The Atlanta Monitor

The Georgia Department of Labor released recently job market data for January 2013. Although this blog focused more on the significant 2012 benchmark revisions in the same report, let’s take a moment to focus on what happened in January.

As a disclaimer, detailed data from the last year are not yet available yet, so it’s a bit tough to speak authoritatively about the January data. For that reason, I’ll just focus on the basics.

• One of the most basic metrics to look at in January is the December-to-January employment change. Typically, the metro loses between 40,000 and 60,000 jobs during the month, as the holiday shopping season comes to a close. This year, Atlanta seems to have performed far better, losing only 25,000 jobs over the month. I’m not sure exactly why this is without the benefit of detailed data for the last year.
• Instead, we’ll have to rely on the year-over-year employment change, which stands at an impressive 63,400 jobs added since January 2012. For the last year or so, we have normally seen annual job growth between 30,000 and 40,000 jobs. Again, without detailed data I’m hesitant to proclaim that Atlanta’s year-over-year job growth trend moving forward will be in the 60,000-job range (despite how I wish it were so). Over the coming weeks, the release of 2012 detailed data (which will occur Friday the 22nd) and the release of February’s job market data will shed light on whether we’re looking at sustained year-over-year gains of 60,000 jobs, or whether this is a statistical blip.

Given the new revisions, we can take a look at what sectors are hot and what are not.

What’s hot

• Trade, Transportation, and Utilities. The sector has added 13,600 jobs year-over-year–among the metro’s best performing sectors (2.6% growth). Although more than half of these jobs are retail positions, the sector as a whole, including warehousing and wholesaling, is performing strongly. This is reflective of strong consumer demand both in metro Atlanta and in the surrounding states, which metro Atlanta’s logistics business serves.
• Professional & Business Services. This sector is broadly adding jobs among nearly all of this subsectors, with 18,000 jobs added year-over-year in total (4.5% growth). Particularly robust are temporary employment services, which account for almost half of the growth (9.7% growth). On a negative note, Computer Systems Design–those ever-coveted tech jobs–only added 1,800 jobs over the last year (3.8% growth). Not a slow rate by any means, but far slower than the rate seen over previous months, which was 3,000 to 5,000 jobs per year.
• Accommodation & Food Services. In another sign that Atlantans themselves are feeling brighter about the economy, this subsector has added 9,500 jobs over the last year (4.8%).
• Health Care. The sector, which nearly always shows job growth despite economic conditions, added a stronger-than-normal 10,700 jobs compared with last January (4.7%).
• Insurance. Here’s an unexpected bright sport. Insurance, which has stagnated throughout the recession, added 3,200 jobs over the last year, which represents 6.2% growth in that small subsector.
• Information. Like Insurance, this sector unexpectedly gained jobs. The 4,800-job gain amounts to 6.0% growth in the sector, although the breakdown of what types of jobs account for this growth is unclear.
• Construction. Although year-over-year job growth of 2,200 jobs (2.6% growth) is normally nothing to get too excited over, in the case of metro Atlanta’s construction sector it is good news. The sector has been crushed by the recession, and, as I have said over and over, the recession won’t “feel” over until real estate-related sectors see a turnaround.

What’s not

• Private Education. The subsector, which normally grows despite economic conditions, shed 900 jobs compared with January 2012 (1.9% contraction).
• Government. Government, which has been among Atlanta’s worst performers in the last couple years, continued to shed jobs. It lost 3,200 jobs compared with January 2012 (1.0% contraction).
• Manufacturing. The sector managed to eke out growth of 1,500 jobs (1.0% growth), but this is far slower than recent trends. Politicians are counting on Manufacturing to be a source of economic recovery, so this slow rate of growth is a setback. However, the silver lining is that the rest of Georgia excluding Atlanta had stronger manufacturing growth of 4,300 jobs (2.1% growth). Recovery in the rest of Georgia means more tax revenue, as well as greater demand for goods and services produced here in Atlanta.

Next, look forward to household survey (unemployment rate) data, due for release tomorrow.

