TENNESSEE ECONOMIC OVERVIEW
(June Index as of November 7, 1995)
Tennessee's economic indicators displayed signs of sustained growth and
increased vigor in June following somewhat disappointing news in the
previous two months. Signals from the Tennessee labor market were less
encouraging, but labor markets continue to evidence underlying strength.
The Tennessee composite index of leading indicators rose at a
seasonally-adjusted annual rate (SAAR) of 3.1 percent in June, a
welcomed upturn after experiencing losses in April and May. This
moderate advance in the Tennessee leading index resulted from
improvements in three of its five components. Initial claims for
Tennessee unemployment insurance decreased considerably from 42,900 to
38,400 on the heels of a vigorous surge in May. Other components
exhibiting positive movement were Tennessee inflation-adjusted taxable
sales and the U.S. composite index of leading indicators. An increase in
Tennessee inflation-adjusted taxable sales mostly reversed declines seen
in the previous two months, while the U.S. leading index advanced 2.4
percent (SAAR). This improvement in the U.S. leading index follows a
string of four consecutive setbacks, and thus suggests that the national
economy may be settling into lower rates of growth rather than
exhibiting signs of continued weakening. A resurgence in U.S. personal
income and a sharp upturn in consumer sentiment give further support to
this view. On the downside, both total Tennessee construction potentials
and Tennessee taxable mortgages endured setbacks. Total Tennessee
construction potentials decreased from 572.2 to 516.2, and Tennessee
inflation-adjusted taxable mortgages bore a downward adjustment
following a tremendous May surge, its largest advance of the year.
The Tennessee composite index of coincident indicators, which provides
a measure of current economic conditions in the state, saw even greater
improvement in June, launching upward at a SAAR of 9.0 percent. This
increase in the Tennessee coincident index was very broadly based, as
all of its three components enjoyed positive movement. Tennessee
commercial and industrial electrical consumption moved to one of its
highest levels of the year, while the Memphis help-wanted index reversed
a May setback, increasing from 167 to 173. The only remaining component
of the Tennessee coincident index, the U.S. composite index of
coincident indicators, enjoyed a gain of 4.2 percent (SAAR).
--Monthly Percent Change in Tennessee Leading Index
The Tennessee unemployment rate experienced a jump from 4.6 percent to
5.0 percent in June, and there were some other negative signs from the
Tennessee labor market as well. Overall, however, employment levels
remain high and should be sustained by continued, albeit modest,
expansion of the state economy. Tennessee nonagricultural employment saw
a slight decline of 0.7 percent (SAAR) in June, while Tennessee
manufacturing employment fell 6.3 percent (SAAR). In addition, Tennessee
manufacturing workers saw their average weekly hours decrease by 8.9
percent (SAAR). There was also some very positive news for Tennessee
workers in June. As mentioned above, a considerable downturn in initial
claims for Tennessee unemployment insurance helped to bolster the
Tennessee leading index for the month. Moreover, continued weeks claimed
for Tennessee unemployment insurance fell substantially from 180,700 to
161,600. The Tennessee unemployment rate remained well below the
national unemployment rate in June, which was 5.6 percent.
Advances in both of Tennessee's economic indexes suggest that the state
economy will see continued prosperity, as well as moderate growth, in
the near term. There were some negative signals from the Tennessee labor
market in June, but a strong state economy, as evidenced by the positive
movement in state economic indicators, should sustain employment levels
throughout the summer and into the fall. A positive turnaround in
national economic performance heralds further positive news for the
state.
