/monetarypolicy/beigebook202103.htm


Federal Reserve Bank of Atlanta

Summary of Economic Activity
Economic activity in the Sixth District expanded modestly, on net, from January to mid-February. Labor markets improved some as employers added to headcounts, and wage pressures remained muted. Increases in certain nonlabor costs were noted, and pricing power among firms was mixed. Retailers reported continued strong demand in home furnishings and recreational products. Online sales continued to outpace brick-and-mortar sales. Auto sales increased, exceeding expectations. Tourism contacts saw an uptick in activity over the reporting period as domestic travel rebounded slightly. Demand for housing remained robust, inventories of new and existing homes fell, and home prices rose. Commercial real estate markets were mixed. Manufacturing activity accelerated as new orders and production levels increased. Conditions at financial institutions were stable, but loan demand weakened.

Employment and Wages
On balance, contacts indicated that employment levels and hours worked rose modestly over the reporting period. Most reported that employment levels were even with or below pre-pandemic levels, and about half of contacts expect to increase employment levels slowly as demand improves. Large leisure and hospitality firms reported a strong willingness from furloughed employees to return to work when called back. Among firms planning to reduce employment levels over the coming months, most planned to downsize through attrition rather than layoffs. Those hiring indicated that most jobs were easy to fill with the exception of lower-skilled positions, nurses, and long-haul drivers. The remote work stance was largely unchanged since the previous report, and several noted that this has allowed them to fill higher-skilled positions more easily. Many firms indicated that they planned to encourage employees to get the COVID-19 vaccine but at this point would not require it. Some contacts were offering paid time off to get the vaccine or were looking to provide the vaccine onsite.

Most contacts noted that wage pressure remained subdued. Shortages of nurses, skilled trades workers, warehouse workers, and commercial drivers were putting upward pressure on wages in those occupations according to several contacts. In Florida, most employers anticipate little impact from the mandated increases in the minimum wage (by 2026), although a few noted they were investing in capital to replace some of this labor. Many expect normal merit increases during 2021, with higher increases in critical and high-demand fields.

Prices
Consistent with previous reports, input costs, particularly for lumber and steel, continued to rise notably over the reporting period. Transportation and shipping costs continued to increase as well, with some contacts noting supply chain constraints creating upward cost pressures. Reports on pricing power were mixed. Sectors such as construction, manufacturing, and transportation that were affected by rising input costs implemented increases, while others were unable or unwilling to raise prices. The Atlanta Fed's Business Inflation Expectations survey showed year-over-year unit costs increased notably to 2.1 percent in February, up from 1.8 percent in January. Year-ahead expectations remained relatively unchanged at 2.2 percent.

Consumer Spending and Tourism
Home furnishings and recreation goods retailers reported a continuation of strong demand that began last March. Online sales continued to grow at a faster pace than brick and mortar sales. Auto sales in January outpaced expectations, and dealers reported a positive outlook for the balance of 2021; however, suppliers to the industry noted that shortages of semiconductors could impact future volumes.

Travel and tourism contacts reported a slight uptick in activity since the previous report. Domestic travel rebounded slightly and is expected to continue to strengthen as the COVID-19 vaccine is more widely distributed. Contacts expect that leisure travel will begin to normalize towards the end of summer, while business travel is expected to pick up in the fourth quarter of 2021 but remain well below pre-pandemic levels.

Construction and Real Estate
The District's housing market maintained its momentum as rising home sales continued to be fueled by low interest rates. In many markets, sales increased sharply from a year ago. Inventory shortages were prevalent as available homes for sale did not keep pace with demand. New home construction also fell short of market demand, and shortages of lots, materials, and labor increased costs for builders. As a result, both existing and new home prices have experienced significant upward pressure. Though low rates have helped offset rising prices, home ownership affordability declined overall. The level of mortgage delinquencies, while elevated due to the pandemic, remained stable over the reporting period.

Commercial real estate (CRE) contacts reported that the sector continued to be hampered by the effects of the pandemic; however, some areas of CRE showed improvement. Conditions in the retail sector improved modestly and rent collections recovered from the dismal results experienced in mid-2020. Multifamily conditions were mixed; however, leasing activity appeared to be picking up in some of the harder hit areas. The hospitality sector continued to be negatively impacted by low levels of tourism. Banks reported that financing for commercial projects was available and demand for new construction rose.

Manufacturing
Manufacturing firms indicated that business activity accelerated since the previous report. Contacts reported an increase in new orders and production levels, while purchasing managers continued to see longer supply delivery times and slightly elevated finished inventory levels. Expectations for future production remain optimistic, with almost two-thirds of contacts expecting higher levels of production over the next six months.

Transportation
On balance, transportation activity was consistent with the previous report. Railroads noted further improvements in overall traffic buoyed by double-digit increases in intermodal shipments. Freight brokerage firms reported robust demand and revenue growth as limited trucking capacity boosted rates per mile. Port contacts noted record container volumes amid surges in imports and an uptick in exports. Trucking contacts continued to benefit from strong demand for consumer staples; however, driver shortages remained a constraint in the industry despite rising wages. Inland barge and relocation contacts, however, continued to experience challenges due to COVID-19, and a return to pre-pandemic levels of activity is not expected until 2022 or beyond.

Banking and Finance
Conditions at financial institutions were steady. Net interest margins stabilized even as loan yields declined due to lower funding costs. Earnings also improved slightly as a result of lower provisions for credit losses. Loan growth declined due to tepid demand, especially among commercial customers, resulting in higher balances in banks' cash accounts and securities portfolios amidst healthy deposit growth. Despite concerns that increased unemployment levels might negatively impact loan payments, credit quality stayed strong at most banks. Customer loan payment performance continued to improve, with some banks reporting extremely low past due loan levels; however, retail delinquencies were still elevated in comparison to other commercial borrowers.

Energy
In parts of the District, residents and businesses grappled with power outages and rolling blackouts during mid-February winter storms. Refiners, chemical manufacturers, and liquified natural gas producers in Southwest Louisiana were forced to idle production. Fuel carriers in the region reported a severe backlog of deliveries as hazardous road conditions, power outages, and terminal shutdowns created delivery congestion and delays. Crude oil production was steady, and oil and gas rig counts gradually picked up. Contacts described a moderate recovery of consumer demand for petroleum products. However, refiners continued to experience low utilization resulting from weak global demand for refined products. Some refiners took production offline while others were forced to consolidate or shut down completely. Renewables remained strong, with considerable solar, wind, and battery storage projects in the works across the country. Within the utilities sector, contacts noted energy usage remained sensitive to COVID-19 conditions. More broadly, though, energy contacts continued to express optimism about COVID-19 vaccinations stimulating economic activity.

Agriculture
Agricultural conditions remained mixed. Abnormally dry conditions prevailed across much of the District. On a month-over-month basis, the February production forecast for Florida's orange crop was up while the grapefruit production forecast was unchanged; both forecasts were below last year's production. The USDA reported year-over-year prices paid to farmers in December were up for corn, cotton, rice, and soybeans but down for cattle, broilers, eggs, and milk. On a month-over-month basis, prices increased for corn, cotton, rice, soybeans, cattle, and broilers, but decreased for eggs and milk.

For more information about District economic conditions visit: www.frbatlanta.org/economy‐matters/regional‐economics