Showing posts with label economic growth. Show all posts
Showing posts with label economic growth. Show all posts

Friday, February 7, 2020

Georgia 2019 job growth would have been a disaster without Atlanta

Source: U.S. Bureau of Labor Statistics

The Bureau of Labor Statistics has released detailed numbers on job growth in Georgia over the past calendar year, not only for statewide Georgia, but for all the metro areas in the state.

By subtracting out the Atlanta area’s job information from the statewide information, it is possible measure how job growth in the non-Atlanta portion of the state, which I have termed RGA (Rest of Georgia), compares to the Atlanta area in calendar year 2019, and the results are not pretty.

In 2019, Georgia added 69,400 jobs for a growth rate of 1.5%, before seasonal adjustments. The calendar year growth rate was the lowest for the state since 2011, when the state posted a 1.1% rate.

The Atlanta metro area, which consist of 29 of the state’s 159 counties, recorded job growth of 66,700 over the calendar year for a growth rate of 2.4%. In contrast to the state, this year’s growth rate exceeded the rates recorded for the Atlanta area in 2017 and 2018.

By subtracting Atlanta’s numbers from the statewide totals, job growth in RGA (Rest of Georgia) was a mere 2,700 or 0.2% for calendar year 2019.

As a comparison, for the nation, job growth was 1.4% in calendar 2019.

The lack of job growth at a time when the nation is doing well economically is particularly worrisome because it represents a trend whereas the Atlanta metro area is increasingly the state’s primary job growth engine.

In 2019, RGA accounted for 38% of the total nonfarm jobs residing in Georgia. Ten years ago, RGA was home to 41% of the state’s nonfarm jobs. Since 2009, the Atlanta area has increased its job count by 623,300, as the RGA added 190,300.

Jobs by Industry

Looking at the jobs data by industry for 2019, jobs in the professional and business services sector grew by 13,000 in the Atlanta metro area while falling by 16,200 in RGA. The Atlanta area added 3,700 jobs in the information sector, while RGA lost 3,200.

Only in the financial activities sector did the number of jobs added in RGA exceed the number added in the Atlanta area. In that one industry RGA added 600 jobs, while the Atlanta area added 400.

Another way of looking at jobs is to compare the industry concentration by employment for the state, the Atlanta metro area, and the Rest of Georgia.

For example, about 15% of statewide employment is in government, which is the same as nationwide. Even though Atlanta is the state capital, only 12% of jobs in the metro area are in government, while in the rest of the state, this increases to 20% of total nonfarm jobs.

More specifically, about 4% of jobs statewide are in state government, with state government jobs in Atlanta accounting for 3% of total employment. For RGA, the percentage doubles with state government jobs accounting for 6% of total employment outside the Atlanta metro area.

Clearly, employment in government, federal, state, and local government combined, is of much more importance to the RGA than it is to the Atlanta metro area. Job losses in this sector would be more deeply felt in RGA than in the Atlanta metro area.

One sector where RGA has a significantly larger proportion of jobs compared to the Atlanta area is in manufacturing.

In the Atlanta metro area, manufacturing represents 6% of all employment, while in RGA, it accounts for 13% of employment.

Over the past 10 years, the state has added 63,100 jobs in manufacturing with the additions about evenly split between the Atlanta area and RGA.

Urban areas outside Atlanta

While the Atlanta metro area is the state’s largest urban area, Georgia is home to 13 other metropolitan areas ranging in size from Augusta with 246,000 jobs to Hinesville with 21,000.

Two of the 13 areas posted job growth rates above 2% in 2019. Gainesville added 3,400 jobs resulting in a 3.6% growth rate, and Rome added 1,100 jobs for a 2.6% job growth rate.

Although Gainesville is classified as its own metropolitan statistical area, the area sits adjacent to the Atlanta metro area and is classified by the Census Bureau as a part of the Atlanta-Athens-Clarke-Sandy Springs Combined Statistical Area (CSA). Some portion of Gainesville area residents commute to the Atlanta area daily for work.

Columbus was the only area in the state to lose jobs in 2019, with a net loss of 1,500 jobs or -1.2%. Albany recorded zero job growth over the year.

Excluding the Atlanta area, the other 13 metro areas reported a net addition of 13,100 jobs in 2019 for a growth rate of 1.1%. Unfortunately, since some of the state’s metro areas include counties outside Georgia, it is difficult to determine how changes in employment in those non-Georgia counties affected the overall employment of those metro areas that overlap two states, such as Augusta and Columbus.

Conclusion

Focusing only on statewide job growth can lead to misleading conclusions about the economic health of the state.

While the state as a whole is seeing job growth above the national average, the longer-term trend has been for that growth to concentrate in the Atlanta metro area.

Meanwhile, the rest of the state is seeing jobs concentrate in manufacturing and government, neither of which have been particularly strong growth engines.

Georgia is one of the largest states geographically east of the Mississippi River, so commuting to jobs in the Atlanta metro area by individuals living in other parts of the state is not a viable option for most of the state.

More likely, young people are being drawn out of other parts of the state into the Atlanta area in search of better employment opportunities as rural areas hollow out.