--Quarterly Coincident and Leading Indexes
--Total Nonagricultural Employment
--Percent Change in U.S. Consumer Price Index
--MSA Nonagricultural Employment Growth
--Real Personal Income
--Civilian Unemployment Rates
TENNESSEE PERSONAL INCOME
92/IV 93/I 93/II 93/III 93/IV
----------------------------------------------------------------------
TN Personal Income (MIL $) (1)..... 91956 91406 93316 94602 96414
% Chg Prev Qtr SAAR.............. 14.59 -2.37 8.62 5.63 7.88
% Chg Same Qtr Last Yr........... 10.19 6.49 6.38 6.44 4.85
TN Personal Income (MIL 87 $) (1).. 73624 72718 73826 74607 75619
% Chg Prev Qtr SAAR.............. 10.25 -4.83 6.24 4.30 5.53
% Chg Same Qtr Last Yr........... 6.84 3.44 3.69 3.84 2.71
----------------------------------------------------------------------
94/I 94/II 94/III 94/IV 95/I
----------------------------------------------------------------------
TN Personal Income (MIL $) (1)..... 97920 99496 100963 103840 105802
% Chg Prev Qtr SAAR.............. 6.40 6.60 6.03 11.89 7.77
% Chg Same Qtr Last Yr........... 7.13 6.62 6.72 7.70 8.05
TN Personal Income (MIL 87 $) (1).. 76560 77189 77724 79571 80642
% Chg Prev Qtr SAAR.............. 5.07 3.33 2.80 9.85 5.49
% Chg Same Qtr Last Yr........... 5.28 4.55 4.18 5.23 5.33
----------------------------------------------------------------------
1992 1993 1994
--------------------------------------------------------
TN Personal Income (MIL $) (1)..... 88598 93935 100555
% Chg Prev Qtr SAAR.............. 8.47 6.02 7.05
% Chg Same Qtr Last Yr........... 8.47 6.02 7.05
TN Personal Income (MIL 87 $) (1).. 71744 74192 77761
% Chg Prev Qtr SAAR.............. 5.16 3.41 4.81
% Chg Same Qtr Last Yr........... 5.16 3.41 4.81
--------------------------------------------------------
ECONOMIC OVERVIEW,
SELECTED TENNESSEE MSAs
(June Index as of November 7, 1995)
CHATTANOOGA
The Chattanooga economic index fell at a seasonally adjusted annual rate
(SAAR) of 8.3 percent in June, its third consecutive monthly decline and
the fourth of the last five months. This downward movement in the
Chattanooga index resulted from setbacks in four of its seven
components, the most salient being a surge in initial claims for
Chattanooga unemployment insurance from 1,570 to 1,750. The only other
labor market component of the Chattanooga economic index, Chattanooga
nonagricultural employment, also suffered a considerable setback.
Chattanooga nonagricultural employment fell at a SAAR of 22.9 percent
for its fourth consecutive monthly decline. Other components impacting
negatively on the Chattanooga economic index were Chattanooga airport
passengers, which experienced a moderate decline over the last month's
level, and Chattanooga bankruptcies, which moved from 458 to 484,
failing to retreat after a substantial May increase. On the bright side,
three components of the Chattanooga economic index registered positive
movement in May, including (1) Chattanooga inflation-adjusted taxable
sales, which advanced 10.5 percent (SAAR); (2) Chattanooga commercial
and industrial electrical consumption, which enjoyed a solid increase;
and (3) the Tennessee composite index of leading indicators, which
turned upward 3.1 percent (SAAR).
The Chattanooga unemployment rate climbed from 4.3 percent to 4.7
percent in June, reinforcing the negative movement of the labor force
components of the Chattanooga economic index. Chattanooga manufacturing
employment also fell in June, moving downward 7.8 percent (SAAR).
Although news from the Chattanooga labor market was somewhat
discouraging, it is too early to suggest a sustained weakening, as the
Chattanooga economy has maintained its overall strength. Such strength
should support Chattanooga workers over the next several months. The
Chattanooga unemployment rate compares favorably with the state
unemployment rate of 5.0 percent.
Although the Chattanooga economy has endured some setbacks in the last
couple of months, it is expected to settle back into a pattern of modest
growth in the near term. Chattanooga's growth prospects are further
enhanced by an upswing in the state economy in June.
--Chattanooga Quarterly Economic Index
KNOXVILLE
The Knoxville economic index fell at a seasonally adjusted annual rate
(SAAR) of 2.0 percent in June, failing to bounce back after significant
declines in the previous two months. This downturn in the Knoxville
index resulted entirely from setbacks in its labor market components,
most notably, a surge in initial claims for Knoxville unemployment
insurance from 3,370 to 3,790. The increase in initial claims for
Knoxville unemployment insurance follows a considerable retreat in May.
Other components impacting negatively on the Knoxville economic index
were Knoxville nonagricultural employment, which declined 5.3 percent
(SAAR), and the Knoxville help-wanted index, which was down from 451 to
437. Both Knoxville nonagricultural employment and the Knoxville
help-wanted index were at their low points for the year. Although the
performance of the labor market components was somewhat disappointing in
June, three components of the Knoxville economic index saw improvement.
Knoxville bankruptcies moved from 490 to 449 in partial retreat
following a May surge. Furthermore, Knoxville inflation-adjusted taxable
sales and the Tennessee composite index of leading indicators both
enjoyed healthy advances. Knoxville inflation-adjusted taxable sales
increased 17.3 percent (SAAR) to reach their highest level of the past
year, while the Tennessee leading index turned upward 3.1 percent
(SAAR).
The Knoxville unemployment rate increased from 3.8 percent to 4.0
percent to reinforce the lackluster performance of Knoxville economic
indexes labor components. Fortunately, the solid performance of
non-labor components worked to hold back the June descent of the
Knoxville economic index. Perhaps more encouraging, however, is that
strong performance of non-labor components suggest that the Knoxville
economy has the potential to tighten the labor market in coming months.
If the Knoxville economy continues to maintain steam over the near term,
workers should expect to see more promising news from the Knoxville
labor market. Other encouraging news can be seen in Knoxville
manufacturing employment, which advanced 7.2 percent (SAAR) in June to
reinforce a substantial May increase.
--Knoxville Quarterly Economic Index
MEMPHIS
The Memphis economic index retreated for the fifth consecutive month in
June as it fell at a seasonally adjusted annual rate (SAAR) of 6.7
percent. Most components of the index, however, saw improvement. The
decline in the Memphis economic index was driven by a vigorous surge in
initial claims for Memphis unemployment insurance and a significant
decrease in Memphis nonagricultural employment. Initial claims for
Memphis unemployment insurance were up from 4,080 to 4,590 to reinforce
a May increase, while Memphis nonagricultural employment suffered a 10.5
percent (SAAR) decline. Components impacting positively on the Memphis
economic index were (1) Memphis new incorporations, which increased from
136 to 144; (2) the Memphis help-wanted index, which advanced from 167
to 173 to partially reverse a May upturn; and (3) the Tennessee
composite index of leading indicators, which turned upward 3.1 percent
(SAAR) following two consecutive monthly declines.
The Memphis unemployment rate jumped from 4.4 percent to 4.7 percent in
June, while other labor market signals were mostly negative. As
mentioned above, setbacks in Memphis nonagricultural employment and
initial claims for Memphis unemployment insurance drove the Memphis
economic index down in June, while an increase in the Memphis
help-wanted index helped to temper the fall. Memphis manufacturing
employment suffered a sharp setback, declining 14.6 percent (SAAR).
A fifth consecutive decrease in the Memphis economic index and weaker
signs from the Memphis labor market suggest that the Memphis economy has
struggled through the first half of the year and may see some further
weakening in coming months; however, more likely is that the Memphis
economy will begin to stabilize and enjoy modest economic growth, as
there were some very positive signals from the state economy in June.
--Memphis Quarterly Economic Index
NASHVILLE
The Nashville economic index rose at a seasonally adjusted annual rate
(SAAR) of 10.3 percent in June, enjoying a vigorous upturn after two
months of decline in the index. This advance in the Nashville economic
index was engineered by improvements in five of its six components.
Nashville nonagricultural employment was up 2.7 percent (SAAR), a gain
that was reinforced by a substantial surge in the Nashville help-wanted
index from 238 to 293. The increase in the Nashville help-wanted index
follows a steep May decline. Other components impacting positively on
the Nashville economic index were (1) Nashville inflation-adjusted
taxable sales, which saw a hearty upswing after setbacks in the previous
two months; (2) Nashville construction potentials, which increased 18.1
percent (SAAR); and (3) the Tennessee composite index of leading
indicators, which advanced 3.1 percent (SAAR), proffering continued
growth for the state economy. On the downside, initial claims for
Nashville unemployment insurance rose from 4,610 to 4,980 for its sixth
consecutive monthly increase.
