ILLINOIS ECONOMIC REVIEW - University of Illinois … ECONOMIC REVIEW The Monthly Illinois Economic...

ILLINOIS E CONOMIC REVIEW

The Monthly Illinois Economic Review contains information on national, statewide, and local economic

performance by measuring job growth, unemployment, and business activity. This information is compiled by IGPA Economist Geoffrey Hewings, director of the Regional Economics Applications Laboratory at the

University of Illinois at Urbana-Champaign with assistance from Yizhou Zhang and Whayoung Jung

APRIL 2017

2

EMPLOYMENT EMPLOYMENT DATA SUMMARY

§ Illinois lost 7,200 jobs in April 2017, compared with a revised 7,700 job loss in March 2017. Compared to April 2017, Illinois has added 22,100 jobs. The three-month moving average, a more stable measure of labor market, showed a decrease of 50 jobs per month.

§ The Nation added 211,000 jobs at a rate of 0.14%, compared with a revised 79,000 job gain in March 2016. The three-month moving average was up by 174,000 jobs per month.

§ The RMW added 11,500 jobs in April after a revised 22,800 job loss in March 2016. The three-month moving average was up by 9,600 jobs per month.

§ The state of Illinois now has 44,100 more jobs than in December 2007 when the recent recession started.

§ Since January 2010, when Illinois employment growth resumed after the national recession, Illinois has added 445,600 new jobs.

§ By April 2017 in Illinois, Professional & business services and Leisure & hospitality have both recovered to their previous employment peak levels. The 12-month-ahead job recovery forecasts show that the future recovery rates in Illinois will decrease for every sector except Information, Financial Activities, and Leisure & hospitality.

§ The shadow unemployment rates for Illinois, RMW and the Nation were 9.20%, 9.43% and 9.71%, compared to official unemployment rates of 4.7%, 4.1% and 4.4%.

§ Through April 2017, the cumulative job growth for Illinois, RMW and the Nation compared to January 1990 stood at 14.44%, 19.48%, and 33.78%, respectively.

MAY 2017 EMPLOYMENT CHART

April

2017

Negative

Total Non-Farm

Employment

Mar 2017– Apr 2017 Last 12 months Apr 2017

Growth Rate %

Number of Jobs

Growth Rate %

Number of Jobs

Shadow U.R. **

Nation 0.14 211,000 1.56 2,237,000 9.71

RMW* 0.06 11,500 1.1 222,900 9.43

Illinois -0.12 -7,200 0.37 22,100 9.2

*RMW stands for Rest of the Midwest including six states, Indiana, Iowa, Michigan, Missouri, Ohio and Wisconsin. **REAL has estimated a shadow unemployment rate; this is calculated as the unemployment rate that would be observed if labor force participation rates matched the average for the 15-year period from 1990 to 2004.

3

TOTAL NON-FARM EMPLOYMENT GROWTH RATE JAN 1990 – APRIL 2017

95.00

100.00

105.00

110.00

115.00

120.00

125.00

130.00

135.00

140.00

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

National RMW IL

LAST 12 MONTHS TOTAL NON-FARM EMPLOYMENT GROWTH RATES MAY 2016 – APR 2017

-0.20%

-0.10%

0.00%

0.10%

0.20%

0.30%

0.40%May/16 Jun/16 Jul/16 Aug/16 Sep/16 Oct/16 Nov/16 Dec/16 Jan/17 Feb/17 Mar/17 Apr/17

Nation RMW IL

4

SHADOW UNEMPLOYMENT

Unemployment Rate: Official and Shadow The unemployment rate estimates the percentage of workers in the labor force who are currently unemployed but who are seeking work. The labor force participation rate is the percentage of the population 16 and older who are either working or actively seeking work. The participation rate has declined since the 1990s and thus a number of analysts feel that the official unemployment rate does not account for a larger number of people who have dropped out of the labor force. REAL has estimated a shadow unemployment rate; this is calculated as the unemployment rate that would be observed if labor force participation rates matched the average for the 15-year period from 1990 to 2004.

