Posted tagged ‘New Hampshire’

“A Chicken in Every Pot and a Car in Every Garage”

September 28, 2015

I say this with all of the sagacity of Herbert Hoover who is quoted above: New Hampshire will once again exceed the U.S.  rate of employment growth in 2015 and will have the highest growth rate in the Northeast.  It has been our state’s decade long nightmare to have sub-par job growth after becoming accustomed to superior job growth for much of the prior three decades.  After several years of playing the pessimist it is nice to be able to argue that New Hampshire will once again be a leader in economic performance. Private sector job growth has accelerated and NH is moving up in the state rankings over the past twelve months. A steep decline in energy prices is helping the state by lowering the price of fuel oil, gasoline, and natural gas, lowering some costs for businesses and increasing disposable income of households in a state and region burdened by higher energy costs. Energy producing states are feeling the brunt of price declines. A year ago North Dakota could not be displayed on the graph below without ruining the scale of the Y axis, now they, along with Alaska, Wyoming, Oklahoma and other energy producing states are the laggards. Energy isn’t the reason NH had sub-par job growth but a reduction in energy prices is helping accelerate growth in the state.

Gottlob 2015 Savings Bank of Walpole Presentation

The quality of job growth is also improving, with jobs in better paying industries increasing more than jobs in industries that tend to have fewer well-paying jobs. The troubling exception is in professional, scientific, and technical industries where there has been no job growth.

job quality

Private sector job growth is accelerating despite the fact that help-wanted ads have declined. I believe this indicates that more jobs are being filled, lowering the number of unfilled jobs, and thus help-wanted ads, even as job growth is increasing. One exception may be jobs in professional, scientific, and technical fields which comprise the largest category of help-wanted ads but where industries that employ the largest number of these occupations appear to have had no net job growth over the past year. A large number of these jobs appear to be going unfilled and indicate a technical and professional labor supply problem in the state.

help wanted

I expect New Hampshire to add about 16,000 non-farm jobs in 2016, a rate of about 2.5% annual growth. This is a rate higher than any in the past decade and comes with a few caveats. First, energy prices must remain stable and relatively low, this I think is a lock. NH faces more upside potential (things will get better) than downside risk on the energy front. Second, the pace of government job cuts has to slow or reverse. The reduction in local government employment has been a significant drag on overall employment growth in the state, subtracting about 0.5% from the state’s total non-farm job growth rate. And stop please, anyone who thinks cutting local government jobs is a reason for accelerating private sector job growth. Third and most importantly, NH’s labor force has to grow at rates above the past few years. I have recently written about the labor force being the most significant constraint on the NH economy, and largely responsible for NH’s sub-par job growth (as opposed to some fundamental erosion of the business climate). One thing is clear, labor force growth will not come from just absorbing the “slack” in NH’s labor market. The chart below shows that NH is essentially at full employment with the exception of individuals who are working part-time for economic reasons (that is they would like to work full-time but can’t get full-time employment). There will always be some level of unemployment regardless of the strength of the economy, both for frictional reasons as people change careers or jobs, as well as structural reasons as the economy and industries change and the demand for different skills and occupations shifts. There are now  more people working part-time for economic reasons in NH than there are unemployed individuals. Three quarters of part-time workers in NH work part-time by choice according to my analysis of Bureau of Labor Statistics Current Population Survey data. The remaining 25 thousand or so part-timers wanting full-time work shows an equal number of men and women, spread fairly evenly over the age distribution between 22 and 64. More than one-third have at least an associate’s degree and 24% a bachelor’s degree. This source of labor can be more fully utilized boosting overall output but they are already working and don’t expand the size of the labor force. Discouraged workers number less than 1,500 with about that number again who are conditionally discouraged but would enter the workforce for the right job. They are predominately male (80%) and older (75% age 45+) and overall have lower levels of educational attainment (although a percentage of college grads is included).

unemployement rate

Hope for expanding the labor force in NH comes mostly from a return to net in-migration from other states. NH’s primary source of for increasing the skill and talent of its labor force for three decades, this source became a net negative factor in recent years. Data on this comes with a long lag but some unofficial, non-government statistics suggest that in-migration is returning and accelerating in some parts of the state, supplying an influx of talent and additional labor that will contribute to expanding differential rates of growth in the state. Areas of the state that have seen labor force growth in recent years have been adding jobs at a much faster rate than the remainder of the state and is one reason why I advocate giving as much attention to making a community, region, or state “attractive to individuals and families”  as making them attractive to business. The Seacoast will continue to lead in job growth because of the region’s ability to attract “talent” and expand its labor force. Job growth in the Manchester region is picking up and I expect a stronger performance for that region in 2016, while the Nashua region will continue to lag.

