TENNESSEE ECONOMIC OVERVIEW
(September Index as of November 22, 1995)
The Tennessee composite index of leading indicators failed to
reinforce a considerable August gain as it fell at a seasonally
adjusted annual rate (SAAR) of 7.8 percent in September. Tennessee
inflation-adjusted taxable sales and inflation-adjusted taxable
mortgages were both down sharply after making significant strides
forward in the previous month. Also failing to augment an August
improvement were initial claims for Tennessee unemployment insurance,
which rose from 37,800 to 39,100 in September. Both total Tennessee
construction potentials and the U.S. composite index of leading
indicators retreated modestly to further hold back the Tennessee
leading index. Total Tennessee construction potentials declined 3.0
percent (SAAR), while the U.S. composite index of leading indicators
fell 1.2 percent (SAAR).
It is noteworthy that all components of the index suffered setbacks in
September, in sharp contrast to August where all components recorded
gains. The broadly based downward movement of the leading index is not
indicative of an impending economic downturn. As has been noted in
recent months, both the U.S. and Tennessee economies have settled in
to a modest path of economic growth. In such an economic environment,
one can expect various barometers of economic activity to fluctuate in
both an up and down direction. An analogy is a sports team with an
excellent winning season that still, on occasion, records a loss.
On a more upbeat note, the Tennessee composite index of coincident
indicators--a gauge of current economic conditions in the state--rose
a healthy 5.2 percent (SAAR) in September to bolster a robust August
gain of 12.5 percent (SAAR). Tennessee commercial and industrial
electrical consumption surged to its highest level of the year in
September. The U.S. composite index of coincident indicators rose 2.1
percent (SAAR) to further boost the Tennessee coincident index. On the
downside, the Memphis help-wanted index saw a slight decrease from 174
to 173 to temper the gain.
--Monthly Percent Change in Tennessee Leading Index
The Tennessee unemployment rate increased from 5.1 percent to 5.2
percent in September, while other labor market signals were mixed. As
mentioned above, the rise in initial claims for Tennessee unemployment
insurance helped to push the Tennessee leading index back for the
month. Continued weeks claimed for Tennessee unemployment insurance
were down significantly in September, however, from 192,700 to
187,100. Additional good news was heralded by an advance in Tennessee
nonagricultural employment, which surged 6.8 percent (SAAR) to its
highest level of the past year. U.S. nonagricultural employment was
also at its peak for the year. Unfortunately, none of the gain in
Tennessee nonagricultural employment accrued to the pivotal
manufacturing sector, which accounted for 22.2 percent of the state's
nonagricultural jobs in 1994. State manufacturing employment was down
2.3 percent (SAAR), while average weekly hours in Tennessee
manufacturing firms declined 1.4 percent (SAAR).
The solid performance of the Tennessee economy, as evidenced by
improvement in the Tennessee coincident index, and significant gains
in Tennessee nonagricultural employment suggest underlying strength in
the Tennessee economy, despite downward movement in the Tennessee
leading index. Over the course of the next several months, Tennessee
should continue to enjoy sustained and moderated rates of economic
growth, with expansions in both aggregate income and nonagricultural
employment.
--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
(September Index as of November 22, 1995)
CHATTANOOGA
The Chattanooga economic index fell slightly in September at a
seasonally adjusted annual rate (SAAR) of 1.1 percent. This sixth
consecutive monthly decline in the Chattanooga economic index resulted
from setbacks in four of its seven components, including Chattanooga
nonagricultural employment, which decreased 10.9 percent (SAAR) to its
lowest level of the year; (2) Chattanooga inflation-adjusted taxable
sales, which failed to bolster a considerable August advance; (3)
Chattanooga airport passengers, which declined 25.9 percent (SAAR);
and (4) the Tennessee composite index of leading indicators, which
fell 7.8 percent (SAAR) to partially reverse a strong August showing.
Despite these setbacks, there were some bright spots in the
Chattanooga economy in September. Initial claims for Chattanooga
unemployment insurance were down for the second consecutive month,
falling from 2,020 to 1,970. Furthermore, Chattanooga bankruptcies and
Chattanooga commercial and industrial electrical consumption also saw
substantial improvement. Chattanooga bankruptcies declined from 564 to
506, and Chattanooga commercial and industrial electrical consumption
surged to its highest level in the past five months.
Despite the significant decline in Chattanooga nonagricultural
employment, there was some very positive news in the Chattanooga labor
market in September. The Chattanooga unemployment rate moved downward
from 4.8 percent to 4.7 percent, its first decline in seven months.