• In the 1990s, the average participation rate was 68.2% in Illinois whereas in 2010, it has been only 66.6%.

• For the 15 years from 1990 to 2004, the average participation rate was 68.1% in Illinois. • In the 1990s in the US, the average participation rate was 65.5% whereas in 2010, it has been 66.0%;

for the 15 years from 1990 to 2004, the average participation rate was 66.6%. • The figures on the next page show the difference between the official and shadow unemployment

rate for Illinois (top figure) and the US as a whole (bottom figure). • After 2000, the gap between Illinois’s official and shadow unemployment rates increased until 2006

when it began to shrink. However, the gap went increasing again since 2010. • To bring the two together in April 2017, a further 321,200 jobs would need to be created in Illinois.

Total Non-farm Employment growth rate by Sector March 2017 – April 2017

-2.50% -2.00% -1.50% -1.00% -0.50% 0.00% 0.50% 1.00% 1.50%

90Government

80OtherServices

70Leisure&hospitality

65Education&health

60Professional&businessservices

55Financialactivities

50Information

40Trade,transportation&utilities

30Manufacturing

20Construction

Nation RMW IL

5

§ Illinois

§ US

0%

2%

4%

6%

8%

10%

12%

14%

UnemploymentRate ShadowUnemploymentRate

0%

2%

4%

6%

8%

10%

12%

14%UnemploymentRate ShadowUnemploymentRate

6

EMPLOYMENT FORECAST

* The values by sector for the number of jobs added are the lower bound of the forecast.

4600

4800

5000

5200

5400

5600

5800

6000

6200

19901991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 20022003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 20142015 2016 2017 2018

NumberofJobs(inthousands)

Year

TotalNon-farmEmploymentForecast

Illinois Apr 2017

Apr 2018 (p) Number of Jobs Growth Rate %

Total non-farm 6,029,300 6,023,200 -6,100~38,200 -0.10~0.63% Construction 211,900 207,800 -4,100 -1.93% Manufacturing 572,300 570,100 -2,200 -0.38% Trade, transportation & utilities 1,204,700 1,194,000 -10,700 -0.89% Information 100,200 102,900 2,700 2.69%

Financial Activities 392,100 396,300 4,200 1.07% Professional & business services 940,900 933,800 -7,100 -0.75% Education & health 927,800 941,600 13,800 1.49% Leisure & hospitality 596,400 603,800 7,400 1.24% Other services 249,600 248,900 -700 -0.28% Government 825,200 824,000 -1,200 -0.15%

7

Employment Forecast for MSAs

MSAs Mar

2017*

Mar 2018 (p)*

Number of Jobs *

Growth Rate % Growth

Sector with Highest Growth

Rate (p)

Sector with Lowest

Growth Rate (p)

Bloomington-Normal 93,500 93,400 -100~400 -0.06%~ 0.46% - PRO (1.68%) CON(-10.90%)

Champaign-Urbana-Rantoul 109,700 109,700 0~-50 -0.05%~-0.02% - EDU (0.92%) CON (-1.81%)

Chicago 4,143,500 4,190,100 46,700~53,200 1.13%~1.28% + FIN (5.00%) OTH (-0.39%) Davenport-Rock

Island-Moline 184,400 185,400 1,000~ 1,700 0.53%~ 0.90% + PRO (2.11%) CON (-3.19%)

Decatur 51,700 51,300 -400~50 -0.86%~0.07% - CON (1.64%) INF (-4.63%)

Kankakee 44,600 45,100 500~600 1.09%~ 1.25% + OTH (2.92%) INF (-3.92 %)

Peoria 174,400 176,800 2,500~4,400 1.42%~ 2.51% + PRO (2.45%) FIN (-0.87%)

Rockford 148,900 147,500 -1,500~400 -0.98%~0.26% - CON (3.13%) MAN(-9.66%)

Springfield 116,300 116,700 400~1,300 0.38%~ 1.09% + EDU (2.01%) INF (-4.61%)

