December 2006 Cleveland Plus Quarterly Economic Review

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December 2006 Cleveland Plus Quarterly Economic Review

  1. 1. Northeast Ohio Economic Review Welcome to the first edition of “Northeast Ohio Economic Review.” The objective of this publication is to provide key economic data to help paint a picture of the current state of the economy, enabling appropriate and timely business decisions impacting the region’s growth. This publication is unique because the data collected represent all corners of the 13-county area that constitutes Northeast Ohio. This regional information is not collected by any other entity and therefore we hope you find this a valuable resource. As you’ll see in this first publication, the general overview of our current economy (figures are through 3Q 2006) is that, although total employment was down in the past, it is now on an upswing. Recent data confirm this. While employment declined in 2001 and 2002, jobs have been growing for the last three years. In addition, we are seeing excellent gains in productivity. Our manufacturing output is nearly back to its peak and output per person is up 30+ percent. This increase in competitiveness means wealth creation and job security. Some of the stronger segments of our economy are information, professional and scientific technology. In addition, while our employment rate may be lower than years ago, our labor force is still producing the same output with a smaller workforce. Some segments of the economy are growing, for example, high tech (information, professional, scientific and technical sectors, such as printing, publishing, Internet and consultants). While economic development organizations in Northeast Ohio are working to maintain the manufacturing base, we are also working to grow the knowledge-based sectors. We hope you enjoy this new publication, and we welcome your input for future editions, as it is structured to meet your needs. Together, anything is possible. Thomas A. Waltermire, chief executive officer, Team NEO December 2006
  2. 2. Employment levels returning to pre-Sept. 11 levels 2,150,000 8.0 7.5 2,100,000 7.0 2,050,000 6.5 Number of Workers 6.0 2,000,000 Percent 5.5 1,950,000 5.0 4.5 1,900,000 4.0 1,850,000 3.5 1,800,000 3.0 1994 1994 1995 1996 1997 1997 1998 1999 2000 2000 2001 2002 2003 2003 2004 2005 2006 NEO Unemployment Rate (%) NEO Employment (number) NEO Total Labor Force (number) Quarterly Labor Force Trends for NEO Source: Ohio Labor Market Information, Ohio Workforce Informer, Local Area Unemployment Statistics The labor force is composed of eligible workers ages 16 and over. While the NEO labor force (blue line) has hovered slightly above 2 million workers since 1999, the number of those workers “employed” (orange line) fell after Sept. 11. It was not until recently (2006) that the number of employed returned to near Sept. 11 levels. The NEO regional unemployment rate (yellow line) was about 5.3 percent at the end of the third quarter; Ohio’s rate was at 5.0 percent, both above the U.S. rate of 4.4 percent (not seasonally adjusted). NEO’s labor force (the available pool of workers) is relatively stable, while the region’s employment rate is approaching pre-Sept. 11 levels.
  3. 3. 3.0 2.0 Percent Change 1.0 0.0 -1.0 -2.0 -3.0 1995 1997 1999 2001 2003 2005 NEO Employment* US Employment Annual Percentage Change for Total Employment Source: Moody’s Economy.com based on BLS data; *Includes Carroll County 6.0 5.0 4.0 3.0 Percent Change 2.0 1.0 0.0 -1.0 -2.0 -3.0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 NEO GRP* US GDP Annual Percentage Change for Gross Product (Added Value) Source: Moody’s Economy.com based on BLS data; *Includes Carroll County NEO’s employment growth rate has slowed, but the U.S. growth rate is slowing at a greater rate (first chart); the September 2006 employment growth rate was 5.5 percent for NEO, 5.0 percent for Ohio and 4.4 percent for the U.S. NEO’s gross regional product (second chart) shows that since 2001, the value-added to goods and services produced by NEO workers is growing, but a bit more slowly than the U.S. gross domestic product.
  4. 4. 18% 16% 14% 12% 10% 8% 6% 4% 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Mfg Info & Pro Leisure Trade Health Percent Employment by Sector (Sectors account for 53% of NEO employment) Source: Moody’s Economy.com based on BLS data; Includes Carroll County 30% 25% 20% 15% 10% 5% 0% 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Mfg Info & Pro Leisure Trade Health Percent NEO GRP by Sector (Sectors account for 55% of NEO GRP) Source: Moody’s Economy.com based on BLS data; Includes Carroll County The charts above show share of the Region’s employment and gross product (value-added) for the following NAICS sectors: all manufacturing, information (NAICS 51) combined with professional and technical services (NAICS 54), arts, entertainment and recreation (NAICS 71) with accommodation and food services (NAICS 72), wholesale trade (NAICS 42) combined with retail trade (NAICS 44 and 45), and healthcare and social services (NAICS 62). While the manufacturing industries account for 16 percent of the Region’s employment, they account for 21 percent of the gross regional product (GRP). GRP is the “value-add” created by the labor component in the production of goods and the rendering of services. While manufacturing employment in Northeast Ohio may be declining, this is consistent with trends for the industry across the U.S. Manufacturing is still the largest contributor to the Region’s gross product.
  5. 5. 110.00 100.00 90.00 80.00 70.00 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 GRP Forecast Employment Forecast GRP Historic Employment Historic NEO Manufacturing: Growth Index Source: Moody’s Economy.com based on BLS data; Includes Carroll County 160 150 140 130 120 110 100 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 GRP Forecast Employment Forecast GRP Historic Employment Historic NEO Information & Professional Services: Growth Index Source: Moody’s Economy.com based on BLS data; Includes Carroll County The manufacturing and high-tech (information, professional, scientific and technical) sectors contribute 21 percent and 8.5 percent, respectively, to the regional economy and show steady growth in value (blue lines in the sector growth index charts above).

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