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MSU-B Economic Indicators: Region’s economy shows evidence of turnaround
Regional economic conditions in September showed improvement in all but one indicator tracked by the Center for Applied Economic Research at Montana State University-Billings.
Billings Gazette
Labor and tourism indexes turned around during September while agriculture, Bizdaq and energy remained strong, said Scott Rickard, director of the center.
"Within our region, things appear to be getting back on the positive track," he said.
The center’s analysis of market segments follows:
Consumer perspective
Nationwide, consumers continued to increase their spending. Personal consumption expenditures rose 0.8 percent during August. This was in line with a 0.9 percent increase in disposable personal income for the same period. This means that consumers continue to be optimistic about the economic recovery although some showed continuing concern about the soft job market. The Federal Reserve has decided to allow interest rates to continue at low levels as an ongoing stimulus to the economy. Prices paid nationwide by consumers continued an upward trend in September with the largest increases in energy, medical care and transportation.
Billings Area Consumer Price Index
A new economic indicator is the Billings Consumer Price Index. The purpose of this indicator is to provide better information on the price changes that affect regional consumers. Monthly data is collected on 140 items including a wide variety of items from clothing, motor oil, rental costs, electricity rates, a loaf of bread to the cost of attending a movie. The Billings CPI showed a 1.2 percent increase above August levels with the largest gains coming in the housing, recreation and apparel categories. We will be monitoring the Billings CPI to see how closely it reflects changes recorded in the national CPI.
Business perspective
The Producer Price Index, which reflects prices paid by businesses for production inputs, rose 0.3 percent in September. Businesses’ fixed investment increased, reflecting greater spending on equipment and software. The most recent national Business Confidence Index shows improvement over the preceding month with increased capital expenditures and higher expectations for the upcoming six months. This restoration of business confidence should be reflected in more companies increasing their production and lead to hiring of more workers.
Employment
The overall regional labor index improved slightly during the past month. The employment index rose 2 points from the previous month with a slight decline in the unemployment rate in our region to 3.72 percent. The numbers of unemployed in our region declined 10 percent from August levels. The help wanted index showed some weakness in the professional and medical fields but general category positions remained steady.
Agriculture
The agricultural index showed a 9 point gain in September over August levels driven by higher prices being received by agricultural producers. Improvement continues in livestock prices and dairy with grains and hay prices softening slightly. Planting conditions and pasture and range conditions continue to create problems with some producers choosing to plant later than usual in hopes of better soil moisture conditions.
Bizdaq
The composite Bizdaq, which tracks stock values for companies with significant employment within the region, rose through September – well above levels of this time last year. The index is finally at approximately the level of May 2002 when data collection was begun. Improvements were seen in the energy, financial, medical transportation and technology sectors. Retail stocks with significant area employment continued to prosper.
Energy
The September energy index continued its rise, ending 15 points above the previous month and 38 points above one year earlier. The wholesale petroleum price index was both regular and reformulated gasoline. Prices for all categories continued to rise in the range of 4 to 10 percent. Lower crude oil prices should ease some of the increase over the next few months. Energy production increased with larger quantities of natural gas and electricity being produced.
Housing
The regional housing index slipped slightly during September reflecting a smaller number of listings, while closings remained fairly constant. The average home price was virtually unchanged from levels of the previous month. Year to date closings were running almost 15 percent above the previous year but the average year to date home price slipped 5 percent from a year earlier. Nationwide, building permits have slowed as supply has caught up with demand in many areas.
Travel
The travel index for September rose 3.5 points above August levels but remained almost 30 points below levels of one year earlier. Yellowstone Park visitations fell 30 percent from the previous month but were only 1 percent below levels of the same month one year earlier. With the tourism season winding down, 21-day advance airfares fell an average of 30 percent below August levels. Enplanements and deplanements remained essentially unchanged from the previous month and were similar to levels of one year earlier.
The monthly analysis was prepared by Rickard and Ann Adair, chief economist at the Center for Applied Economic Research at Montana State University-Billings.
Copyright © The Billings Gazette, a division of Lee Enterprises.
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