*Total Non-Farm Jobs

60000

65000

70000

75000

80000

85000

90000

95000

100000

105000

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018


Year

TotalNon-farmEmploymentForecastBloomington(BN)

3000000

3200000

3400000

3600000

3800000

4000000

4200000

4400000

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018


Year

TotalNon-farmEmploymentForecastChicago(CHI)

150000

155000

160000

165000

170000

175000

180000

185000

190000

195000

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018


Year

TotalNon-farmEmploymentForecastDavenport-Rock-Island-Moline(DRM)

85000

90000

95000

100000

105000

110000

115000

120000

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018


Year

TotalNon-farmEmploymentForecastChampaign-Urbana-Rantoul(CU)

8

44000

46000

48000

50000

52000

54000

56000

58000

60000

62000

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018


Year

TotalNon-farmEmploymentForecastDecatur(DE)

30000

32000

34000

36000

38000

40000

42000

44000

46000

48000

50000

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018


Year

TotalNon-farmEmploymentForecastKankakee(KA)

120000

130000

140000

150000

160000

170000

180000

190000

200000

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018


Year

TotalNon-farmEmploymentForecastPeoria(PE)

120000

125000

130000

135000

140000

145000

150000

155000

160000

165000

170000

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018


Year

TotalNon-farmEmploymentForecastRockford(RO)

98000

100000

102000

104000

106000

108000

110000

112000

114000

116000

118000

120000

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018


Year

TotalNon-farmEmploymentForecastSpringfield(SP)

9

Barometer of Job Recovery

* The figure 791,500 is the number of jobs needed for the Illinois economy to recover to the previous employment peak, Nov-2000. The gap between the previous peak, Nov-2000 and the previous lowest point, Dec-2009 is 445,600. Adding 321,200, the number of additional jobs that needed to be created after taking shadow unemployment rate into account, the total number of jobs that Illinois needs to create 791,500. ** The figure 26,100 represents the jobs recovered from December 2009 (previous lowest level) through June 2010. *** The figure 445,600 represents the jobs recovered from December 2009 through May 2017.

Illinois Recovery Scenarios

To Recover Growth Rate

At the point of 2017 – April

At the point of 2010-June

In 5 years 69,200 jobs/year 153,100 jobs/year




10

ILLINOIS JOB RECOVERY BY SECTOR

Illinois job recovery by sector from Dec 2007 – April 2017

Job Changes in Recession Period*

Job Changes in Jan 2010- Apr

2017 Recovery Rate

Forecasted Job Changes Jan

2010- Apr 2018 Forecasted

Recovery Rate

Construction -63,800 8,000 12.54% 3,900 6.11% Manufacturing -114,600 17,500 15.27% 15,200 13.26%

Trade, transportation & utilities (TTU) -97,700 84,400 86.39% 73,100 74.82%

Information -11,300 -4,200 -37.17% -1,500 -13.27% Financial activities -32,600 19,200 58.90% 31,300 96.01%

Professional & business services -92,300 167,500 181.47% 160,400 173.78%

Education & health 33,800 107,300 - 121,100 - Leisure & hospitality -22,300 84,500 378.92% 91,900 412.11% Other Services -5,900 -6,400 -108.47% -7,100 -120.34% Government 6,000 -31,500 - -32,300 - *Recession period: Dec 2007- Dec 2009

Recovery by Sector

§ During the recession period of December 2007-December 2009, 8 out of 10 Illinois sectors experienced employment declines. Education & health and Government were the only 2 sectors that had positive job growth during the recession.

§ Since January 2010, Illinois employment growth resumed. Construction, Manufacturing, Trade, transportation & utilities, Financial activities, Professional & business services, and Leisure & hospitality have recovered 12.54%, 15.27%, 86.39%, 58.90%, 181.47% and 378.92% respectively from the jobs lost during the recession.

§ By April 2017, Professional & business services and Leisure & hospitality had both recovered to their previous employment peak levels.

§ However, the recovery rates for Information and Other Services are still negative, namely -37.17% and -108.47%.

