Our partners include:
                                                   Greater Cleveland Partnership
                   ...
June 2009 | Volume 3, Issue 2


Continued Growth in Professional, Scientific
and Technical Services Sector
In the Septembe...
Significant Employment Growth in Many
PS&T Services Sector Industries
Many industries within the PS&T Services Sector have...
Why has
                                                                                             Scientific
          ...
NEO Total Employment                                                                                                      ...
June 2009 | Volume 3, Issue 2



Demand for Industrial                                                                    ...
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June 2009 Cleveland Plus Economic Review

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Team Northeast Ohio (Team NEO) released the latest edition of the quarterly Cleveland Plus® Economic Review today with a focus on the region’s growing Professional, Scientific and Technical (PS&T) Services sector. GRP for the sector has grown 79% since 1993, outpacing the nation’s average in several industries. Fueling this growth is the region’s strong heritage of invention, a strong base of significant research institutions, and a growing entrepreneurial sector.

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Transcript of "June 2009 Cleveland Plus Economic Review"

  1. 1. Our partners include: Greater Cleveland Partnership Greater Akron Chamber Stark Development Board Team Lorain County Youngstown-Warren Regional Chamber Medina County Economic Development Corporation Cleveland Plus ® Economic Review June 2009 Volume 3, Issue 2 Growing Professional, Scientific and Technical Services Sector Generates Opportunity in Cleveland Plus Region
  2. 2. June 2009 | Volume 3, Issue 2 Continued Growth in Professional, Scientific and Technical Services Sector In the September 2007 edition of the Northeast Ohio Economic Review, we reviewed the sectors that accounted for the 30% growth in Gross Regional Product (GRP) from 1992–2007. As evidenced by the chart below, several sectors had significantly grown in that time, including Professional, Scientific and Technical (PS&T) Services, which grew 74%. While it is expected that PS&T would grow due to global Real GRP Change : 1992-2007 advances in technology, such Billions (2006 Dollars) significant growth in Northeast Ohio may be surprising because of Real Estate, 58% Rental & Leasing our strong industrial manufacturing All Other Industries 22% base. This prompted further 60% Finance & Insurance exploration into this sector. Retail Trade 56% This report investigates this sector Wholesale Trade 51% to better understand the factors Prof, Sci & Tech Services 74% that are driving such remarkable Health Care & Social Asst 38% growth in the Cleveland Plus region. Information 64% Management of 88% Companies/Entps Public Aministration 16% Manufacturing 6% $0 $5 $10 $15 $20 $25 $30 $35 $40 2007 GRP 1992 GRP Source : Moody’s Economy.com and Northeast Ohio Economic Review September 2007 All PS&T Services Industries are Growing GRP in Professional, Scientific & Technical Industries (1993-2008) Updated for the fifteen years between 1993 and 2008, the 169% Scientific R&D PS&T GRP has grown more than 79%, with growth realized in all Advertising 48% segments. Several industries, Other Professional, 48% such as Computer Systems Design, Scientific & Tech Scientific Research & Develop- Accounting & Tax Prep 21% ment, Management, Scientific Scientific & 165% and Technical Services grew by Tech Consulting more than 150%. Certainly, these Architectural & Engineering 38% service industries are contributing Computer 173% to diversifying Northeast Ohio’s Systems Design economy. As the region’s manu- Legal Services 76% facturing sector is becoming more advanced with robotics and $0 $500 $1000 $1500 $2000 $2500 automation, and other sectors, (Millions 2008 $) 1993 2008 such as Biomedical and Information are growing, technical services are in Source : Moody’s Economy.com greater demand.