Big news, folks: the Georgia Department of Labor released its January 2013 job market data, which includes revisions to the 2012 labor market data. As I discussed, the revisions are a key data release: they are the government’s latest-and-greatest gauge of the local economy, and businesses and investors make decisions based on the results.

Atlanta fared quite well this year, with the economy 20,000 jobs larger in the revised December 2012 release (2,392,000 jobs) compared to the preliminary December data (2,371,500 jobs).

The recent release isn’t anywhere near as positive as last year’s revision, when Atlanta’s economy was revised upwards by a whopping 75,000 jobs. But a 20,000-job boost is still major.

There was a surprising amount of fluctuation among individual sectors. The notable winners were Leisure & Hospitality and, especially, Financial Activities. The latter saw its employment estimate increase by a startling 15%. Financial Activities includes, in addition to banking and insurance, real estate sectors that were hard-hit during the recession. The ever-beleaguered Government sector saw an 8,200-job positive revision, but is still showing year-over-year declines as of January 2013. Information, which has shed jobs during the recession, saw a healthy boost of about 5%.

Three sectors lost big. Trade, Transportation, and Utilities was revised downward by about 17,000 jobs, mainly on the heels of big downward revisions in retail employment. Sadly, Manufacturing employment estimates were revised downwards by about 2%, wiping out much of the growth I have been talking about in the industry over the last year.

Which brings us to Education & Health–the real head-scratcher of this release. As the chart shows, the sector was revised downwards by about 10,000 jobs. But the subsectors are really confusing me here. The Health side of the sector actually was revised upwards by 10,000 jobs, while the much smaller Education side of the sector was revised downwards by a whopping 20,000 jobs, or 30% of the sector’s employment! I don’t see how this is possible unless a significant change was made to the sector’s definition or something. I’ll make sure to review this once the detailed 2012 data set is released in a couple weeks.

At any rate, this is definitely a good day for metro Atlanta. Not only is the job growth I have been discussing for the last 12 months real, but it was actually considerably underestimated. Atlanta’s journey towards a full economic recovery has been handed a considerable boost.

The job market is still below the high-water mark of the pre-recession era. In December 2007, the economy had 2,480,000 jobs; we’re still about 90,000 below that level.

According to the Case Shiller Home Price Index, metro Atlanta’s house prices increased 0.87% in the month of December. It is the latest in a string of positive reports, as the metro area tries to recover from an unprecedented collapse in housing prices that occurred in late 2011.

Atlanta house prices are now 13.9% higher than they were in their March 2012 bottom, in a rebound that has turned out far swifter than anyone could have anticipated. However, it will take at least six more months of brisk appreciation to reach Summer 2011 levels.

As the chart shows, metro housing prices have regained about two-thirds of the value lost during the late-2011 collapse. Notably, even prior to the late-2011 collapse, metro housing values were down 30% compared with pre-recession highs. Even if housing prices recover to mid-2011 levels–which is still a significant if–the market will remain hard-hit in comparison with the rest of the country.

Looking at the metric that most newspapers report, Atlanta’s housing market appears to be recovering with rocket-like speed: we are now looking at double-digit year-over-year appreciation. In all likelihood, year-over-year growth will top out at about 14% in the coming months, level off during the Spring, and recede back into single-digits during the summer.

As the chart shows, the year-over-year appreciation I am predicting of 14%, while hardly lackluster, is slower than the pace of the late-2011 plunge, which was at one point in excess of 17%, and was sustained in double-digits for about a year. In other words, as strong as this recovery has been, the 2011 collapse was ever more severe. Remember that vital context as the sentiment builds in the coming months that Atlanta is a “hot” real estate market.

The Georgia Department of Labor released today the latest household survey data for the Atlanta metro area. According to the data, 5,500 fewer workers were employed in December compared with November, while 6,000 additional workers joined the workforce. The result was a spike of 11,500 in the number of workers looking for a job but unable to find one, pushing the unemployment rate up by 0.4% to 8.4%.

