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MSU-B Economic Indicators: Summer boosts region’s economy
Economic conditions in Eastern Montana and Northern Wyoming strengthened during the summer with improvements in the housing industry, tourism and the medical sector, according to economic indicators tracked by the Center for Applied Economic Research at Montana State University – Billings.
"We aren’t immune to the economic slump that has plagued the rest of the nation" says Scott Rickard, associate director of the center. "But to date our region’s losses have been limited."
He said the center’s new series of regional economic indicators "give us a greater ability to track conditions in both Yellowstone County and the Eastern Montana-Northern Wyoming market area."
Employment
The Employment Index is 107, reflecting a recovery in regional employment during August that offset declines seen earlier in the summer. Jobless claims and regional unemployment rates changed little between July and August. The medical community continues to be a major force for regional economic growth, with the number of available medical positions increasing more than 20 percent since May. As other businesses sought to expand their workforces, general help wanted advertisements increased more than 7 percent during August. However job postings for professional employment dropped 10 percent for the same period.
Tourism
The Tourism Index sits at 103 thanks to larger numbers of Americans traveling domestically this summer. This region benefited from its gateway location. Yellowstone visitations were nearly 20 percent above last August’s numbers and up 12 percent for the year. Airline travel into Billings softened in July and August, and air travel-related businesses may be in for a slow fall season. It doesn’t help matters that ticket prices (21 day advance) for air travel to Billings have edged upward as the peak travel season winds down and business travel dominates a larger portion of the market.
Housing
The Housing Index stands at 97 thanks in part to continued historically low mortgage rates fueling ongoing demand in the housing markets. The stock of homes offered for sale has risen slightly compared to the number sold, but both sales and average housing prices continued to increase throughout the summer, reflecting ongoing strong demand in our region. This solid demand coupled with seasonal heavy construction has allowed the housing market to remain as another bright spot in the economy.
BIZDAQ
BIZDAQ is a hypothetical stock index created to track the publicly traded companies that employ workers in our region. The price movement of this index will help show how broad movements in the stock market affect local employment and spending by these companies. The index was started in mid-May with a value of 100. If stock prices moved lower, the value falls below 100 and if they rose since mid-May, the index rises above 100. For example, the composite BIZDAQ has rebounded to the high 80s after being as low as 78.8 in July. This means that, since mid-May, the weighted-average stock price for area firms lost as much as 21 percent of its value, and by the end of August, it is still 11 percent lower.
Retail sales
Aside from buying a house, automobile purchases are typically the largest expenditure a family makes. So far this year, area families and businesses haven’t been buying new vehicles. In 2002, area sales for new cars and trucks are down considerably from the same period last year, while nationwide, dealers expect sales this year to be within a few percentage points of last year’s totals.
Agriculture
Tough conditions persist for the agricultural sector. Lack of moisture throughout much of the summer coupled with high temperatures hurt pasture and range conditions, which remain virtually unchanged from July. Livestock producers have received slightly higher prices during the past month as herd liquidations have slowed. Crop conditions showed improvement during August with an average of 25 percent of the crops reaching good to excellent condition. Reported conditions for wheat, barley and sugar beets improved. The July Agricultural Price Index shows a 15 percent improvement relative to the June index, but at 90 still remains substantially below the base level of 100 set in February.
Energy
Coal and natural gas production index levels are down almost 8 percent from the previous month while electric production index levels rose 9 percent over the same period. Recent increases in electrical prices probably reflect some unseasonable weather being experienced in the Midwest. Rising prices for gasoline and diesel reflect the increase in crude oil prices from July while propane prices jumped almost 15 percent, leading to expectations of higher energy and transportation costs for the upcoming winter.
U.S. economy
The general economy continues to struggle to regain consumer and business confidence in the face of continuing financial irregularities with major businesses. Gross Domestic Product (GDP) grew only about 1 percent during the second quarter, substantially below the more than 4 percent increase reported during the first quarter of 2002. Capacity utilization, as a measure of the amount of productive facilities being used, was essentially unchanged during July indicating no significant gearing up for increased production at yearend. Despite a year and a half of unexpectedly low interest rates, the response in consumer demand and business investment remains tentative at best, failing to provide the necessary impetus for significant expansion in the economy.
The analysis and charts were prepared by Rickard and Ann Adair, senior economist at the Center for Applied Economic Research. The center will discuss its first monthly report of economic indicators Wednesday at 7:30 a.m. in the ballroom at the MSU-B Student Union Building. H. Brent Coles, the mayor of fast-growing Boise, Idaho, is the featured speaker. To make reservations for the breakfast, call Gary Amundson (657-1610) or Karen Stone (657-2812) at the university.
Copyright © The Billings Gazette, a division of Lee Enterprises.
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