  3. 3. Significant Employment Growth in Many PS&T Services Sector Industries Many industries within the PS&T Services Sector have also realized employment growth throughout the last 15 years. Not only is this sector driving regional growth in GRP, but it also requires a growing, skilled workforce. Scientific and Technical Consulting employment has grown nearly 100%, while Computer Systems Design has grown 129%. In total, increases in employment in the PS&T Services Sector account for more than 21,000, or 21%, of the 99,500 new jobs added to the region between 1993 and 2008. Employment in Professional, Scientific & Technical Industries (1993-2008) 81% Scientific R&D Advertising Other Professional, 5% PS&T Sector has added 30% Scientific & Tech Scientific & 98% Tech Consulting Architectural & Engineering Computer -5% 129% 21,000 new jobs since Systems Design Accounting & 12% Tax Prep Legal Services 28% 1993. 0 2000 4000 6000 8000 10,000 12,000 14,000 16,000 18,000 20,000 1993 2008 Source : Moody’s Economy.com Management, Scientific and Technical Services, and Computer Systems Design have both grown by approximately 170% in Northeast Ohio.
  4. 4. Why has Scientific Research and Development Growth in Northeast Ohio Significantly Northeast Ohio PS&T Sector Outpaced U.S.? Growth Comparable to U.S. Northeast Ohio has a strong When compared to the U.S., several industries have heritage of invention, a strong grown at the same pace, or ahead of, the nation. base of significant research Management, Scientific and Technical Services and institutions, and a growing Computer Systems Design have both grown by entrepreneurial sector. approximately 170%, similar to U.S. growth in these With the University of Akron, industries. Moreover, Northeast Ohio has significantly outpaced U.S. growth in Legal Services and Scientific Case Western Reserve University R&D. In addition, Northeast Ohio remains one of the and the Cleveland Clinic’s nation’s top five legal centers, with leading global firms research investments, Northeast headquartered here, including Baker Hostetler; Calfee, Ohio is a leader in technology Halter & Griswold LLP; Jones Day; Squires, Sanders & transfer. According to Dr. Edward Dempsey LLP; and Thompson Hine. (Ned) Hill, noted economist and Dean of the Levin College of Urban affairs at Cleveland State University, “This sector has grown GRP Growth in Professional, Scientific & Technical Industries (NEO vs US,1993-2008) because of the region’s consis- tent, patient pattern of investment, which is continuing to show a Scientific R&D return through product innovation.” Advertising In fact, Northeast Ohio is home Other Professional, Scientific & Tech to the research centers of Accounting & many global firms, including Tax Prep Sherwin-Williams, Lubrizol, Scientific & Tech Consulting Energizer, and Bridgestone, Architectural & Engineering who recently chose Northeast Computer Ohio for its new $100 million Systems Design research center after a Legal Services nationwide search in 2008. 0% 20% 40% 60% 80% 100% 120% 140% 160% 180% 200% Collectively, the investments and output make Scientific NEO US Research and Development a strong, growing industry in Source : Moody’s Economy.com the Cleveland Plus Region.
  5. 5. NEO Total Employment NEO Total Employment (Not Seasonally Adjusted ) Reflective of World Economy 2.10 2.05 2.00 Because of seasonal patterns, this chart compares total 1.95 (Millions) employment year over year. 1.90 1.85 There is a typical drop in employment from Q4 to Q1. 1.80 The decline was 4% from Q4 2008 to Q1 2009, only slightly 1.75 2007 2003 2004 2005 2006 2007 2008 2009 2003 2004 2005 2006 2008 2003 2004 2005 2006 2007 2008 2003 2004 2005 2006 2007 2008 higher than the decline of 3% that occurred last year. Overall, total employment in Q1 was down about 4% Q1 Q2 Q3 Q4 from a year ago. Source : Ohio Labor Market Information (LAUS Data) NEO Unemployment Rate NEO Quarterly Unemployment Rate Similar to National Rate 12.0% 11.5% 11.0% 10.5% 10.0% While the regional unemployment rate has been following 9.5% the pattern of both the U.S. and Ohio, most recent figures 9.0% 8.5% indicate that the region is continuing to narrow the gap 8.0% between Northeast Ohio and the U.S. as a whole. 7.5% 7.0% The unemployment rate in Northeast Oho increased 6.5% by 2.85% in Q1 09, bringing the rate to 9.97%. This increase 6.0% is less than both the state of Ohio (4.03% increase) and 5.5% 5.0% the U.S. (3.08% increase). 