To say the data is disappointing might be an understatement. In a good December, the number of workers looking for a job but unable to find one (in other words, the number of unemployed workers), falls. Employment tends to kick up during the holiday shopping season, and the workforce expands moderately.

This year, the growth in the workforce compared with November was rather muted at 6,000 workers. That same number has stood as high as 21,000 in 2006, and is typically around 10,000. More worrying is the significant drop in employment: besides the recessionary bust years of 2008 and 2009, a drop in employment in December is unheard of. As recently as 2010, a net 12,000 workers found jobs in December; this year, 5,500 workers found themselves out of a job.

Still Looking Solid?

Despite the significant setback, make no mistake: the major gains Atlanta has posted in terms of the household survey over the last few months are very much in tact. 55,000 workers have found jobs over the last year while 45,000 workers have joined (or rejoined) the workforce. The trend remains positive, despite this weak December report.

The rate at which the ranks of unemployed workers is shrinking–by 10,000 over the last year–is frustratingly slow, but this could improve when the workforce finally reaches its pre-recession level and the flow of workers rejoining the workforce after prolonged periods of unemployment tapers off. In all likelihood, the high-water mark in terms of total workforce size will be reached sometime during 2013.

Another Look at November

One reason not to get too down on the December report is a significant positive revision to November. The Labor Department upped its estimate of the number of employed workers by 2,000 and the workforce growth by 1,500, compared with its earlier estimate. This makes up for a bit of the weakness we previously reported regarding November.

The Georgia Department of Labor released today the December payroll survey of employers, which provides an estimate of the employment situation for the Atlanta metro area. These job-creation figures are the most important single economic indicator for the metro area.

The December data are mostly mixed, with a few scattered positive trends. But first, the bad news: the economy added 1,700 jobs compared with November, which is slower than seasonal norms. Ignoring the Trade, Transportation, and Utilities sector (which includes holiday-fueled industries like retail and warehousing), the economy shed 1,500 jobs.

But as the report shows the fastest year-over-year job growth since February, it’s tough to complain too much.

Here are the highlights:

• Like last month, the latter part of the holiday bounce has been subdued. What began as a brisk holiday hiring period plateaued during November and December–the months normally associated with holiday shopping. (Although positive revisions to the November data, discussed below, are worth pointing out.) Retailers and distributors started hiring holiday workers earlier this year, which puts a damper on the last two job reports but is ultimately a good thing for seasonal workers. The year has been a bullish one for the sector, with 23,200 jobs added since December 2011.
• Several sectors shed jobs. Education & Health, Leisure & Hospitality, Manufacturing, and Other Services all performed poorly. It’s especially disheartening to see Manufacturing, which normally has very little in the way of seasonal fluctuations, take a step backwards, however small.
• Professional & Business Services had a good month. Yesterday we noted that Professional & Business Services, which includes many high-wage jobs that are the lifeblood of a modern service economy, hasn’t been doing so well. This month, the sector added 3,200 jobs compared with November, with only 1,100 coming from the less-permanent Admin & Support subsector. Normally December is a flat month for the sector. Year-over-year job growth for the sector stands at 15,600, which is the strongest performance since the summer. The sector continues to forge new all-time highs in terms of total employment.
• Construction gained some jobs back. Although 700 jobs is just a small gain in comparison to the tens of thousands of jobs lost during the recession, it’s nice to see Construction headed in the right direction. Let’s hope this time it’s the start of a real trend. Finance, which includes the downtrodden real estate sector, also gained some jobs back.
• Government took a bad turn. The sector shed 1,900 jobs over the month and 7,200 jobs over the year. This marks a new post-recession low for the month of December.

A bigger story than the above story lines might be that November was a lot better than previously thought. The Department of Labor revised upward its estimate for November by 3,300 jobs, which is a significant revision for a monthly report. This puts some pep into the year-over-year job creation numbers, and makes it hard to complain about the overall jobs picture. Atlanta has 37,400 more jobs than it did December of last year, and has reached a new post-recession high in total employment.

The state’s seasonally-adjusted unemployment rate notched up a tenth of a percentage point to 8.6%. According to the press release, the labor force grew by about 4,000 and total employment declined slightly on a statewide level. As usual, the detailed unemployment data will be made available next week, so we’ll hold off on commenting until then.

Unemployment insurance initial claims–the number of layoffs experienced in the metro, in a nutshell–were basically flat compared with November, with about 22,000 layoffs across the metro.  More importantly, the rate is a significant improvement from December 2011, when 27,000 people were laid off.

While most people are wondering what 2013 will bring, this blogger’s eyes are looking anxiously towards the end-of-2012 data that will be trickling out over the next few months. We’ve caught you up on Delta’s traffic stats as well as Georgia’s tax revenue. But next comes something more important than either of those: the December payroll survey.

During a normal December, Atlanta’s economy tends to grow modestly–by perhaps 5,000 jobs. The jobs that account for most of the growth are retail and distribution. Same old story as last month. Nothing much to see there.

From the standpoint of the economy at large, the more important thing is what happens in the rest of the economy. Here’s what I’d like to get for Christmas:

• Improvement from the Professional & Business Services sector. These high-paying jobs led Atlanta out of the recession, as the sector was among the biggest gainers in 2011. In 2012, the rate of improvement has slowed dramatically. In the 12 months ending November 2011, the sector added 18,600 jobs. In the last 12 months, is has added only 11,800 jobs–a reduction of over a third from the 2011 rate. The recovery has thus far been much more robust for high wage earners, but this sector appears to be losing steam just as the rest of the economy is gaining a footing.
• Some signs of life in the Construction sector. While most industries are showing some pretty decent growth lately, Construction continues to spiral into oblivion. It last month posted its second-lowest employment total this century–only the snow-locked January of 2011 was worse. With housing starts finally headed up, it’s time for Construction to come back to life, or at least stop draining jobs from the economy. The recession won’t truly feel over until the hardest hit-sectors–Construction chief among them–bounce back.
• A real recovery in Finance and Government employment. These two sectors join government as the worst performers of the recession, and glimmers of hope remain muted at best. If Government can simply manage not to shed jobs this December, we’ll view it as a positive development. Given the substantial boost in tax revenue the state has enjoyed this year, it certainly seems plausible Government could regain some of the jobs it lost, but this remains an idle hope. Finance, which stabilized in 2010 only to nose dive in 2011, has been flat all 2012. Here’s hoping we see some signs of rebound.

As always, check back for full analysis tomorrow.

The US Census Bureau released recently its latest population estimates for all 50 states (no metro-specific data available this time around; sorry). The data show an estimate of the change in population as of July 1, 2012.

Here are the highlights:

• Georgia’s population as of July 1 was 9,919,945.
• Georgia added 107,485 people last year. This is down considerably from the ten-year period between 2000 and 2010, during which Georgia added an average of 150,120 people per year.
• Georgia’s largest source of population growth was natural change (births minus deaths). 60,119 more people were born than died in Georgia during the last year.
• The second largest source of population growth was international immigration, which contributed 27,032 people to the state. This is in line with previous years. Normally, about 80% of new international immigrants to the state end up in the Atlanta metro area. The report suggests this year’s immigration data may be similar to last year’s.
• The smallest source of population growth was domestic migration, which contributed 19,928 people to the state.
• In terms of raw numbers, Georgia is the fourth-fastest growing state, behind Texas, California, and Florida. North Carolina is fifth.
• Georgia was the ninth largest recipient of international immigrants–coming in behind Illinois and ahead of North Carolina.

Here at the Atlanta-Monitor, we call things like we see them. Sometimes that means going out on a limb and explaining why positive trends might actually be hiding behind bad headlines. Other times, it means taking the unpopular side and explaining why something that looks good–like a drop in the unemployment rate–isn’t all that impressive.

I’m sorry to say that this is such a situation. Despite the unemployment rate falling by 0.2 percentage points in November, the underlying trend behind this drop isn’t worth getting excited about.

November saw 8,700 workers find jobs, while the workforce grew by roughly 4,000. This isn’t particularly impressive by November standards. Last year, a whopping 20,000 workers found jobs in November, and the 8,700 figure from this year is the smallest number since 2002 (excluding 2008, when the economy was in free-fall).

However, since workforce growth was relatively subdued as well, the unemployment rate fell by 0.2%, which is in line with normal expectations. In other words, the November bounce is pretty weak this year.

Have No Fear

In the relatively weak November showing reason to fear for the economy in general? In our opinion, the answer is firmly “no”, mainly because the last couple reports have been good enough to make up for the weak November–and then some.

November is just one month of the holiday shopping season. If you look at the change from the post-summer low of August to November, a more complete picture comes into view.

As it turns out, 2012 has actually seen the best August-November bounce in recent years. The only year that comes close is 2006. And of the four stats above, the one that means the most (the “employment” figure) has been strongest in 2012. 2011 had better unemployment rate performance, but that’s largely a function of the workforce growing less robustly.

The strong performance is largely a result of a very good September.

So, in general, although this November data isn’t particularly good, we’ve got to be happy with the household survey in recent months. Particularly since the national consensus is that the 2012 shopping season has been decidedly weak.

The big question now is whether these improvements will vanish in January, or whether the last few months will have lasting gains.

The Bigger Picture

Year-over-year gains are accordingly strong. 66,000 more workers are employed in November 2012 than were employed in November 2011. 47,000 more workers have joined the workforce, and 19,000 fewer people are out of a job but looking for one.

The number of employed workers and the size of the workforce are both at post-recession highs. The number of workers out of a job but looking for one is at a post recession low. These are all positive developments. The household survey continues to be very positive for Atlanta, in contrast to the payroll survey of employers, which has been more mixed.

The Georgia Department of Labor published today the most important economic release of the month.The payroll survey of employers for November is the best snapshot available of the number of employed workers in the Atlanta metro area, broken down by sector and industry.

The total number of jobs stands at 2,366,500, up by 33,900 from November 2011. The figure represents an improvement of 12,300 jobs compared with October 2012, which is on par with seasonal trends in recent years.

The employment total of 2,366,500 is a new post-recession high water mark for total employment. The largest employment total ever registered for metro Atlanta was 2,480,600 in December 2007, which is 114,100 more jobs than Atlanta currently has. At current growth rates, Atlanta will not see a full labor market recovery until 2015.

Winners and Losers

Predictably, most of the growth compared with last month came from the Trade, Transportation, and Utilities sector, which includes retail and distribution–industries boosted heavily by the Christmas shopping season. Retail accounted for 7,100 jobs gained over the last month, while Transportation and Warehousing accounted for 3,100 jobs. Essentially all of these jobs can be expected to disappear by January.

But even though most of these jobs gained are temporary, not all is lost.

Manufacturing–an industry with far smaller seasonal fluctuations–added 600 jobs. Over the last year, manufacturing has added 6,000 jobs, which is the best year-over-year performance for the industry in over a decade. Manufacturing has been extremely hard hit by the last two recessions, and continued to lose jobs even during the economic expansion in the mid-2000s (see chart). The resurgence of manufacturing in Atlanta is undoubtedly the surprise story of the recovery thus far.

Indeed, even at this relatively quick growth rate, it will take a decade for manufacturing to match its pre-2000 employment levels. But whatever growth Atlanta can muster is welcome. The industry is basic employment, meaning the jobs serve a regional or national customer base, rather than a local customer base. It tends to pay solid wages in comparison to service sector jobs, and requires high levels of investment, meaning the jobs are relatively costly to relocate elsewhere.

Will Atlanta’s manufacturing resurgence continue? Our bets here at the A-M are that yes, it will. Numerous industrial projects have been announced over the last year, and these jobs will come on line in the coming years. Mostly notably, Baxter, a pharmaceutical company, announced a major manufacturing facility in the eastern part of the Atlanta MSA, expected to employ up to 1,500 workers. (Caterpillar, which is building a major factory in Athens, is a couple miles outside of the Atlanta MSA, and will instead count towards Athens’ statistics, although it will benefit both cities significantly.)