§ The 12-month-ahead job recovery forecasts show that the future recovery rates in Illinois will decrease for every sector except Information, Financial Activities, and Leisure & hospitality.

11

CATCH UP SCENARIO

& RECOVERY FROM RECESSION

Catch-up Scenario* of Previous Peak Job Index in Illinois

Previous Peak Current Catch-up Recovery Rates

Nation 126.49 (Dec-2007)

133.78 (Apr 2017)

Positive growth -

RMW 119.39 (Jun-2000)

119.48 (Apr 2017)

Positive growth -

IL 115.00 (Nov-2000)

114.44 (Apr 2017)

Positive growth 67.30%

Metro Areas***: Bloomington

Normal 142.06

(Feb 2002) 131.11

(Mar 2017) Negative growth NA

Champaign- Urbana

116.26 (Jan 2009)

111.25 (Mar 2017)

Negative growth NA

Chicago 114.82 (Nov 2000)

116.04 (Mar 2017)

Positive growth -

Davenport- Rock Island-Moline

115.06 (Mar 2008)

111.40 (Mar 2017)


Decatur 112.38 (Jan 2000)

96.14 (Mar 2017)

Negative growth NA

Kankakee 125.66 (Nov 2011)

124.23 (Mar 2017)

Positive Growth -

Peoria 122.09 (Aug 2008)

112.42 (Mar 2017)


Rockford 122.81 (Nov 2000)

110.48 (Mar 2017)


Springfield 110.94 (Aug 2000)

110.03 (Mar 2017)

Positive growth -

Metro-East 114.97 (Jun 2001)

108.52 (Mar 2017)


* Catch-up scenarios compares a region’s current employment with its historical peak. The US has surpassed its historical peak level but RMW and Illinois have not. In the “Recovery Rates” column, “ - ” means the region has fully recovered from the recession, “ NA” means the region did not lose jobs during that period, and a percentage indicates the ratio of recovered jobs to all jobs lost during the recession.

*** Due to lag of data release schedule there is one month of time lag in the catch-up scenario for metro areas.

NOTE: The US Bureau of Labor Statistics and the Illinois Department of Employment Security changed the way national and state employment data are coordinated to be more consistent. As a result, there have been some significant changes in estimates for Illinois over the past year.

12

CBAI INCREASED IN MARCH This index is based on national indices of leading indicators and is a barometer for the economy, tracing the path of growth or contraction through to the current period and then forecasts up to 24 months into the future.

• The Chicago Business Activity Index (CBAI) increased to 96.0 in March from 95.5 in February. The increase is attributed to positive job growth in nonmanufacturing and to the improvement of retail activities in the Chicago area.

• In March, the national and regional economies presented mixed features. The Federal Reserve Board announced that the industrial production index increased 0.5 percent in March after moving up 0.1 percent in February.

• Capacity utilization for the industrial sector increased 0.4 percentage point in March to 76.1 percent. The Chicago Fed reported that the Chicago Fed National Activity Index (CFNAI) moved down to +0.08 in March from +0.27 in February. In the Chicago region, employment in the manufacturing and the construction sector decreased 0.16 percent and 3.37 percent, respectively, in March. Employment in the nonmanufacturing sector rose 0.02 percent and retail sales are estimated to have increased 1.25 percent during the same period.

• In the coming months, the national economy is likely to stay on the expansion phase. The economic growth reflected in the CFNAI-MA3 suggests that growth in national economic activity is slightly above its historical trend. The Bureau of Labor Statistics reported that total nonfarm payroll employment increased by 211,000 and the unemployment rate was little changed at 4.4 percent in April . Considering recent national economic conditions and movements of projected CBAI, the Chicago economy is expected to continue its expansion trend over the next several months.

Chicago Business Activity Index

CBAI (Current: 96.0)

1 month 3 month 1 year

Historical (ago) 95.5 97.1 97.6

Forecast (ahead) 95.6 96.1 -

20

40

60

80

100

120

140

01/07 01/08 01/09 01/10 01/11 01/12 01/13 01/14 01/15 01/16 01/17

belowtrend

abovetrend

trend

4 monthforecast

13

METROPOLITAN STATISTICAL AREA LEAGUE TABLES

MSA LEAGUE TABLES SUMMARY*

§ Kankakee (3rd to 10th) experienced the deepest fall in March 2017.

