INDEX OF ECONOMIC ACTIVITY FOR HUMBOLDT COUNTY
Professor
Erick Eschker, Director
Jessica Digiambattista, Assistant Editor
Garrett Perks, Assistant Analyst
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| Index |
Seasonally Adjusted 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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107.9 |
-0.6 |
2.4 |
2.8 |
-2.1 |
-4.1 |
-1.8 |
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6.9 |
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94.6 |
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| Humboldt County | Seasonally Adjusted |
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| Median Home Price* |
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Help Wanted Advertising |
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| 30 Yr.
Mortgage Rate as of 9/30 |
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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. | |||
The Index of
Economic Activity for Humboldt County measures changes in the local
economy using data from local businesses and organizations. The data
are compiled into a seasonally adjusted index that shows changes
relative to the base month (January 1994). The composite
index is a weighted combination of six individual sectors of the local
economy.
Economic activity in Humboldt County
stagnated this month.
The composite index value dropped 0.6
percent to 107.9. Booming home sales were a bright spot in this month's
economic activity. Fueled by low interest rates, the home sales index
jumped 21.7
percent to 142.71. With the back to school rush apparently over, retail
sales dropped 7.3 percent to an index value
of 139.3. Beautiful fall weather was not enough to spark
local tourism. The
hospitality index was also down 5.4 percent to 94.6. Electricity
consumption fell by 6.6 percent to an index
value of 100.4. The employment index rose for the third consecutive
month. This month's 1.0 percent increase raised the index to
a level of 103.8. The unemployment rate also fell for the third
consecutive month, and remains below the state and national rates.
Humboldt County's manufacturing sector rebounded with a 4.0
percent increase to stand at 85.2.
The
seasonally adjusted
home sales index skyrocketed to 142.71 in September. This is a 21.7
percent increase from August and is the fourth highest index level
ever. Still being fueled by low
interest rates, home sales continue to be the strongest sector of the
local economy.
The
median home price in Humboldt County jumped to $221,000 in September.
This is a 4 percent increase over August's price of $212,450. Statewide
home prices continued to rise, with the median price of existing homes
increasing 17.9 percent to $380,040. "We're continuing to
experience
the impact of the recent rise in mortgage interest rates on home sales
in California," said C.A.R. President Toby Bradley. "Although interest
rates are still near their historic lows, the psychological impact of
rising rates has created a heightened sense of urgency in the housing
market." (www.car.org) Nationally, home sales were record
breaking
for the third consecutive month. Existing home sales are up 20.8
percent from September 2002. The national median existing home price
rose 9.1 percent to $172,300. (www.realtor.org)
The Humboldt Association of
Realtors' Housing
Affordability Index represents the percentage of Humboldt County
households that could afford to purchase a median priced home. In the
most recent release the affodability index remained unchanged at 28
percent.
According
to the country's largest mortgage company, Freddie Mac, the nationwide
average for a 30-year fixed rate mortgage as of October 30th, was 5.94
percent with an average 0.6 points. This is a slight increase over last
month's rate of 5.77 percent. With
interest rates expected to stay low, home
sales should remain strong. According to Frank
Nothaft, chief economist at Freddie Mac, "Worry
about disinflation should now be tempered somewhat, but fear of
inflation is still unwarranted. And that should keep mortgage rates
from rising too quickly or steeply anytime in the near future."
(www.freddiemac.com)
The Commerce Department reports that national September retail sales were down 0.2 percent from the previous month's level, yet up 7.5 percent from September 2002. While overall retail sales stagnated, there were sizable gains in building material and garden equipment which is up 11.4 percent from September 2002. The Commerce Department revised the retail sales figures for the July to August 2003 period from a 0.6 percent increase to 1.2 percent increase.
The
Conference Board's Consumer Confidence Index, which had dropped in
August, rebounded in September. The measure, which now stands at 81.1,
is up 4.1
points from the previous month. "A more favorable job market was a
major factor in the turnaround. And, the belief that this trend will
continue has boosted expectations," says Lynn Franco, Director of The
Conference Board's Consumer Research Center. "With the holiday season
around the corner, this improvement in consumers' spirits is a good
omen for upcoming retail sales."
(www.conference-board.org)
The
Federal Reserve Bank's Beige Book
notes an improvement in sales in the western region of the country.
Strong back-to-school sales lowered department store inventories and
prompted new orders from manufacturers. Despite attractive financing
offers, automobile sales dropped slightly. The service sectors showed
strong improvement. An increase in demand for efficiency enhancing
technologies lead the IT and media industry. Regional travel and
tourism also picked up.
(www.federalreserve.gov).
Humboldt
County's hospitality sector declined in September which is
traditionally a strong month for tourism. Average occupancy at
local hotels, motels and inns, dropped to 65.5 percent. The
seasonally adjusted index number for the sector decreased 5.4 percent
to stand at 94.6.
|
(as of 9/16) |
(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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In
September seasonally adjusted consumption of electricity fell 6.6
percent to 100.4.
Third
quarter revised electricity consumption index:
The index value of the employment sector
is based on seasonally adjusted total employment as reported by the
Employment Development Department.
