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Banking

EconBrief
No Sign of Summer Doldrums

optimism takes root in the springThe last several years have witnessed fits and starts when it comes to building momentum in the regional economy. More recently, the harsh winter weather in the first months of this year clearly slowed activity in the Southeast and in many other parts of the country. The spring months brought better news—both data and reports from our business contacts were positive. That trend has continued, and importantly, we have detected growing optimism throughout much of the region.

Job growth gains welcome momentum
Regional employment growth accelerated in the second quarter; after adding nearly 67,000 jobs in the first quarter, the six states in the Atlanta Fed's district (Alabama, Florida, Georgia, Louisiana, Mississippi, and Tennessee) saw total employment expand by just over 103,000 in the second quarter. The total number of jobs created for the first half of the year rose to 170,000.

There is, of course, much more to the picture. Employment gains in the region have not been evenly distributed. The table below shows the gains in absolute terms and in terms of percent change.

Employment Growth in Sixth District States

As noted earlier, job gains in the first half of the year amounted to nearly 170,000. The vast majority have been in Florida, followed by Tennessee and Georgia. After slow first quarters, Louisiana and Mississippi saw job growth accelerate, but Alabama has continued to shed jobs. In percent change terms, Florida still leads the region, but Tennessee's increase is more pronounced than Georgia's. Louisiana gain of 0.4 percent is much greater than Mississippi's 0.1 percent. Alabama's decline has been minor in terms of percent change, but the fact that employment is dropping in that state is troubling.

Despite the increase in employment, the region's unemployment rate has only declined from 6.7 percent at the end of 2013 to 6.5 percent by the end of the second quarter. The silver lining here is that the number of unemployed across the six states noted above has declined by 63,000 in the first half of 2014. Improved labor force growth has helped to keep the region's unemployment rate from declining further. The region's labor force increase of 305,000 in the first half of 2014 is the healthiest since the recession. For a much more detailed breakdown of regional job growth and unemployment rates, see the recent blog post by my colleagues John Robertson and Whitney Mancuso in the Atlanta Fed's SouthPoint: "A Closer Look at Progress in Selected Southeastern Labor Markets."

Viewing employment from varied perspectives
With regard to unemployment, it is important to consider not only standard measures of the unemployment rate, but also broader gauges. One data point we follow closely is a measure of labor force underutilization known as "U6," which includes not only those who are unemployed but also workers who are considered marginally attached. Marginally attached workers are people who want to work and are available for work but were not counted as unemployed because they had not searched for work in the most recent month. This category also includes people who are not currently looking because they believe there are no jobs available or there are none for which they would qualify, workers often referred to as "discouraged workers." The broader U6 measure also incorporates workers that are employed part-time (from one to 34 hours) but would rather be working full-time. The table below shows that regional states' U6 rate remains in double-digits and—while down from prerecession levels—is quite elevated.

Regional States' U6 Rates

Unemployment insurance claims decline
Another positive sign is the deceleration in initial claims for unemployment insurance to near prerecession levels (see the chart). These data represent individuals who are signing up to receive unemployment benefits, so a decline indicates that fewer workers are losing their jobs.

Regional Initial Unemployment Claims

While we can conclude that regional labor markets are clearly improving and reflect an economy that is likewise improving, these nagging measures of labor force stress remain front-of-mind for Atlanta Fed economists and our President, Dennis Lockhart.

In a recent speech, President Lockhart said:

In current circumstances, a single measure of employment or unemployment does not provide a complete enough picture of what I care about in labor markets. I care about the full utilization, both quantitatively and qualitatively, of available labor resources.

The Atlanta Fed has delved deeply into these labor market issues in several macroblog posts, which focus on national economic trends, and in SouthPoint, our blog that delves into regional economic developments.

Looking down the road
What are businesses telling us about their hiring plans going forward? The number and types of difficult-to-fill positions appears to be increasing. For some time, we have heard that highly specialized positions in IT and engineering face skill shortages, but that shortage has expanded to other areas in business services, health care, construction, and transportation (especially truck drivers). More firms are reporting that they have added employees this year or currently have job openings to fill, which bodes well for employment gains going forward.

In addition to our SouthPoint blog, we invite you to look over the Atlanta Fed's Southeastern Insights as well as our contribution to the Federal Reserve's Beige Book. These reports look at the data and, importantly, what our business and community contacts are telling us about their experiences.