labor forcde growth

Some Good News in Some Very Bad Weather

October 29, 2012

(My apologies for the late post – I posted this 3 hours ago but it didn’t publish so I am trying again)

PolEcon’s NH Leading Index jumped from a revised + 3.7 to +13.0 this month. its highest value since January of 2011.  An Index reading of + 13.0 isn’t a signal of robust growth but it is a substantial improvement over much of the past 18 months and if it continues for another month or two it will be a clear sign of a much improved NH economy.

Weather and electricity permitting, the October edition of the Trend Lines will be emailed or available to read online at    Seven of the nine indicators in the Index improved over the month, with initial claims for unemployment insurance showing an especially large drop.  I prefer initial claims data to the unemployment rate, as it gives greater insight into the near-term direction of the labor market.  I’ve stated in a prior post that I believe job growth in NH will be revised upward, based on aggregate wage and salary growth and the volume of help-wanted advertising in the state.  Declining initial unemployment claims are another indicator that actual  job growth is likely somewhat higher than is currently being reported (NH has seen a few negative year-over-year monthly job growth reports recently). At an average weekly number of claims at 1,400 for the month, it is still much higher than the under 1,000 number that is typically seen during periods of solid job growth, but the number continues its downward trend.  The chart below shows how new claims currently compare with claims during previous periods of growth and recession.  On a three-month moving average basis, the number of new claims in NH  is now about what is was during the short-lived recession of the early 2000s, and compared to the first “great recession” of the early 1990s, it is also about as high now as during that difficult time.  But there is also a larger population in the state and also more employment  so examining initial claims as a percentage of employment in the state provides a better comparison to where the labor market stands today and where it may be heading.  That comparison makes the current labor market appear to be in the early stages of recovery from recession rather than two years removed from the official end of one, but its a sign of recovery nevertheless.

What’s Wrong With This Job Growth Picture?

October 10, 2012

I’ve recently written  and spoken about the declining trend in New Hampshire’s rate of job growth relative to the state’s past performance and relative to the growth of neighboring and states across the country (as an aside, suggesting  that the emperor’s new vestments may not be as fine as others envision is not the best way to relax and enjoy the procession).

Pointing out that NH shouldn’t feel entitled to superior economic performance has generated a fair amount of  “discussion” but the analysis is not especially useful if it simply reinforces hardened ideological positions about how to best facilitate prosperity in the Granite State.  One way to help avoid that is to not end our analysis of job growth in NH by simply noting disturbing trends.  We need a better and more consensus understanding of the causes of NH’s  slow rate of  job growth and of its decline relative to other states.

In the first ever Trend Lines blog post I begin by asking a basic question:  Could the most recent job growth picture in NH be distorted by numbers that will later be revised?  Monthly job growth counts are based on  surveys of employers and they can be revised significantly, especially in small states, when they undergo their annual “benchmark revisions” early each year.   There is some evidence that NH’s job growth will be revised significantly upward. In NH, and the nation, there is a strong statistical relationship between the volume of help wanted advertising and the annualized rate of job growth.  The chart below shows the relationship between on-line help wanted advertising in NH (the number of ads per 100 people in the labor force), and the year-over-year rate of job growth in the state.  The strong relationship is evident except in the most recent data from the past year or so.

Two potential reasons for the recent break in the relationship between help wanted advertising and job growth in NH are the so called “skills gap,” as well as the possibility that the help wanted and job growth relationship has not changed and the recent job growth numbers will be significantly revised upward.  The belief that there are many jobs being offered for which there are not enough qualified job seekers has profound implications for the policies necessary to grow NH’s economy.  There  is a skills gap but I am skeptical that it could have such a dramatic impact over just the past year.  In addition, the occupations comprising help wanted ads in NH don’t suggest a dramatic increase in the skills gap over the past year.  In later posts and writings I will be looking further at the “skills gap” issue.

Another possibility,  that the jobs data is wrong and will be revised upward early next year, is real,  but that doesn’t mean the revisions will show NH is again outperforming its neighbors or the nation.  It just means we will look less bad over the past year or so than we do right now.  One indicator that job growth will be revised upward in NH is the growth in wages and salaries in the state.  The chart below shows that wage and salary growth (not adjusted for inflation)  is indicating a stronger labor market than are the job growth numbers.

%d bloggers like this: