Tri-Cities economy adds 100 jobs in March, jobless rate at decades low

The Tri-Cities economy added 100 nonfarm jobs in March and private sector wages were up according to preliminary, non-adjusted numbers from the Bureau of Labor Statistics (BLS).

The unemployment rate for the seven-county region dropped 0.1% to 3.8%. It has been under 4% for six of the past seven months. They are some of the lowest jobless rates the region has seen since 1990.

Employment was up in both March and the first quarter. Although improving, the year-over-year growth rate has slowly trended lower for nine straight months. Job creation is on a similar trend path. It has ebbed for the past six months. But the number of “we’re hiring” signs that have come out during the slow-growth expansion that took off in the summer of 2015 continues pulling additional workers off the sidelines.

There were 200 fewer nonfarm jobs during the first quarter than last year while first-quarter employment was up by 2,500 people and the labor force grew by 200.

Private sector wages were the strongest point in March’s labor market reports.

Average weekly wages for Kingsport-Bristol private sector workers were up for the first time this year. Workers in the four-county metro area saw their monthly weekly average decline 11 times last year as the region posted its first annual private sector wage decline since 2014. The weekly average last month was $640, up from $624 in February and $627 March last year.

Private sector workers in the three-county Johnson City MSA have fared better. Their weekly average wage has increased for 32 consecutive months following a 32-month decline before the labor market recovery took hold in that metro area. March’s weekly average was $722, up from $699 in February and $641 March last year.

Both Tri-Cities MSAs continue to have some of the lowest private sector wages in the state, although the performance of the Johnson City MSA private wage sector has moved it above Morristown MSA to a second-place ranking in Northeast Tennessee. Knoxville had the highest average in March at $892 a week. Nashville private sector workers were the best paid with an average of $898 a week.

Tri-Cities job seekers are in the best labor market they have seen for years.  There are abundant positions open, wages and the labor force are increasing. March’s labor force was at a 49-month high. But none of this means the quality of many of the new jobs or the benefits that go with them are what job seekers would like to see. Underemployment is still an issue and although the economy is improving some workers are still getting by but not getting ahead.

For example, the recent press release for management downsizing at Ballad Heath included a notice that the newly merged system is looking to fill more than 700 open jobs. Most are in the clinical and nursing sectors.

At the same time, there’s the reality that the local economy is adding more low-paying than high paying jobs. Using $50,000 a year as a benchmark for a sustainable living for a household for three, the local economy creates six jobs that pay less than for every one $50,000-a-year or over job. Those numbers come from the BLS and state Department of Employment and Workforce Development’s hot job creation list for the Tri-Cities area.

Here’s how area city and county unemployment rates looked in March:

Bristol – 3.7%.

Johnson City – 3.4%.

Kingsport – 4%.

Carter Co. – 4.1%

Greene Co. – 4.2%.

Hawkins Co. – 4%.

Johnson Co. – 3.7%.

Sullivan Co. – 3.7%.

Unicoi Co.  – 4.9%.

Washington Co. 3.5%.

Statewide 82 of Tennessee’s 95 counties saw lower unemployment rates in March. Williamson County once again had the lowest jobless rate in the state – 2.5%.

Tennessee’s March unemployment rate was 3.4%, and the national rate was 4.1%.

 

Headwinds building for new car sales

New car sales are expected to soften in the second half of this year despite more dealer incentives. That would be a blow to local tax collections. There’s a wave of new vehicles coming off lease that could lure new car buyers to better deals. Leasing is also expected to be soft.

So far this year, auto sales are matching 2017’s pace but there are some potential trouble spots and well as lending headwinds.

One of the economy’s red flats Wells Fargo Chief Economists John Silva pointed out in Johnson City earlier this month was the rising rate of sub-prime auto loan defaults. Bloomberg is reporting that growing numbers of the subprime lenders are getting out of the business while banks that have been lending to companies that provide subprime finance and private equity owners are cutting off funding due to slim margins. As banks tighten the car loan purse strings, dealers and credit unions should pick up a larger market share.

Higher auto loan rates are also on the horizon. Kiplinger predicts rates will rise a half-point this year for car loans, “causing new-car payments to increase by $7 or so per month. The average new-car payment will be about $525 monthly for a $31,000 loan at 5.5%. For used cars, the average payment will be about $390 for a $20,000 loan at 9.5%.

SUV demand is expected to remain high but keep an eye on gas prices. They’re heading up and analysts say it’s not just a seasonal thing. Currently, SUV’s have a 45% market share, but that could slip as the cost of filling up the tank hits the $50 mark.

