TENNESSEE ECONOMIC OVERVIEW
(November Index as of March 4, 1996)
The Tennessee composite index of coincident indicators, which
serves as a gauge of current economic conditions in the state, fell at
a seasonally adjusted annual rate (SAAR) of 2.4 percent in November,
failing to rebound after a 4.7 percent (SAAR) slip in October. The
decline in the Tennessee coincident index was driven entirely by a
sharp decrease in the Memphis help-wanted index from 183 to 163.
Mitigating the fall in the Tennessee coincident index were improvements
in the U.S. composite index of coincident indicators and Tennessee
commercial and industrial electrical consumption. The U.S. coincident
index rose 2.0 percent (SAAR) for its fourth consecutive monthly
advance. Tennessee commercial and industrial electrical consumption
reversed much of a substantial October decline.
The Tennessee composite index of leading indicators--a yardstick
for economic conditions in the state six to nine months in the
future--rose a moderate 1.3 percent (SAAR) in November, a welcome
turnaround following downturns in the previous two months. Initial
claims for Tennessee unemployment insurance retreated from 50,400 to
45,600, only partially reversing a considerable increase suffered in
October. This improvement was bolstered by very positive movements in
total Tennessee construction potentials and Tennessee
inflation-adjusted taxable sales. Total Tennessee construction
potentials, the number of construction contracts awarded for the month
that are scheduled to begin ground-breaking within 60 days, were up
13.7 percent (SAAR). Construction currently provides about 4.3 percent
of gross state product in Tennessee and accounts for over 6 percent of
the state's nonagricultural employment. Tennessee inflation-adjusted
taxable sales rose sharply in November, reflecting a reinvigorated
retail sector after two consecutive monthly setbacks. The strong retail
sales this November likely reflect early buying for the holiday season.
On the downside, decreases in Tennessee inflation-adjusted taxable
mortgages and in the U.S. composite index of leading indicators
tempered the gain in the Tennessee leading index. Tennessee
inflation-adjusted taxable mortgages failed to build upon a vigorous
surge in the previous month, while the U.S. leading index fell 2.4
percent (SAAR) for its third consecutive (but relatively modest)
decline.
--Monthly Percent Change in Tennessee Leading Index
News from the Tennessee labor market was mixed but mostly positive
in November. The Tennessee unemployment rate fell from 5.2 percent to
5.0 percent--its lowest level of the past five months. Moreover,
bolstering the decline in initial claims for Tennessee unemployment
insurance was an equally marked decrease in continued weeks claimed for
Tennessee unemployment insurance--from 217,000 to 199,000. Despite the
improved unemployment picture in November, however, the levels of
initial and continued claims for unemployment insurance in Tennessee,
as well as for the U.S. as a whole, remain significantly higher than
the levels experienced in November of last year. Tennessee
manufacturing employment fell 3.1 percent (SAAR) for the month, but
weekly hours of manufacturing workers advanced 0.9 percent (SAAR).
Finally, Tennessee nonagricultural employment declined 2.1 percent
(SAAR) following two months of solid improvement. Overall, Tennessee
labor markets continued to exude signs of strength in November, but
employment growth has moderated somewhat in the last year as the state
economy it supports has also moderated.
The Tennessee economy was sluggish in November, although there
were some bright spots in the state's labor markets. A modest gain in
the Tennessee leading index suggests somewhat stronger economic growth
as the state moves into spring of 1996.
--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
93/I 93/II 93/III 93/IV 94/I
----------------------------------------------------------------------
TN Personal Income (MIL $) (1)..... 91530 93469 94765 96362 97882
% Chg Prev Qtr SAAR.............. -2.45 8.75 5.66 6.91 6.46
% Chg Same Qtr Last Yr........... 6.30 6.25 6.47 4.63 6.94
TN Personal Income (MIL 87 $) (1).. 72816 73947 74736 75578 76530
% Chg Prev Qtr SAAR.............. -4.91 6.36 4.34 4.58 5.13
% Chg Same Qtr Last Yr........... 3.25 3.56 3.87 2.50 5.10
----------------------------------------------------------------------
94/II 94/III 94/IV 95/I 95/II
----------------------------------------------------------------------
TN Personal Income (MIL $) (1)..... 99514 101120 104035 104893 105915
% Chg Prev Qtr SAAR.............. 6.84 6.61 12.04 3.34 3.95
% Chg Same Qtr Last Yr........... 6.47 6.71 7.96 7.16 6.43
TN Personal Income (MIL 87 $) (1).. 77202 77845 79720 79949 80239
% Chg Prev Qtr SAAR.............. 3.56 3.37 9.99 1.15 1.46
% Chg Same Qtr Last Yr........... 4.40 4.16 5.48 4.47 3.93
----------------------------------------------------------------------
1992 1993 1994
--------------------------------------------------------
TN Personal Income (MIL $) (1)..... 88794 94032 100638
% Chg Prev Qtr SAAR.............. 8.71 5.90 7.03
% Chg Same Qtr Last Yr........... 8.71 5.90 7.03
TN Personal Income (MIL 87 $) (1).. 71903 74269 77824
% Chg Prev Qtr SAAR.............. 5.40 3.29 4.79
% Chg Same Qtr Last Yr........... 5.40 3.29 4.79
--------------------------------------------------------
ECONOMIC OVERVIEW,
SELECTED TENNESSEE MSAs
(November Index as of March 4, 1996)
CHATTANOOGA
The Chattanooga economic index fell at a seasonally adjusted
annual rate (SAAR) of 5.8 percent in November, due in large part to
disappointing signals from the Chattanooga labor market. The local
economy has struggled to keep pace with the growth of the state economy
over the last year, as evidenced by the lack of an appreciable
improvement in the Chattanooga economic index in eight months. There
were some signs of potential strength in November, however, as most of
the components of the economic index were positive.
The most salient setback in the Chattanooga economic index was an
unfortunate surge in initial claims for Chattanooga unemployment
insurance--from 1,870 to 2,490. This considerable increase followed
three months of steady, robust improvement. Weakness in the local labor
market was amplified by an 8.8 percent (SAAR) decline in Chattanooga
nonagricultural employment. Chattanooga bankruptcies increased from 495
to 514 to further hold back the Chattanooga economic index. On a more
upbeat note, four of the seven Chattanooga components saw improvements
in November. Impacting positively on the Chattanooga index were (1)
Chattanooga inflation-adjusted taxable sales, which surged in November
after declining in the previous two months; (2) Chattanooga airport
passengers, which advanced 3.5 percent (SAAR) to reinforce an October
gain; (3) Chattanooga commercial and industrial electrical consumption,
which saw a very healthy increase; and (4) the Tennessee composite
index of leading indicators, which experienced moderate improvement of
1.3 percent (SAAR).
As mentioned above, much of the decline in the Chattanooga
economic index in November is attributable to the poor performance of
its labor market components. The significant increase in initial claims
for Chattanooga unemployment insurance and the decline in Chattanooga
nonagricultural employment were further magnified by a climb in the
Chattanooga unemployment rate from 5.0 to 5.2 percent. Although the
Chattanooga labor market appears to be relatively flat, the employment
picture is likely to improve if the Chattanooga economy is able to pick
up some steam in the coming months. Furthermore, a 2.7 percent (SAAR)
rebound in Chattanooga manufacturing employment bodes well for labor
market strength in the near term.
The string of setbacks suffered by the Chattanooga economy in
recent months is somewhat out of line with the performance of the state
economy. While there are some positive signs emanating from the local
economy, recent economic performance does not provide much basis for
optimism.
--Chattanooga Quarterly Economic Index
KNOXVILLE
The Knoxville economic index enjoyed a slight gain in November,
advancing at a seasonally adjusted annual rate (SAAR) of 1.7 percent.
There was positive movement in four of the six components of the
Knoxville index, with two labor market components serving to hold back
the gain. Knoxville inflation-adjusted taxable sales moved to their
highest level of the year, reflecting a strong seasonal buying pattern
on the part of consumers. Other components impacting positively on the
Knoxville economic index were (1) Knoxville bankruptcies, which
declined from 524 to 497, a welcome move after three months of
especially high bankruptcies; (2) Knoxville nonagricultural employment,
which advanced 2.3 percent (SAAR) for its second consecutive monthly
gain; and (3) the Tennessee composite index of leading indicators,
which turned upward 1.3 percent (SAAR). The rise in the Knoxville
economic index was tempered by substantial setbacks in the Knoxville
help-wanted index and initial claims for Knoxville unemployment
insurance. The Knoxville help-wanted index fell from 444 to 407, its
lowest level of the year and down from 481 in September. Initial claims
for Knoxville unemployment insurance reinforced a considerable October
increase by rising from 4,170 to 4,460 in November.
Despite the negative movement of the Knoxville help-wanted index
and initial claims for Knoxville unemployment insurance, other
Knoxville labor market signals were very positive in November. The
Knoxville unemployment rate retreated soundly from 4.4 percent to 4.0
percent, good news after a steady rise in the unemployment rate since
May. Moreover, some of the gain in Knoxville nonagricultural employment
was enjoyed by manufacturing workers, who saw their numbers augmented
2.4 percent (SAAR). News from the Knoxville labor market was a mixed
bag for the month of November, with the economy exhibiting signs of
both strength and weakness. Overall, however, the Knoxville employment
picture seems promising, as nonagricultural employment is at its
highest level in eight months.
Improvements in a majority of the components of the Knoxville
economic index and a labor market that remains relatively tight suggest
that the Knoxville economy has the potential to enjoy continued growth
through winter and into early spring. Expect some mixed signals in the
coming months, with the local economy continuing to show overall signs
of growth.
--Knoxville Quarterly Economic Index
MEMPHIS
Although the Memphis economy has enjoyed a moderate surge in
economic activity over the last few months, the Memphis economic index
fell at a seasonally adjusted annual rate (SAAR) of 4.8 percent in
November. The decline in the Memphis index is attributable to a
generally poor performance in its labor market components, including
(1) initial claims for Memphis unemployment insurance, which rose from
4,700 to 4,820 after improvements in the previous two months; (2) the
Memphis help-wanted index, which suffered a sizable decrease from 183
to 163; and (3) Memphis nonagricultural employment, which saw only a
very slight downturn of 0.1 percent (SAAR). On the positive side,
advances in Memphis new incorporations and the Tennessee composite
index of leading indicators helped to temper the setback in the Memphis
economic index. Memphis new incorporations surged vigorously from 123
to 140, following a significant October retreat, while the Tennessee
leading index rose a moderate 1.3 percent (SAAR).
Despite the lackluster performance of the labor market components
in the Memphis economic index in November, the Memphis unemployment
rate managed a notable descent from 4.9 percent to 4.4 percent,
slipping well under the state unemployment rate of 5.0 percent. If the
Memphis economy is to maintain this lower unemployment rate, however,
there will likely have to be some improvement in other employment
indicators in the coming months. Unfortunately, other labor market
information for the month of November doesn't bode well for the late
winter and spring months. There are, nonetheless, other reasons for
optimism. Memphis inflation-adjusted taxable sales reached their
highest level of the year in November, and there was also a
considerable advance in Memphis inflation-adjusted taxable mortgages
and a 14.3 percent (SAAR) decline in Memphis bankruptcies. Positive
trends in the Memphis economy should lead to continued prosperity
through the winter and into spring. Large positive or negative swings
for the local economy do not appear to be in the cards.
--Memphis Quarterly Economic Index
NASHVILLE
All indications point to a Nashville economy that remains the most
vibrant regional economy in the state. The Nashville economic index
rose vigorously in November at a seasonally adjusted annual rate (SAAR)
of 18.6 percent as all components of the index were positive.