In addition, long-run global trends are pointing towards more manufacturing taking place in the US. High energy costs make trans-Pacific imports less economical. And persistent wage inflation in China has done much to wipe out the Chinese manufacturing cost advantage. Manufacturing looks poised to continue recovering in Atlanta.

Financial Activities, a sector long-reeling from the real estate bubble and financial crisis, is finally posting some gains. The sector added 1,600 jobs compared with last month, even as 500 real estate jobs were wiped out. The sector includes hard-hit professions such as consumer banking and real estate agents.

Professional & Business Services–which generally includes high-wage professionals–is a mixed bag. The sector added 800 jobs compared with last month, but its year-over-year employment gain stands at a languid 11,800 jobs–lower than job growth in the last couple years. But underlying this mediocre gain is a whopping 5,000 jobs lost in Employment Services over the last year. One criticism of the economic recovery has been that many new jobs are temporary; however, lately it seems that companies are shedding temp workers and hiring permanent ones. Other subsectors are by and large performing well.

Construction, on a negative note, continues its slide. It has lost 900 jobs since October last month and 2,600 over the last year. Its current employment level stands at 86,000 jobs, which is the second lowest reading since 1995. The lowest reading was during January 2011, when an ice storm ground most construction to a halt. Even though housing starts are up, the sector is still unfortunately contracting.

In other news, the report also mentions that Georgia’s seasonally-adjusted unemployment rate fell 0.2% to 8.5%, the lowest level since January 2009. However, since the detailed data are not yet available, it remains to be seen why the unemployment rate fell this month. Recent months have seen unemployment fall for the right reason–more workers finding jobs–but that by no means guarantees the same thing happened this month. More detail is expected next week.

Unemployment Insurance Initial Claims–which more or less indicates the number of layoffs in the metro area–decreased by 12.6% compared with November of last year. About 21,800 workers were laid off across the metro area during the month.

Atlanta’s housing market notched yet another month of strong growth as it tries to recover from its collapse late last year. According to Case-Shiller’s seasonally-adjusted September data, house prices grew 1.70% compared with August levels–the fourth best month on record for Atlanta.

Just two months ago we were still looking at double-digit depreciation, year-over-year. Now, we are flat year-over-year.

I began predicting this would happen during the June data release, and so far my only mistake has been underestimating the rate of recovery in the housing market. I originally thought the headlines would show year-over-year appreciation starting with the December data; we’ll instead be seeing appreciation in next month’s October release.

When I originally pointed this trend out, I called it a faux-recovery, and said it would take months of sustained growth before I’ll be excited about a true turnaround. We aren’t there yet, folks. But this data marks yet another extremely positive release for Atlanta.

It’s somewhat impressive that September 2012 is the fourth best month in the history of Atlanta’s housing market. But what’s incredible is that the only three months better than September were May, June, and August of this year. All four of the Atlanta housing market’s best months for price performance in history have been in 2012. The housing market is rebounding from its dreary lows remarkably well.

We’re still about 8% below our mid-2011 price levels, which is just before the latest collapse began. Six months ago, even an optimist would have thought a full recovery was years and years out, given the loss of approximately 20% of the metro’s home values in a short timeframe. But, suddenly, a full recovery to those levels in the near future is starting to look plausible. The recovery has been far more robust than anyone could have imagined–but it is still ongoing and far from certain.

The Next Few Months

I have been posting a monthly graph of our projected year-over-year change in house prices. Here’s the September edition:

It’s now almost a given that we’ll see headlines of double-digit year-over-year appreciation in house prices in the near future. Don’t buy into the hype of positive headlines: we’re still not out of the woods, and we won’t be until we see house prices reach their mid-2011 levels.

But September’s report is another huge step in the direction of recovery.