Car dealers are not the only ones watching gas prices. Talk about gap-price induced staycations is on the rise and the tourism industry is closely watching. That’s a double opportunity for local tourism attractions like the Off the Grid ziplines in Elizabethton, the growing interest in Southwest Virginia and Northeast Tennessee biking trails and kayaking on local rivers. The first opportunity is the activity itself, but equally important is the number of locals who use them talk about it to friends and neighbors.

 

GenZ preferences good news for malls – no so much for downtowns

Here’s some good news for malls – not so much for downtowns or big online sellers like Amazon.

Generation Z is rapidly coming of age, and new studies show they like hanging out at the mall just as much as their GenX parents did when they were youngsters. They like the shopping experience, but so far, they’re not big fans of downtowns or outlets. And bear in mind, we’re talking about a national trend. Some signs are showing up locally but don’t expect to see packs of mall rats immediately.

This youngest generation is always online, but they are not TV watchers. They use social media as much if not more than Millennials. It’s their town square for product and service discussion and comparison.  And today’s big online sellers are not, especially in favor.

This generation is roughly defined as those born between 1995 and 2012. The most current Census count shows there are about 109,000 of them in the Tri-Cities. About 44,000 are in their early 20s and late teens. They account for 21.8% of the population – just below the Millennial’s 23.5% share.

Kiplinger reports GenZ influences about 93% of household spending. Data on their habits and preferences are evolving but according to WJSchroer Co. says they will be a highly diverse generation. They have grown up with sophisticated media, and in a computer environment, so they’re Internet savvy.

Their most noteworthy flexing of generation muscle has been in political activism in the wake of a school shooting and gun control.

 

Kingsport-Bristol blows the doors off Feb. sales tax collections

Kingsport-Bristol Metropolitan Statistical Area (MSA) sales tax collections were up an eye-popping 15.6% over February last year and 17.6% better than January following a disappointing beginning of the New Year performance.

Both month-over-month and year-over-year collections as reported by MTSU and the State Advisory Commission on Intergovernmental Relations eclipsed seasonally adjusted performance of all the other state metro areas.

February’s collections raised Kingsport-Bristol’s year-to-date performance 7.1% better than the first two months of last year and heads-and-shoulders above the region’s other metro areas.

The Johnson City MSA collections were 1.7% better than last year and a 6.3% improvement over January. The three-county metro area’s share of collections in the seven-county region also dropped to a decade low – 45.3%.

Kingsport-Bristol collections have been stronger than Johnson City almost every month since January last year, but Johnson City sustained a consistent 48% to 49% share of collections – until February.

So, what’s driving Kingsport-Bristol’s new-found collection strength?

The first thing to watch will be upcoming adjustments. Typically there’s some change in collections totals after the initial reporting, but more often than not they are small compared to the February increase.

The Pinnacle continues to grow, and although it has atrophied some of Kingsport’s retail muscle, it has helped grow the metro area’s retail performance.

Another retail sales increase driver can be found in the Census Bureau’s 2017 population estimates.  That report estimates the population of Sullivan Co. led the region with an 823 person increase. Hawkins Co. added another 93. At the same time Washington Co. added 568 residents while Carter Co. grew by 30 and Unicoi was up 94. That gave Kingsport-Bristol a net gain of 206 new residents. The SW Va. population estimates are not part of this comparison since the sales tax collections were from Tennessee.

Census data puts the region’s per capita retail sales at $13,443, so there’s something else play besides the population growth estimates. And MTSU’s numbers are seasonally adjusted but hasn’t been February’s type month over month increase in a decade. Job creation, employment and private sector wages in the Johnson City Metro area consistently outperformed Kingsport-Bristol last year. At the same time, Kingsport-Bristol’s housing market outperformed the Johnson City MSA, but while real estate accounts for about 30% of consumer spending, it’s not part of the retail sales component. However, some of the additional revenue generated by home sales and the economic multipliers would account for a bump in sales tax collections.

This is something local government and civic leaders will be closely watching for the next couple months to see its collections moderate or the uptrend continues to build.

Here’s how February’s year-over-year collections looked.

  • Kingsport-Bristol, up 15.6%.
  • Knoxville MSA, up 3.3%.
  • Johnson City MSA, up 1.7%.
  • Morristown, down 2.9%.

Here’s how the NE Tenn. collections looked compared to January:

  • Kingsport-Bristol, up 17.6%.
  • Johnson City MSA, up 6.3%.
  • Knoxville MSA, up 4.8%.
  • Morristown MSA down 6.8%.

Statewide collections were 5.1% better than February last year and down 0.3% from January.

 

 

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