INDEX OF ECONOMIC ACTIVITY FOR HUMBOLDT COUNTY
Professor
Erick Eschker, Executive Director
Ceema Feizollahi, Managing Director
The
seasonally adjusted composite index value for July is a preliminary
109.2.
This is 0.2 percentage points lower than June's downwardly revised
109.4.
In July 2002, the composite index value was 108.3.
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| Median Home Price* |
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Help Wanted Advertising |
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| 30 Yr.
Mortgage Rate |
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Building Permits |
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| Average Hotel Occupancy Rate |
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Unemployment Claims |
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| Unemployment Rate** |
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Manufacturing Orders |
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| * Home price data are provided by the Humboldt Association of Realtors. MLS is not responsible for accuracy of information. The information published and disseminated by the Service is communicated verbatim, without change by the Service, as filed with the Service by the Participant. The Service does not verify such information provided and disclaims any responsibility for its accuracy. Each Participant agrees to hold the Service harmless against any liability arising from any inaccuracy or inadequacy of the information. | |||
| ** Preliminary EDD data (not seasonally adjusted). See the EDD Website for updates. | |||
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| Sector | Seasonally Adjusted Sectoral Index Value (1994=100) | Previous Month | Same Month 2002 | Same Month 2001 | Same Month 2000 | Same Month 1999 | Same Month 1998 |
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6.3 |
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102.7 |
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| Due to
technical difficulties the employment estimate will not run this
month. Please continue to look for this feature in future
issues. |
Despite the fact that four of the Index's six seasonally adjusted sectors registered positive growth relative to June's revised numbers, the overall composite index fell slightly to a preliminary 109.2. Lumber-based manufacturing decreased slightly this month from the previous month's unchanged figure, yet the same month of activity for the past five years continues to remain in the red. Retail sales lost the most ground this month from last month's record figure of 153.0, but continues to be a nationally popular topic. While electricity consumption, home sales, and hospitality gained the most ground as total county employment nudged upwards, home sales set numerous records this month as houses are selling faster and at higher prices than realtors expected.
The
seasonally adjusted leading indicators are mostly negative this month,
with three of the four indicators looking gloomy. New
claims for unemployment insurance in July rose this month by 16.4 percent
from June's number. On a
four-month moving average basis, which is an average of the indicator
over the past four months, the seasonally adjusted unemployment claims
is still trending negatively as it reached it's second highest point. Help-wanted
advertising for August decreased 13.5 percent from its July level, as
seasonal employment opportunities declined for a second month,
although the four-month moving average for help-wanted advertising is
leveling off and not yet decreasing. Last month's slight decrease for Manufacturing
came down another 2.4 percent this
month from last month's decrease of 2.2 percent, as it lost momentum to
keep the four-month moving average up for the third time. Building
permits was the only leading
indicator to move ahead this month, pushing forward at an increase of a
mere 1.2 percent. Moving the four-month moving average trend downward again since last December, although
building permits tend to be volatile, and it cannot be clearly
determined the direction this leading indicator will take. The
Humboldt County Employment Estimate
estimates the number of jobs to be added in the job market for the next
month. However, this feature is not available this month due to
technical difficulties.
Seasonally adjusted home sales rose this
month by more than 10 points from June's index level, which is a
increase of 7.4 percent. As July came to a close, the state and national pace and price set
even more records this month than of June.
June's drop in
median home price didn't last long as the price bounced back up to
another record for the Index to reach an all time high of $215,000, an
increase of 9.4 percent from $196,500. The current statewide median sale price
for existing homes rose once again in July, setting a new record of
$383,320 from June's downwardly revised number. This is an increase of
2.1 percent from last month and is 19.1 percent higher than in July 2002, when it
was $321,900.
July's national median price for existing homes increased 3.2 percent from July's level to stand at $182,100, and is still 11.9 percent higher than it was in June 2002 (www.realtor.org). Along with the statewide record for median priced homes, this is also a record for the national median price of existing home sales. The similar figure for new homes rose 2.4 percent this month after last month's short lived decreased figure of $187,000 to come in this month at $191,500. This is the second highest level recorded in the Index, only to be beat by May's level of $195,200. This measure is up 9.1 percent when compared to July 2002 (www.census.gov).
The most recent release of the Humboldt Association of Realtors' Housing Affordability Index, which represents the percentage of Humboldt County households that could afford to purchase a median priced home in June, rose three percentage points from the previous month's record low of 28 percent. The Housing Affordability Index now stands at 31 percent, which is a decline of 6 percentage points from in June 2002. The next graph shows the five-year tend:
Concurring with C.A.R. President Bradley, the National Association of Realtors reports many records as well. David Lereah, chief economist at N.A.R., says that "When mortgage interest rates first began to rise from record lows, it appears some buyers jumped into the market to take advantage of good affordability conditions before interest rates moved even higher." Although he adds "Given the underlying demand for housing from a growing number of households, it's hard to gauge how much 'fence jumping' may have accounted for the sales record."
According to the country's largest mortgage company, Freddie Mac, the nationwide average for a 30-year fixed rate mortgage as of August 28th, was 6.32 percent with an average 0.7 points. Last year at this time, the average rate was 6.22 percent with an average 0.7 points (www.freddiemac.com).
The Commerce Department reports that national July retail sales were up 1.4 percent from the previous month's level, and up 5.6 percent from July 2002. The increase was led by strong activity in furniture and home furnishings (up 8.7 percent), building material and garden equipment and supply dealers (up 8.2 percent), and retail trade sales (up 1.4 percent), when compared to June 2002. (www.census.gov).
The
Conference Board's Consumer Confidence Index, which dropped in July,
rebounded in August. The measure, which now stands at 81.3, is up 4.3
points from the previous month. “The welcome bounce back in
confidence this month was entirely due to consumers’ increasing optimism
about the future,” says Lynn Franco, Director of The Conference Board’s
Consumer Research Center. “Growing optimism about the economy over the
next six months echoes the latest gain in The Conference Board’s Leading
Economic Index. However, continued optimism will depend on positive
developments in the labor market.”(www.conference-board.org).
According
to the San Francisco Chronicle, summer clearances and an improving
economy help move retail sales in July above expectations
nationwide. Michael Niemira, vice president of Bank of
Tokyo-Mitsubishi, said "It was a good month, and it was a month that
actually may contain a telling tale for the future. Consumers were
motivated to shop in July because of the warmer weather, coupled with
tax-rate cuts and overall improvements in the economy." Niemira
also said that the retail industry would still have to conquer some
difficulties such as getting customers to come into their stores after
the summer sales end.
Average occupancy at the participating hotels, motels and inns increased 26.3 percent in July from the previous month's level as summer continued. The seasonally adjusted index number for the sector increased 7.3 percent to stand at 102.7.
According to the
Washington Post, Tom Mack, chairman of Tourmobile Inc. in Washington
D.C., says his company has experienced the longest decline in earnings
in 35 years. Mack comments on the tourism industry saying, "The
economy is a factor, but people are doing fewer things and they're
taking fewer trips. When people are laid off or looking for jobs, they
realize they can live a long time without sightseeing."
Gasoline Prices:
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(as of 8/12) |
(cents/gal.) |
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| Eureka |
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| Northern CA |
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| California |
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| Current average price per gallon
of self-serve regular un- leaded gasoline as reported by the American Automobile Association's monthly gas survey (www.csaa.com). |
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Estimated July
consumption of electricity rose a seasonally adjusted 8.4 percent from
the previous month.
According to an article in the Toronto Star newspaper, the recent blackout in the Northeast had many government agencies and conservationists concerned about saving electricity and reducing consumer prices, although mistakenly associating high use with waste. Many agencies want to implement higher rates to discourage consumer's use, as well as an inverted rate structure where those who used the most would pay a higher percentage price. Andy Frame, a consultant in the electrical power industry, comments "High use by industrial, commercial and residential customers does not mean electricity is wasted. A punitive rate structure will bring hardships to some residential customers and have a severe impact on industrial and commercial users that depend on electricity, the engine of our economy. It is easy to understand how growth in industry and commerce will lead to more electricity use. For example, a new factory bringing new jobs with new high-tech machinery will need more electricity. When commercial and retail stores expand, they require more space and, therefore, more electricity."
In the preliminary report for July, the EDD reported that 56,500 people were employed in Humboldt County. This is a 0.1 percent decrease over June's revised figure, indicating a net loss of 200 jobs. However, when seasonally adjusted the index number rose 0.8 percent to stand at 103.5.
Preliminary EDD data indicate the following changes in Humboldt county employment:
July's unemployment
rate for Humboldt County increased one-tenth of a point from June's
unchanged figure of 6.2 percent to a preliminary 6.3 percent. Meanwhile,
the national rate (not seasonally adjusted) dropped two-tenths of a
point to a preliminary 6.3 percent, and the state rate moved upward
one-tenth of a percentage point to 6.9 percent from June's upwardly
revised figure.
The preliminary July
Index value for this sector fell slightly by 2.2 percent from June's
unchanged number to 83.5. Although this sector fell slightly from
last month's largest recorded month-to-month increase, the four-month
moving average only fell a small amount, suggesting that lumber
manufacturing is on the turn around.
National manufacturing output in August, as measured by the Institute of Supply Management, grew for the second consecutive month. The current ISM Index level of 54.7 is an increase of 2.9 percentage points when compared to 51.8 in July (a number higher than 50 indicates growth). Norbert J. Ore, C.P.M., chair of the Institute for Supply Management says "The manufacturing sector showed improvement for the second month as the PMI is at its highest level since December of last year. Though two months of growth do not establish a trend, there is strength in the various segments of this report that we have not seen for some time. New Orders and Production have both been above 50 percent for four consecutive months; the continuation of a second half recovery appears on track." (www.ism.ws.cfm).
Employment-Based Economic Indicators:
A count of help-wanted ads indicates the number of new job openings.
Claims for unemployment insurance indicate the number of newly unemployed people in Humboldt County. Thus the number of new unemployment claims is a negative indicator of economic activity.
Manufacturing Economic Indicator:
Manufacturing orders are a leading indicator of activity and employment in the County.
Home Sales Economic Indicator:
Building
permits:
The
gross domestic product (GDP), which measures the total value of the
nation's output of goods and services, grew at a seasonally adjusted annual rate
of 3.1 percent during the second quarter. This is a revision from
the previous estimate of 2.4 percent, 0.7 percent higher than economists
had predicted. The revised pace was led by strong
increases in activity for consumer and business spending. Consumer
spending was revised to 3.8 percent growth, up from a preliminary 3.3
percent, while business investment on software and equipment increased
at it's fastest rate in three years to a revised number of 8.3 percent
growth rate. David Littmann, chief economist at
Comerica Bank comments on the revised figures, "It's really excellent.
It's a great platform for the building momentum of the next four
quarters. The rise is likely to continue in the coming
quarters as a result of massive tax cuts and low interest rates."
Although
conditions for economic growth have improved, many economists are still
skeptical about a robust economy in the coming quarters due to the fact
that business are seeing improvements but still are not hiring.
This may contribute to a lack of employment growth, and leaving many
people wondering why they still don't have a job. Independent
economist Joel Naroff says "Businesses are clearly getting their bottom
lines back in shape and that is having a very positive impact on the
economy, as can be seen by the improving investment situation. Now, if
firms would only translate that into some confidence about the future
and start hiring, we would really be off to the races." While
Chris Rupkey, senior financial economist at Bank of Tokyo-Mitsubishi
says "All the buzz on the economy is that growth is red hot, but we just
don't see it in the job market yet. It's not a full-fledged
recovery until you put people back to work. We're probably within a
month or two before seeing substantial job creation."
| Explanatory Note: For those of you who are new or less familiar with the Index, we have been tracking economic activity since January 1994. The composite indices plotted as blue and green lines in the diagram at the top of this page are weighted averages of each of the six sectors described in the table above. Each sectoral index, and the composite index, started at a value of 100 in 1994. Thus if the retail sectoral index value is currently 150, that means that (inflation-adjusted) retail sales among the firms that report data to us are 50 percent higher than in January 1994. We also seasonally adjust each sector, and the composite index, to correct for "normal" seasonal variation in the data, such as wet season vs. dry season, and so trends in the seasonally-adjusted composite index (the blue line in the diagram above) provide a better indication of underlying growth and fundamental change in the economy. This month's report reflects data gathered from the previous month, and so the "August 2003" report reflects data from July 2003. As is common, our initial report is preliminary, and as we receive final data we revise our reports accordingly. |
Cited References
The Eureka Times-Standard web site
The San Francisco Chronicle web site
California Association of Realtors web site
National Association of Realtors web site
American Automobile Association web site
Institute of Supply Management web page
U.S. Bureau of the Census's home page
U.S. Bureau of Economic Analysis' web page
U.S. Bureau of the Census's Economic Briefing Room web page
U.S. Bureau of Labor Statistic's web page
The
Federal Reserve Bank's Beige Book web page
The Milwaukee Journal Sentinel
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