Moreover, as mentioned above, a solid retreat in initial claims for
Chattanooga unemployment insurance helped to mitigate a fall in the
Chattanooga economic index in September. Chattanooga manufacturing
employment was down 5.3 percent (SAAR) for the month.
The long string of contractions in the economic index for Chattanooga
is a disturbing trend, amplified by weakness in the region's
manufacturing sector. A ray of hope is offered by the sustained growth
in the U.S. and Tennessee economies. This growth has the potential to
provide modest rejuvenation in coming months. Accordingly, look for
the Chattanooga economy to pick up some steam in the fall and winter.
If the Chattanooga economy is able to muster moderate advances in the
next few months, labor markets should see some tightening, and overall
economic conditions will improve markedly.
--Chattanooga Quarterly Economic Index
KNOXVILLE
The Knoxville economic index fell at a moderate seasonally adjusted
annual rate (SAAR) of 3.4 percent in September after a strong gain in
the previous month. This decline in the Knoxville index resulted from
setbacks in three of its six components. Impacting negatively on the
index were (1) Knoxville inflation-adjusted taxable sales, which
partially reversed a solid August showing; (2) the Tennessee composite
index of leading indicators, which declined 7.8 percent (SAAR),
failing to reinforce a considerable gain from the previous month; and
(3) Knoxville nonagricultural employment, which fell 5.9 percent
(SAAR) . Although Knoxville nonagricultural employment suffered a
setback in September, other labor market components of the Knoxville
economic index were positive. Initial claims for Knoxville
unemployment insurance fell from 3,920 to 3,800 for a second
consecutive monthly improvement, and the Knoxville help-wanted index
surged from 461 to 481. A considerable retreat in Knoxville
bankruptcies also helped to mitigate the drop in the Knoxville
economic index. After substantial increases in the previous two
months, Knoxville bankruptcies took a welcomed turn downward from 548
to 516 in September.
The Knoxville unemployment rate inched upward from 4.2 percent to 4.3
percent in September, but remains well below the state unemployment
rate of 5.2 percent. Other labor market signals were mostly positive.
As mentioned above, solid improvements in initial claims for Knoxville
unemployment insurance and the Knoxville help-wanted index helped to
temper a fall in the Knoxville economic index. Moreover, about 500
people joined the ranks of Knoxville's manufacturing workers in
September for a net gain of 12.4 percent (SAAR). Manufacturing
currently provides just under 17 percent of all non-farm jobs in
Knoxville, far less than the state average of 22.2 percent in 1994. On
the downside, a decrease in Knoxville nonagricultural employment
helped to push down the Knoxville economic index in September.
Continued strength in the Knoxville labor market offers hope for
continued expansion in the Knoxville economy in the near term,
although a strong surge in Knoxville economic activity is not likely.
Expect weak but modest employment growth in the months to come,
coupled with a slow ascent in the area's unemployment rate.
--Knoxville Quarterly Economic Index
MEMPHIS
The Memphis economy continued to show signs of rejuvenation and
enhanced growth in September, as the Memphis economic index rose at a
seasonally adjusted annual rate (SAAR) of 5.0 percent following a
significant gain in August. This advance in the Memphis economic index
was engineered by improvements in three of its five components.
Boosting the Memphis economic index in September were (1) initial
claims for Memphis unemployment insurance, which fell from 4,990 to
4,740; (2) Memphis new incorporations, which enjoyed a vigorous surge
from 143 to 166; and (3) Memphis nonagricultural employment, which was
up 5.5 percent (SAAR) for its third consecutive monthly gain. A slight
decline in the Memphis help-wanted index from 174 to 173 and a 7.8
percent (SAAR) decline in the Tennessee composite index of leading
indicators worked against the overall rise in the Memphis economic
index.
Despite a gain in Memphis nonagricultural employment and a healthy
retreat in initial claims for Memphis unemployment insurance, the
Memphis unemployment rate managed to inch upward in September from 5.0
percent to 5.1 percent, just under the state unemployment rate of 5.2
percent. Other labor market signals were negative. As mentioned above,
a very modest setback in the Memphis help-wanted index helped to hold
back an increasing Memphis economic index. Moreover, Memphis
manufacturing employment saw its second consecutive monthly decline,
falling a moderate 2.7 percent (SAAR) in September.
The Memphis economy was the only major metropolitan area of the state
to enjoy growth in its economic index for the month of September.