Especially noteworthy were substantial advances in Nashville
inflation-adjusted taxable sales and Nashville construction potentials,
and a considerable descent in initial claims for Nashville unemployment
insurance. Nashville inflation adjusted taxable sales rebounded
strongly after setbacks in the previous two months, reaching the
highest level of the year. Also establishing a new pinnacle was
Nashville construction potentials, which rose from 130 to 172. Initials
claims for Nashville unemployment insurance fell from 5,650 to 4,870,
but the level of initial claims remained high relative to that achieved
a year ago. Also impacting positively on the Nashville economic index
were (1) the Nashville help-wanted index, which rose from 283 to 292;
(2) Nashville nonagricultural employment, which increased 1.4 percent
(SAAR) for its sixth consecutive monthly advance; and (3) the Tennessee
composite index of leading indicators, which saw a modest improvement
of 1.3 percent (SAAR).
The positive movement of the Nashville economic index was
reinforced by mostly good news coming out of the Nashville labor
market. As mentioned above, all of the labor market components of the
Nashville economic index saw improvement in November, including an
especially strong retreat in initial claims for Nashville unemployment
insurance. Amplifying the strength of the Nashville labor market was a
decline in the Nashville unemployment rate from 3.5 percent to 3.4
percent. On the downside, Nashville manufacturing employment fell 1.2
percent (SAAR), its fifth consecutive monthly decline.
Despite some potential weakness in manufacturing employment, other
signs from the Nashville economy were positive in November. Although
the Nashville economy is anticipated to see continued growth in the
near term, economic growth is likely to slow somewhat.
--Nashville Quarterly Economic Index
TRI-CITIES
The Tri-Cities economic index rose at a seasonally adjusted annual
rate (SAAR) of 2.0 percent in November, turning upward after
consecutive declines. Like most other metropolitan areas in Tennessee,
the Tri-Cities labor market components helped to hold back the economic
index while other non-employment indications of economic activity were
very positive.
The increase in the Tri-Cities economic index was engineered by
improvements in four of its six components. Impacting positively on the
Tri-Cities index were (1) Tri-Cities bankruptcies, which fell from 524
to 497, dipping below 500 for the first time since July; (2) Tri-Cities
inflation-adjusted taxable sales, which enjoyed a resurgence after two
consecutive monthly declines; (3) Tri-Cities commercial and industrial
electrical consumption, which rose 2.6 percent (SAAR); and (4) the
Tennessee composite index of leading indicators, which advanced 1.3
percent (SAAR), but failed to recoup losses suffered in the two months
before. On the downside, an upturn in initial claims for Tri-Cities
unemployment insurance and a moderate decline in Tri-Cities
nonagricultural employment worked to mitigate the gain in the
Tri-Cities economic index. Initial claims for Tri-Cities unemployment
insurance rose from 2,120 to 2,200 following considerable improvement
in the previous three months, while Tri-Cities nonagricultural
employment fell 3.1 percent (SAAR).
The Tri-Cities unemployment rate made an unusually strong turn
downward in November, falling from 5.8 percent to 4.7 percent, thereby
reversing an upward trend it has experienced since March. Other labor
market signals were negative and largely inconsistent with the improved
unemployment rate. As mentioned above, initial claims for Tri-Cities
unemployment insurance saw an appreciable increase, while Tri-Cities
nonagricultural employment slipped following a respectable October
gain. Furthermore, Tri-Cities manufacturing employment fell 10.7
percent (SAAR).
The Tri-Cities economic index showed signs of renewed strength in
November, offering the promise of continued growth through the winter
and into early spring. Most notable was a substantial drop in the local
unemployment rate in November. However, other labor market conditions
showed signs of weakness for the month. Expect slow growth in the
months to come and continued mixed signals from the area labor market.
--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, November 1995
Tennessee Economic Overview, Current
CBER Home Page
Last updated March 4, 1996