EconSouth (Third Quarter 1999)

Recent events and trends from the six states of the Sixth Federal Reserve District
The forestry industry in Alabama remains weak. Demand from pulp and paper producers is still depressed by weak demand from overseas, and foreign supply is becoming more abundant. The relatively robust rate of single-family home construction has helped lessen this problem somewhat.
The auto industry continues to expand, most notably with the announcement that Honda will be locating a large assembly facility along Interstate 20 near Talladega, between Birmingham and the Georgia border. Construction will begin later this year. Auto component manufacturers located in northern Alabama and throughout the region will benefit as the auto industry in the South continues to expand.
The state's year-over-year employment growth lags behind both the district's and nation's, with manufacturing and services showing notable relative weakness.

Excess capacity is beginning to show up in a number of theme parks in the central part of the state after several years of aggressive expansion in that area. But this condition does not indicate a slowdown in overall tourism.
The state's employment growth is handily outpacing both the district's and nation's as measured on a year-over-year basis. Most of this strength is found in the central part of the state, with Orlando and Tampa showing the strongest growth rates.
The cruise industry continues to enjoy high occupancy rates, even with new ships being added — and more on the way. While bookings are available for the distant future, cruises at the beginning of 2000 sold out long ago with very little discounting.
The Atlanta metropolitan area led the nation in the number of new homes constructed last year and is on track to do the same again this year, although the margin may not be as great.
Employment growth versus a year ago continues above the 3 percent rate, bettering both the district and national rates. The construction sector is still showing most of the growth, although these rates are decreasing. The larger miscellaneous business service sector is accelerating, however, taking up any reduction in momentum from construction.
Turner Field, home of the Atlanta Braves, has been selected as the site of the 2000 Major League Baseball All-Star game.
The decline in oil and gas drilling activity has halted as a result of higher oil and gas prices. Industry sources report, however, that even though prices are well above break-even points for expanded drilling, firms are reluctant to restart drilling in a significant way until there is more certainty that the higher market prices will continue.

Baton Rouge continues to be the strongest metropolitan area in the state, growing faster than both the district and nation. The rest of Louisiana is underperforming both.

Strength in Baton Rouge has come from a variety of industries. While growth in government employment has been important, the performance of the state's service sector and whole-sale trade has also contributed.

The gambling industry along the Gulf Coast continues to prosper. Despite the recent opening of the largest gambling complex to date, though, an even larger project already is set to begin construction.
A major obstacle to expansion along the Mississippi Gulf Coast is the very tight labor market conditions in the area, making the staffing of more facilities problematic.
Despite the continued Gulf Coast expansion, the state's overall employment growth is stagnant. In part, this situation simply reflects the tight labor markets along the Gulf, but what growth has occurred there is being offset by a generally weak manufacturing sector and no net growth in services in the remainder of the state.
Employment growth in Tennessee is underperforming the district and is even slightly less than the national average as measured on a year-over-year basis. The Knoxville area is notably weak, actually losing jobs compared to year-ago levels.
Manufacturing in the state has been relatively weak for over a year, but the recent strength in the auto industry, which is concentrated in the middle of the state, has helped to slow Tennessee's overall job losses in manufacturing.
Knoxville has experienced notable reductions in manufacturing employment compared to the rest of the state, and the city has also suffered losses in the retail trade and transportation/public utilities sectors.
Compiled by the regional section of the Atlanta Fed's research department

Return to Index  |  Next