Given the improved performance of economic conditions in Memphis over
the past two months, coupled with a Memphis labor market that, despite
some discouraging signals, continues to exude underlying strength,
expect the Memphis economy to remain on the positive growth path it
has recently established. A vigorous surge in Memphis economic
activity over the near term is not likely in the cards, however.
--Memphis Quarterly Economic Index
NASHVILLE
The Nashville economic index was unable to build upon a solid August
gain as it fell at a seasonally adjusted annual rate (SAAR) of 4.1
percent in September. This decline in the Nashville index resulted
from setbacks in four of its six components. Impacting negatively on
the Nashville economic index were (1) Nashville inflation-adjusted
taxable sales, which were down 5.2 percent (SAAR) following an August
surge; (2) Nashville construction potentials, which fell sharply from
153 to 122; (3) Nashville nonagricultural employment, which
experienced a negligible downturn of 0.9 percent (SAAR) after three
months of moderate improvement; and (4) the Tennessee composite index
of leading indicators, which declined 7.8 percent (SAAR). On the
positive side, improvements in initial claims for Nashville
unemployment insurance and the Nashville help-wanted index served to
temper the fall in the Nashville economic index. Initial claims for
Nashville unemployment insurance were down from 5,750 to 5,520 for its
second consecutive monthly decrease, while the Nashville help-wanted
index was up 2.2 percent (SAAR).
Although a decline in initial claims for Nashville unemployment
insurance and a moderate advance in the Nashville help-wanted index
boosted a falling Nashville economic index, other labor market signals
were negative. The Nashville unemployment rate remained well below the
state unemployment rate of 5.2 percent in September, but climbed from
3.6 percent to 3.8 percent. Moreover, Nashville manufacturing
employment was down 4.8 percent (SAAR), reinforcing the modest decline
in Nashville nonagricultural employment mentioned above.
Despite the decline in the economic index in September, the overall
Nashville economy--including the local labor market--remains in good
health. Nashville will likely experience some modest growing pains in
the months to come, including slower rates of job creation and a
slight ascent in the area unemployment rate. A serious slowdown is not
anticipated, nor is a return to vigorous growth likely.
--Nashville Quarterly Economic Index
TRI-CITIES
The Tri-Cities economic index failed to hold on to a substantial
August gain as it fell at a seasonally adjusted annual rate (SAAR) of
6.5 percent in September. Although four of its six components suffered
setbacks, the most conspicuous was a resolute decline in Tri-Cities
nonagricultural employment of 21.4 percent (SAAR). Despite the
downward jump, however, Tri-Cities nonagricultural employment remains
above the level set in September. Moreover, the region has enjoyed
considerable advances in employment in the previous two months.
Tri-Cities commercial and industrial electrical consumption and
Tri-Cities inflation-adjusted taxable sales also retreated following
gains in the previous two months. The final component impacting
negatively on the Tri-Cities economic index was the Tennessee
composite index of leading indicators, which fell 7.8 percent (SAAR)
after a significant boost in August. On the positive side,
improvements in Tri-Cities bankruptcies and initial claims for
Tri-Cities unemployment insurance helped to mitigate the drop in the
Tri-Cities economic index. Tri-Cities bankruptcies were down sharply
from 548 to 516, while initial claims for Tri-Cities unemployment
insurance saw a healthy decrease from 2,560 to 2,250.
The forceful drop in Tri-Cities nonagricultural employment was
reinforced by other labor market signals that were mostly negative in
September. Tri-Cities manufacturing employment--approximately 30
percent of all non-farm jobs in the Tri-Cities--declined 6.5 percent
(SAAR). Moreover, the Tri-Cities unemployment rate inched upward from
5.2 percent to 5.3 percent, just above the statewide unemployment rate
of 5.2 percent. On a positive note, as mentioned above, a significant
drop in initial claims for Tri-Cities unemployment insurance helped to
offset the fall in the Tri-Cities economic index in September.
Although there were some discouraging signals emanating from the
Tri-Cities labor market in September, the employment picture in the
Tri-Cities has been fairly strong in the past few months, which
suggests underlying strength in Tri-Cities labor markets. Although
some continued up and down movement in the Tri-Cities economic index
is expected in coming months--consistent with the pattern established
in February of this year--the Tri-Cities economy is anticipated to
stay on a longer-term positive growth path.
--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, September 1995
Tennessee Economic Overview, Current
CBER Home Page
Last updated November 27, 1995