4.5% 4.0% Q2 Q2 Q2 Q2 Q2 Q2 Q3 Q3 Q3 Q3 Q3 Q3 Q1 Q4 Q1 Q4 Q1 Q4 Q1 Q4 Q1 Q4 Q1 Q4 Q1 2003 2004 2005 2006 2007 2008 NEO 16 counties Ohio U.S. Source : Ohio Labor Market Information (LAUS Data) $190 NEO Real GRP Billions (2008 Dollars) Soft Economy Reflected $180 $170 2.6% 1.2% 0.3% (-1.9)% 1.2% 1.8% 2.4% 0.5% (-1.0%) 0% (-1.1%) (-5.5%)(-0.7%) in GRP Projections 4.8% $160 3.0% 3.8% As expected, GRP for the region in 2009 is estimated to $150 5.1% show a moderate decline at 0.7%. In addition, the GRP $140 $130 was revised downward for 2008 (-5.5% growth), putting $120 Northeast Ohio in line with the decline in the nation 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 as a whole. As data are updated, these numbers are Real GRP Average Annual Growth = 0.7% subject to revision. Source : Moody’s Economy.com
  6. 6. June 2009 | Volume 3, Issue 2 Demand for Industrial NEO Occupied Industrial Space & Vacancy Rate Space Remains Strong 405 9.5% Occupied Square Feet (Millions) 400 9.0% Vacancy Rate 395 8.5% This graph shows the total amount of industrial 390 8.0% space occupied by quarter between the first quarter of 2005 and the first quarter of 2009. 385 7.5% In the first quarter of 2009, Northeast Ohio had 380 7.0% a total stock of occupied industrial space greater 375 6.5% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 than 400 million square feet. The Northeast Ohio 2004 2005 2006 2007 2008 09 Industrial vacancy rate was stable at 7.5% in the first quarter of 2009, remaining steady through Occupied Square Feet Vacancy Rate the current economic downturn. Source : CoStar Industrial Data About Team NEO Due to market limits within the CoStar database, historic trend data for the Team NEO advances Northeast Ohio’s economy Team NEO region is defined as 10 of the 16 counties forming the regional by attracting businesses worldwide to the 16-county footprint. These counties include Ashtabula, Cuyahoga, Geauga, Lake, Lorain, Medina, Portage, Richland, Stark and Summit. Cleveland Plus region. The organization is a joint venture of the region’s largest metro chambers of commerce. Since 2007, the organization has attracted 23 new companies, 2,500 new jobs and more than $75M in annual payroll to Northeast Ohio, leading to a total regional Cleveland Plus 16-County Region Lake Ashtabula annual impact of $150M. For more information, visit www.clevelandplusbusiness.com. Cleveland Geauga Cuyahoga Lorain Trumbull Data Sources: Team Northeast Ohio uses a number of data sources for the Regional Economic Review. One of the primary sources is the Moody’s Summit Portage Economy.com (www.economy.com) Northeast Ohio modeling system. Medina Youngstown Akron This firm is the leading independent provider of economic, financial and Mahoning industry research and data that specializes in national and metropolitan economic growth forecasts. Moody’s Economy.com county level output, Ashland Wayne Canton Columbiana employment and payroll historical data are estimated from several Richland Stark publicly available sources and are summarized into the Team NEO regional footprint. It is important to understand data provided by Carroll Economy.com are estimates of economic activity. Team NEO also uses data from federal and state sources as part of the report. As with Economy.com, the information for the Team NEO footprint is derived from data reported at either the county or metropolitan level. We rely heavily on data from the U.S. Bureau of Labor Statistics (www.bls.gov) and Ohio’s Labor Market Information (www.lmi.state.oh.us) for information on wages, unemployment and both general and industry- specific employment. In addition, Team NEO uses data from the Census (www.census.gov) to track housing-related activity including the number of single and multifamily permits, as well as their values. Industrial real estate data for this edition was derived from the CoStar Group. The CoStar Group is a leading provider of commercial real estate data throughout the United States, covering more than 58 billion square feet This report made possible through the generous of property throughout the country. support of Dominion. 737 Bolivar Road, Suite 2000, Cleveland, Ohio 44115 888.NEO.1411 • www.clevelandplusbusiness.com

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