By Mark Thompson

NATIONAL SUMMARY
While some indicators are showing positives signs, the labor market continues to signal that the national economy is in the midst of a recession. Total nonfarm employment declined by 62,000 jobs in June. To add to this, April’s and May’s employment numbers were revised downward indicating another 50,000 jobs lost.

While much of the job loss is in the construction and manufacturing sectors, the service sector is also experiencing cuts. One bright spot in the national labor market is the job gains in educational and health services sector (a major sector for Augusta). Of course, with oil prices on the rise, the mining sector is also seeing a boost in employment as oil companies are entering the market and increasing investment. However, this sector is relatively small in terms of its impact on the national labor market.

If you are looking at the labor market to decide if the United States is in a recession, then here are some thoughts to keep in mind. First, job losses since the beginning of this year are still less than during the last recession. This is due to businesses being in better financial positions with leaner payrolls.

Second, the amount of job losses over the past few months is less than what we saw earlier in the year. This may be an early indication that the economy is starting to rebound.

AUGUSTA ECONOMY
The Greater Augusta Economic Activity Index is a single summary measure that tracks the current state of the Augusta-Aiken Metropolitan Statistical Area (MSA) economy. (Note: Further discussion and information of the index can be found at http://coba.aug.edu/mthompson/Augusta Regional.htm).
In May, the Greater Augusta Economic Activity Index increased by 0.10 percent from last month and 0.63 percent from this time last year. The local economy held steady and started to show some signs of increased activity. While this continues to be good news, some of the gains could be from additional spending made available by the stimulus package.

While we continue to hear about the housing problems contributing to the slowing economy, Augusta’s market continues to weather the downturn. Existing home prices are appreciating at a slower rate than late 2006 and early 2007, but still well above their historical average of 3.8 percent. Expect home prices in Augusta to continue to appreciate as many other metro areas are starting to see price declines. Augusta’s housing market also has some room to maneuver before the housing market has a detrimental impact on the regional economy.

The latest labor market report shows that Augusta lost 700 jobs last month. This is a normal adjustment and highlights the importance of seasonally adjusting economic data. After seasonally adjusting the data, employment actually went up from last month. The main reason behind this type of adjustment is the Masters tournament. Leisure and hospitality sector experiences a boost in employment for the tournament, but then drops following the tournament. If you look at the unadjusted numbers, total employment fell by 700 jobs, which happens to be the same decline in the leisure and hospitality sector. Simply put, the labor market in Augusta continues to support economic growth.

Even though the unemployment rate increased this month, it is still below the state unemployment rate.
Good news may be in store for the unemployment rate as initial unemployment claims started to level off over the past couple of months and actually declined in June.

CONCLUDING REMARKS
While the national news is focused on government bailouts, labor market signaling a recession, and if the housing market has reached bottom, the Augusta economy is holding steady and starting to show signs of increased economic activity. Time will tell if this is the start of a trend or just good timing.

Popularity: 1% [?]