In the preliminary report for September, the EDD reported that 57,700 people were employed in Humboldt County. This is a 1.8 percent increase over August's revised figure, indicating a net gain of 1,000 jobs. This jump in employment pushed the seasonally adjusted employment index up 1.0 percent to 103.8.
Sectoral changes in Humboldt County employment:
Humboldt County's unemployment rate
hits it's lowest level in the past twelve months and remains well below
the state and national rates. September's unemployment
rate for Humboldt County (not seasonally adjusted) decreased
five-tenths of a point from August's figure of 5.6 percent to a
preliminary 5.1 percent.
Meanwhile,
the state and national rates (not seasonally adjusted) also dropped to
6.1 percent and 5.8 percent respectively.
The
preliminary August index value for this sector is up 4.0
percent from the
previous month to stand at 85.2. This increase may be signalling a
recovery in this sector.
National
manufacturing output in October, as measured by the Institute of
Supply
Management, grew for the fourth consecutive month. The current ISM
Index
level of 57.0 percent is an increase of 3.3 percentage points when
compared to September's PMI of 53.7 (a number
higher than 50 indicates growth). Norbert
J. Ore, C.P.M.,
chair of the Institute for Supply Management says "The manufacturing
sector enjoyed its fourth consecutive month of growth as new orders
continue to lead the recovery. Production made a sharp swing upward
during October, signifying growth for the sixth consecutive month."
(www.ism.ws.cfm)
Employment-Based Economic Indicators:
The leading indicators for Humboldt
County's economy are giving positive signals for future economic
growth. Seasonally adjusted help wanted advertising increased by 5.9
percent in September signaling a continued increase in producer
confidence. Despite the gains in the labor market this month, initial
unemployment claims rose 22.3 percent. However, there are large swings
in claims from month to month. When smoothed with a
four month moving average, initial unemployment claims are
trending downward. Building permits jumped 39.7
percent indicating a
continuation of the upward trend in the housing market. The
manufacturing industry leading indicator remained unchanged.
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:
Single and multiple unit residential and commercial building
permits from municipalities and unincorporated county areas are
a leading indicator of future home sales.
Third
quarter U.S. GDP growth soared to its highest level since 1984. 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 7.2 percent during the third quarter. The GDP growth was led by
strong
increases in personal consumption expenditures, residential fixed
investment, equipment and software, and exports. Personal consumption
expenditures
experienced real (seasonally adjusted annualized) growth of 6.6 percent
in the third quarter. This was lead by tremendous growth in durable
goods consumption. Equipment and software grew at a real
(seasonally adjusted annualized) rate of 15.4 percent.
Residential fixed investment experienced real
(seasonally adjusted annualized) growth of 20.4 percent. Exports grew
at a real (seasonally adjusted annualized) rate of 9.3 percent.
(bea.doc.gov)
GDP
isn't the only economic indicator that is soaring. The federal
government budget deficit has also hit a record high. The Department of
Treasury announced on October 20th, there was a $374.22 billion budget
deficit for the fiscal year 2003 which ended on September 30th.
(www.ustreas.gov) This is larger than the previous record
high of $290 billion posted by the first Bush Administration in 1992.
(www.cnn.com) In a statement released by the White House Office of
Management and Budget, Director Joushua Bolten said, "Although the
deficit is still projected to increase in 2004, and will likely exceed
$500 billion even with a strengthening economy, we can put the deficit
on a responsible downward path if we continue pro-growth economic
policies and exercise responsible spending restraint."
(www.whitehouse.gov)
Around
the world nations are seeking bilateral trade agreements and special
free trade zones in the wake of the failed WTO conference in Cancun. An
earlier proposal that is getting revived attention is the Free Trade of
the Americas Accord. The proposed agreement would create a free trade
zone from the tip of South America to the top of Alaska. Many Latin
Americans however are reluctant to enter into the hemisphere wide trade
argeement. Most noticably, Brazil insists on an end to
agricultural subsidies in the United States. This is the same point of
contention that lead to the collapse of the WTO trade talks. Even the
European Union, who also came under fire at the WTO conference, is fed
up with what it considers unfair American subsidies. EU Trade
Commissioner Pascal Lamy threatened $4 billion in sanctions against the
U.S. for violating WTO trade rules. The Europeans argue that U.S. tax
rules give American steel exporters an unfair subsidy. The U.S. House
of Representatives recently approved a bill to repeal the export-tax
break. The repealed law will however be replaced with a corporate tax
cut for top U.S. manufacturing firms.
(online.wsj.com)
In
local news, the Port of Oakland is seeking a partnership with Humboldt
Bay. Jerry Bridges, Maritime Director for the Port of Oakland expects
shipping on the west coast to triple within 15 to 20 years. Unable to
handle such huge increases in volume, the Port of Oakland hopes to use
the deep water port in Humboldt Bay to ship cargo to and from the west
coast. There is one logistical difficulty with the proposal, namely how
to get cargo between Oakland and Humboldt Bay. Local harbor
commissioners note that restoring rail service would solve the problem.
However, this would be costly and Port of Oakland officials are
reluctant to support the endeavor. (Times Standard)
| 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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