Columbus Chamber eConomiC ForeCast
2009 Forecast:
Employment in the Columbus Metropolitan Statistical Area (MSA — Delaware, Fairfield, Franklin, Licking, Madison, Morrow, Pickaway, and Union counties) should decline in 2009, but proportionally less than is likely at the national level. The Blue Chip panel’s consensus is for a year-to-year net decline of 0.4 percent (3,500 jobs). Differences among our individual forecasts are a result of the considerable uncertainty regarding the severity of the recession during 2009 and its impact on employment. Healthcare and private education is the one sector expected to strengthen in 2009. Growth should continue in transportation, business and professional services, and leisure and hospitality as well, but at far more modest rates. Declines are predicted for other sectors. For each sector, we present both our individual forecasts and the consensus forecast — the average of the individual forecasts. Economists surveyed by The Wall Street Journal generally expect U.S. output declines to continue over the first half of the year, with the recession ending in summer 2009. Employment declines are likely to continue through the year, however.
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Columbus MSA employment declines 3,500
The forecast presented here is the average of independent sector forecasts by Bill LaFayette, Ph.D., vice president, economic analysis, Columbus Chamber; Joseph Mandeville, assistant vice president, Red Capital Group; George Mokrzan, Ph.D., vice president, senior economist, Huntington Bancshares, Inc.; and James Newton, Ph.D., chief economic advisor, Commerce National Bank.
Columbus msA employment will suffer reCession-driven deClines in 2009
Consensus –0.3% 947,200 laFayette –0.9% 914,300 mandeville +0.3% 952,800 mokrzan –0.3% 947,200 newton –0.3% 947,700
Employment growth stronger than average in 2008
We expect a final average of 950,300 for Columbus MSA employment during 2008, based on preliminary estimates through October and forecasts for November and December. This represents a 0.7 percent increase from 2007, far better than the likely U.S. decline of 0.2 percent. (Ohio employment in 2008 will likely be 0.3 percent lower than in 2007.) Most sectors experienced relatively strong growth, with transportation and professional and business services registering particularly strong gains while declining at the national level. Construction, manufacturing, retail and financial activities declined locally, but far less than elsewhere. However, education and healthcare, other services, and government were weaker than average.
business, professionAl, And informAtion serviCes_up 0.2%
2008 average: 172,000 (18.1% oF total) Change From 2007: +2.3% (u.s.: –0.6%; ohio: 0.0%)
Consensus +0.2% 172,200
laFayette –1.9% 168,800
mandeville +0.3% 172,600
mokrzan +0.7% 173,200
newton 1.4% 174,300
Professional and business and services (90 percent of this aggregated sector) continued to outperform the national average in 2007; local employment grew 2.8 percent, while national employment fell 0.5 percent. Information services, however, declined both locally and nationally. Prospects for 2009 are unclear because the local employment trend has only recently begun to weaken.
tHousAnds
Government_down 1.0%
943.6 946.8 950.3 931.9 916.0 910.6
1000.0 950.0 915.4 900.0 864.7 850.0 800.0 750.0 700.0 1995 1998 1999 2000 2001 2002 2003 2004 2006 2009 1996 1997 2005 2007 2008 822.3 844.5 808.0 890.8 919.9 913.6
2008 average: 157,200 (16.5% oF total) Change From 2007: +0.1% (u.s.: +1.2%; ohio: –0.2%)
922.7
Consensus –1.0% 155,700
laFayette – 0.8% 155,900
mandeville +0.1% 157,300
mokrzan –2.8% 152,800
newton – 0.3% 156,700
The one segment of government employment registering strong growth in 2008 was federal, thanks to continuing growth at DSCC. This growth will continue in 2009. Although state and local government employment increased strongly nationally, budget problems caused a decline in state employment and unchanged local employment. State employment declines were less than elsewhere in Ohio because of smaller declines in the relatively large state education component. But given the worsening condition of the finances of Ohio, its colleges and universities, and many local governments, government employment may decline in 2009 for the first time in 25 years.
leisure And otHer serviCes_up 0.2%
2008 average: 127,500 (13.4% oF total) Change From 2007: +0.5% (u.s.: +0.9%; ohio: –0.4%)
finAnCiAl ACtivities_down 0.9%
2008 average: 73,800 (7.8% oF total) Change From 2007: –0.1% (u.s.: –1.4%; ohio: –0.6%)
Consensus +0.2% 127,800
laFayette –0.7% 126,600
mandeville +1.9% 130,000
mokrzan –0.6% 126,700
newton +0.2% 127,800
Consensus –0.9% 73,200
laFayette –2.1% 72,300
mandeville +0.7% 74,300
mokrzan –1.0% 73,100
newton –1.2% 72,900
Leisure and hospitality (71 percent of the combined sector) grew 0.9 percent locally in 2008, close to the 1.1 percent national average. However, other services (personal services and civic, social, and business, organizations) fell 0.5 percent locally but rose 0.6 percent nationally. We all expect continued declines in other services. We are divided on leisure; the consensus is a 0.6 percent gain. The economy may encourage residents to vacation at home.
