The document discusses slowing manufacturing growth in Northeast Ohio and its impact on the regional economic recovery. It notes that while manufacturing production has returned to pre-recession levels nationwide, growth has slowed, particularly in Northeast Ohio. Surveys of businesses in Ohio show less optimism about future sales and hiring compared to nationwide surveys. The regional manufacturing downturn has stalled Northeast Ohio's economic recovery.
Northeast Ohio Recovery Stalls as Manufacturing Slows
1. SLOWING IN MANUFACTURING
IS WEIGHING ON NORTHEAST
OHIO RECOVERY
Augustine Faucher
Senior Economist
November 19, 2015
ECONOMIC OUTLOOK
2. 2
-2
0
2
4
6
8
'11 '12 '13 '14 '15
Gross domestic product
Gross domestic income
ECONOMY BOUNCES BACK AFTER SLOW START TO
2015
Source: BEA
Real, annualized % change
3. 3
A NEW JOB PEAK IN MID 2014
Sources: BEA, BLS
128
130
132
134
136
138
140
142
144
14,000
14,500
15,000
15,500
16,000
16,500
'06 '07 '08 '09 '10 '11 '12 '13 '14 '15
Real GDP, SAAR,
2009$ bil (L)
Payroll employment, mil (R)
4. 4
MANUFACTURNG PRODUCTION ALMOST BACK TO
ITS PRE-RECESSION PEAK…
Source: Federal Reserve
75
80
85
90
95
100
105
'06 '07 '08 '09 '10 '11 '12 '13 '14 '15
Industrial production, 3-month moving average, cyclical peak=100
5. 5
…BUT GROWTH HAS SLOWED
Source: Institute for Supply Management
48
50
52
54
56
58
60
'14 F M A M J J A S O N D '15 F M A M J J A S O
Non-manufacturing
Manufacturing
ISM index, 3-month moving average, >50 indicates expansion
6. 6
-15
-10
-5
0
5
10
15
20-15
-10
-5
0
5
10
15
'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15
Broad U.S. $ index,
% change year ago,
reverse axis (R)
Real U.S. exports,
% change year ago (L)
STRONG DOLLAR LIKELY TO PULL EXPORTS DOWN
FURTHER
Sources: BEA, Federal Reserve
7. 7
DOWNTURN IN ENERGY PRICES A MAJOR DRAG ON
MANUFACTURING
Sources: BEA, NYMEX
2.0
2.5
3.0
3.5
4.0
4.5
5.0
70
80
90
100
110
120
130
140
'10 '11 '12 '13 '14 '15
Real business investment in
mining, shafts, wells, SAAR,
2009$ bil (L)
Natural gas price,
$ per mmbtu (R)
11. 11
LESS OPTIMISTIC ABOUT SALES…
Source: PNC
0
20
40
60
80
100
120
U.S. Ohio
Expect Increase Expect Remain the Same Expect Decrease
View on expected sales, % of respondents
12. 12
…AND THE LOCAL ECONOMY…
Source: PNC
0
20
40
60
80
100
120
U.S. Ohio
Optimistic Moderately Optimistic Pessimistic
View on local economy, % of respondents
13. 13
…WITH SUBDUED HIRING PLANS
Source: PNC
0
20
40
60
80
100
120
U.S. Ohio
Expect Increase Expect Remain the Same Expect Decrease
View on expected hiring, % of respondents