§ Chicago (4th to 6th), Bloomington (1st to 7th), and Springfield (6th to 9th) also dropped in

terms of ranks from last month.

§ The most remarkable upward move in March was recorded for Davenport-Rock Island-

Moline (10th to 3rd).

§ In the 12-month growth league table, upward moves were recorded for Chicago (3rd to 2nd),

Champaign-Urbana-Rantoul (5th to 4th), Metro-East (7th to 6th), Decatur (8th to 7th) and

Peoria (10th to 9th).

§ Downward moves were recorded for Springfield (2nd to 3rd), Davenport-Rock Island-

Moline (4th to 5th), Bloomington-Normal (6th to 8th), and Rockford (9th to 10th).

§ In the 12-month growth league table, Rockford dropped to the last place while Kankakee

remained in the first place.

*NOTE: The US Bureau of Labor Statistics and the Illinois Department of Employment Security changed the way national and state employment data are coordinated to be more consistent. As a result, there have been some significant changes in estimates for Illinois over the past year.

14

MSA League Tables*: Non-farm Employment Growth Rate

Monthly growth:

Rank February 2017 March 2017 Rank Change**

1 Bloomington-Normal(1.55%) Peoria(0.47%) 1 Ç(+1)

2 Peoria (1.02%) Decatur(0.26%) 2 Ç(+5)

3 Kankakee (0.93%) Davenport-Rock Island-Moline(0.22%) 3 Ç(+7)

4 Chicago (0.35%) Champaign-Urbana-Rantoul(0.13%) 4 Ç(+5)

5 Rockford (0.31%) Rockford (0.04%) 5 Å(+0)

6 Springfield (0.14%) Chicago(0.02%) 6 È(-2)

7 Decatur (-0.14%) Bloomington-Normal(-0.03%) 7 È(-6)

8 Metro-East (-0.17%) Metro-East(-0.06%) 8 Å(+0)

9 Champaign-Urbana-Rantoul (-0.24%) Springfield (-0.28%) 9 È(-3)

10 Davenport-Rock Island-Moline (-0.3%) Kankakee(-0.88%) 10 È(-7)

Growth over last 12-months:

Rank February 2017 March 2017 Rank Change**

1 Kankakee (2.28%) Kankakee (1.13%) 1 Å(+0)

2 Springfield (1.12%) Chicago (0.67%) 2 Ç(+1)

3 Chicago (0.87%) Springfield (0.62%) 3 È(-1)

4 Davenport-Rock Island-Moline (0.23%) Champaign-Urbana-Rantoul (0.47%) 4 Ç(+1)

5 Champaign-Urbana-Rantoul (0.09%) Davenport-Rock Island-Moline (0.45%) 5 È(-1)

6 Bloomington-Normal (-0.31%) Metro-East (0.01%) 6 Ç(+1)

7 Metro-East (-0.61%) Decatur (-0.16%) 7 Ç(+1)

8 Decatur (-0.97%) Bloomington-Normal (-0.24%) 8 È(-2)

9 Rockford (-2.1%) Peoria (-1.48%) 9 Ç(+1)

10 Peoria (-2.25%) Rockford (-2.32%) 10 È(-1)

* MSA League Tables are based on revised employment data. For instances of equal growth rate for multiple MSAs ranks are decided based on change of growth rate from previous month.

15

Unemployment Claims (Initial)

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

Jan/00

Jan/01

Jan/02

Jan/03

Jan/04

Jan/05

Jan/06

Jan/07

Jan/08

Jan/09

Jan/10

Jan/11

Jan/12

Jan/13

Jan/14

Jan/15

Jan/16

InitialClaims(IL) InitialClaims(US)

Unemployment Claims (Initial, IL)

Unemployment Claims (Initial, US)

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