This trend has been evident for some time, so reversing it, even if desirable, will be difficult. Once a growth pattern like this develops, it feeds on itself, as more jobs create more opportunities, drawing more people from low growth areas to Atlanta in a self-reinforcing process.

Friday, December 1, 2017

Federal Reserve finds modest economic improvement in Georgia and other Southeast states


On November 29, 2017, the Federal Reserve published its latest edition of the Beige Book. The report is published eight times per year and summarizes anecdotal information on current economic conditions in the Federal Reserve’s 12 Districts gathered through reports from Bank and Branch directors and interviews with key business contacts, economists, market experts, and other sources.

Below are excerpts from the Sixth Federal Reserve District’s report, which includes Alabama, Florida, and Georgia, and portions of Louisiana, Mississippi, and Tennessee, followed by a summary for the Fifth Federal Reserve District. For purposes of this story, I have italicized direct quotes from the report.

In summary, the Sixth District reported that economic conditions modestly improved since the previous report. Tightness in the labor market persisted and wages grew modestly. Non-labor costs remained little changed. Retail sales increased across most of the District. Tourism activity was mostly positive. Home sales were flat to down, and home prices improved slightly. Manufacturers indicated that activity modestly increased. Credit was available.

For the nation as a whole, the Bank reports that economic activity continued to increase at a modest to moderate pace in October and mid-November, according to anecdotal reports from contacts across the 12 Federal Reserve Districts. There was a slight improvement in the outlook among contacts in reporting Districts.

Conditions in the Southeast (Sixth District) 

Most businesses continue to expect slow and steady growth for the remainder of the year. District firms continued to describe a tight labor market as many faced difficulty [sic] finding workers. Wage growth remained modest. On balance, nonlabor input costs were stable. Retail sales, including auto, increased across most of the District. Reports from the hospitality sector were mostly positive. Residential real estate contacts noted that home sales were flat to down, although home prices improved modestly from the previous report. Commercial real estate contacts continued to report that the pace of construction had picked up from a year ago. Manufacturers indicated that activity grew at a modest pace since the previous report. Bankers reported that ample credit was available.

In a survey of business contacts, most respondents indicated that they planned to increase employment over the next 12 months as a result of expected sales growth, a need for skills not possessed by current staff, and to mitigate concerns about current staff being overworked. The top factors restraining hiring plans were challenges finding workers with required skills and a desire to keep operating costs low. Amidst these challenges, in an effort to attract workers, most respondents reported that they raised wages, signing bonuses, or total compensation offered.

Georgia and Louisiana contacts reported continued growth in business, leisure, and group travel.

Banking and Finance
Credit remained readily available for most qualified borrowers, although some contacts faced challenges obtaining financing for long-term residential developments. Credit tightened somewhat for energy-related industries. Liquidity was plentiful, but some banking contacts reported pressure to increase deposit rates. Some bankers noted increased competition for loans.

Energy
Overall, energy contacts reported a steady pace of activity. They noted that the new natural gas pipeline capacity that came online was facilitating the demand for export of liquid natural gas. Both crude oil and gasoline inventories continued to decrease; however, levels were higher than the average range. Contacts reported that industrial and commercial utility usage remained flat. Broadly, utility contacts indicated they are preparing for a colder winter than the previous year.

Conditions in other southeastern states (Fifth District) 

Not all southeastern states are located in the Federal Reserve’s Sixth District. The Fifth District includes the states of Maryland, Virginia, North Carolina, and South Carolina; 49 counties constituting most of West Virginia; and the District of Columbia.

Summary of Economic Activity in the Fifth District

The Fifth District economy grew at a moderate rate since our last Beige Book report. Manufacturers noted a moderate rise in new orders and shipments, and they generally expected strong growth over the next six months. District ports continued to see high volumes, particularly for imports. Trucking firms reported robust growth, in part due to relief shipments being sent to hurricane-affected areas. Retailers were optimistic ahead of the holiday shopping season. Tourism remained robust as mild weather helped boost activity. Residential home sales rose modestly and the inventory of houses for sale remained low. Commercial real estate leasing increased moderately. Residential loan demand was little changed in recent weeks, while commercial, small business, and agriculture lending picked up. Nonfinancial services firms reported moderate revenue growth. The demand for labor increased moderately in recent weeks while wage increases remained modest. Prices continued to grow at a modest pace.

Banking and Finance
On the whole, loan demand increased modestly since our previous report. Residential mortgage demand was generally characterized as stable. A lender in Virginia reported an increase in mortgage loans, but attributed it to more advertising and concessions on closing costs. Meanwhile, a banker in North Carolina said the low inventory of homes for sale was restraining mortgage loan growth. Commercial lending activity rose moderately in recent weeks. A banker in Baltimore saw an increase in commercial real estate lending for multi-family and senior housing facilities. Small business and agriculture lending rose modestly, according to contacts in Virginia and North Carolina. On balance, interest rates and net interest margins increased slightly in recent weeks. Credit quality remained strong while credit standards were generally unchanged.


The Beige Book is a summary of interviews conducted with business contacts before each meeting of the Fed's monetary policymaking Federal Open Market Committee (FOMC). The next FOMC meeting will be held December 12 and 13.