Although financial activities employment declined in 2008, its performance was considerably better than the national average. The likely reason is the relatively slow growth of finance and insurance employment earlier in the decade, coupled with growth in output higher than any other sector. However, the ongoing turmoil in this sector creates considerable uncertainty for the course of employment in 2009.
eduCAtion, HeAltH, And soCiAl serviCes_up 2.4%
2008 average: 113,100 (11.9% oF total) Change From 2007: +2.2% (u.s.: +3.0%; ohio: +1.5%)
trAnsportAtion And utilities_up 1.6%
2008 average: 51,900 (5.5% oF total) Change From 2007: +3.9% (u.s.: –0.7%; ohio: +0.1%)
Consensus +2.4% 115,100
laFayette +2.1% 115,500
mandeville +3.4% 116,900
mokrzan +2.0% 115,300
newton +2.0% 115,300
Consensus +1.6% 52,700
laFayette –0.8% 51,400
mandeville +2.7% 53,300
mokrzan +1.9% 52,800
newton +2.5% 53,200
Employment in healthcare and social services (87 percent of the sector) rose 2.7 percent in 2008 — a rate close to the national average. Estimates of private education employment are less reliable, but this segment may have declined around 0.6 percent. This brought down the performance of the overall sector. Prospects are excellent for this sector, especially the healthcare component, which has grown steadily since employment estimates became available in 1983. Consequently, this is the one sector that we all expect to perform well in 2009.
Growth in transportation and warehousing (93 percent of the sector) has weakened in recent months as the recession has worsened. The 2009 economy will be a challenge, but if distribution operations continue consolidating in Columbus, transportation and warehousing will defy the national trend, as it has the entire decade thus far.
wHolesAle trAde_unCHAnGed
2008 average: 39,700 (4.2% oF total) Change From 2007: +2.3% (u.s.: –0.2%; ohio: +0.2%)
retAil trAde_down 2.2%
2008 average: 102,900 (10.8% oF total) Change From 2007: –0.3% (u.s.: +1.4%; ohio: –0.6%)
Consensus 0.0% 39,700
laFayette –0.9% 39,300
mandeville –0.2% 38,600
mokrzan +1.3% 40,200
newton 0.0% 39,700
Consensus –2.1% 100,800
laFayette –1.2% 101,700
mandeville –3.3% 99,500
mokrzan – 0.8% 102,100
newton –2.9% 99,900
We are unanimous in our expectation of a decline in retail employment in 2009. But, for a change, this decline will be driven by the national economy rather than by the effects of two decades of local overdevelopment, which seem finally to be worked out of the system. Retail employment slipped only modestly in 2008, and actually rose for much of the year while declining nationally. Although the economic headwinds should cause sharper employment losses in 2009, declines elsewhere may well be worse than in the Columbus MSA.
Local wholesale trade employment growth has exceeded the national average since mid-2006, with 2008 showing particularly strong gains as Columbus has become an increasingly important supply chain hub. Wholesale growth has weakened the past several months, however, and this weakness is likely to continue in 2009 as a result of reduced purchases by businesses and consumers.
ConstruCtion_down 3.3%
2008 average: 37,100 (3.9% oF total) Change From 2007: –3.0% (u.s.: –4.6%; ohio: –2.1%)
mAnufACturinG_down 2.4%
2008 average: 75,200 (7.9% oF total) Change From 2007: –2.3% (u.s.: –3.0%; ohio: –1.9%)
Consensus –3.3% 35,800
laFayette –3.1% 35,900
mandeville –2.7% 36,100
mokrzan –1.9% 36,300
newton –5.7% 34,900
Consensus –2.4% 73,400
laFayette –1.7% 74,000
mandeville –2.8% 73,100
mokrzan –0.9% 74,500
newton –3.1% 72,900
Manufacturing employment continued to decline in 2008. But in contrast to previous years, these employment declines were likely accompanied by recession-driven output declines. (Between 2001 and 2007, U.S. manufacturing employment declined 15 percent while output increased 29 percent and worker productivity increased 37 percent.) The status of the Detroit automakers is the key unknown confronting the manufacturing sector in 2009. The restructuring that will likely be required should trigger several years of employment declines. Elsewhere, though, earlier efficiency gains may lead to a more rapid employment recovery when expansion resumes.
The good news for construction in 2008 was that the employment decline was not nearly as bad in the Columbus MSA or in Ohio as it was nationwide. Columbus employment was actually fairly stable from month to month for much of the year as the national decline accelerated. But the continuing inventory of unsold houses, the economic uncertainty facing businesses, and the tightness of credit markets suggest that both builders and remodelers will face a challenging year in 2009.
note: employment figures have been rounded to the nearest hundredth.