The Nashville unemployment rate inched upward from 3.2 percent to 3.3
percent in June, though remaining well below the state unemployment rate
of 5.0 percent. Other Nashville labor market signals were mostly
positive. As mentioned above, improvements in Nashville nonagricultural
employment and the Nashville help-wanted index helped to boost the
Nashville economic index in June. Moreover, Nashville manufacturing
employment advanced 1.2 percent (SAAR) to reverse a May decline.
Nashville did endure a continued increase in initial claims for
unemployment insurance in June, but Nashville labor markets remain
strong, as demonstrated by an unemployment rate that remains low as well
as generally positive signs from Nashville labor markets. Tight
Nashville labor markets and an improving economic index suggest that the
Nashville economy will see continued prosperity and relatively strong
rates of growth in coming months.
--Nashville Quarterly Economic Index
TRI-CITIES
The Tri-Cities economic index surged at a seasonally adjusted annual
rate (SAAR) of 21.6 percent in June to mostly reverse a substantial
decline from the previous month. This advance in the Tri-Cities index
was broadly based, as five of its six components showed improvement.
Tri-Cities bankruptcies enjoyed a welcomed downturn from 490 to 449
following a considerable increase in May. Tri-Cities commercial and
industrial electrical consumption rose to its highest level of the year.
Other components impacting positively on the Tri-Cities economic index
were (1) initial claims for Tri-Cities unemployment insurance, which
decreased from 2,220 to 2,130; (2) Tri-Cities inflation-adjusted taxable
sales, which increased for the second consecutive month; and (3) the
Tennessee composite index of leading indicators, which turned up 3.1
percent (SAAR) following setbacks in the previous two months. On the
downside, Tri-Cities nonagricultural employment declined 2.9 percent
(SAAR) to dampen the rise in the Tri-Cities economic index.
The Tri-Cities unemployment rate increased from 4.6 percent to 4.8
percent in June, while other Tri-Cities labor market components were
mixed. Although Tri-Cities nonagricultural employment was down in June,
manufacturing employment, which provides approximately 29 percent of all
non-farm jobs in the Tri-Cities, was unchanged. As mentioned above, a
decrease in initial claims for Tri-Cities unemployment insurance helped
to boost the Tri-Cities economic index in June. Initial claims for
Tri-Cities unemployment insurance were 17.8 percent lower than in June,
1994.
The Tri-Cities economy continues to herald good news, as evidenced by
the solid performance of the Tri-Cities economic index and generally
positive signals from Tri-Cities labor markets in June. Although some
continued up and down movement may occur in the Tri-Cities economic
indicators over the coming months, overall, the Tri-Cities should
continue to enjoy economic expansion.
--Tri-Cities Quarterly Economic Index
Center for Business and Economic Research, College of Business
Administration, The University of Tennessee, Knoxville. For further
information, call CBER (423) 974-5441.
Data reported herein are seasonally adjusted, and therefore
may not be directly comparable to data elsewhere. The five
seasonally adjusted leading index components are Tennessee
construction potentials, initial claims for Tennessee unemployment
insurance, the U.S. leading index, inflation-adjusted taxable sales
and taxable mortgages. The three seasonally adjusted coincident
index components are Tennessee commercial and industrial electricity
consumption, the Memphis help-wanted advertising index, and the U.S.
coincident index. See the Fall 1988 issue of the Survey of Business
and the 1994 Economic Report to the Governor for a complete discussion
of the methodology underlying the Tennessee economic indices.
Economic Indicator Tables: TN, US, and MSAs,
June 1995
Tennessee Economic Overview, Current
CBER Home Page
Last updated November 16, 1995
Vickie Cunningham,
vcunningham@utk.edu