Welcome! Welcome to the summer 2019 issue of the ICB Economic Update, a quarterly newsletter from Investors Community Bank to help you stay current on economic conditions in Northeast Wisconsin. Second Quarter Summary Annualized Employment Growth: January 2016 - June 2019 • Growth patterns have diverged since March 2013. e trends have again tightened but look to diverge as local hiring rates have increased in the manufacturing and transportation sectors. • Regional employment growth has averaged a 1 percent annualized rate since 2015. • Annualized wage growth of 2.8 percent suggests that employers are beginning to respond more aggressively to respond to talent shortages though candidate quality remains an ongoing concern. e Northeast Wisconsin economy’s growth rate decelerated in the second quarter 2019, due to the lingering effects of a cool and wet spring and the continued effects of increased tariff rates. e theme of this quarter’s indicators is change. Employment growth in the region has slowed significantly throughout 2019 as the region’s labor market contracts. e average duration of unfilled vacancies has increased significantly with several employers deciding not to post positions. Commodities and lending markets also reflect a highly competitive state. Of interest and potential concern is continuing sluggishness in the region’s residential real estate market. e continued slow pace of new residential construction points both to the hiring difficulties of the industry and a tightening of available inventory. A great deal of market interest over the past quarter has returned to fundamentals with several blue-chip firms reporting underwhelming quarterly and annual earnings. e national and regional economy continued to be bolstered by strong consumer spending, which is belied by ongoing struggles in retail markets including the closure of Shopko. e outlook for 2019 has dimmed slightly as GDP growth has decelerated and manufacturing inventories are on the rise. e near-term domestic outlook remains bullish though labor and wage constraints continue to pump the brakes on the market’s potential. Source: Current Employment Statistics Program, U.S. Bureau of Labor Statistics, July 2019
Transcript
Welcome!Welcome to the summer 2019 issue of the ICB Economic Update, a quarterly newsletter from Investors Community Bank to help you stay current on economic conditions in Northeast Wisconsin.
Second Quarter Summary
Annualized Employment Growth: January 2016 - June 2019
• Growth patterns have diverged since March 2013. Th e trends have again tightened but look to diverge as local hiring rates have increased in the manufacturing and transportation sectors. • Regional employment growth has averaged a 1 percent annualized rate since 2015. • Annualized wage growth of 2.8 percent suggests that employers are beginning to respond more aggressively to respond to talent shortages though candidate quality remains an ongoing concern.
Th e Northeast Wisconsin economy’s growth rate decelerated in the second quarter 2019, due to the lingering eff ects of a cool and wet spring and the continued eff ects of increased tariff rates. Th e theme of this quarter’s indicators is change. Employment growth in the region has slowed signifi cantly throughout 2019 as the region’s labor market contracts. Th e average duration of unfi lled vacancies has increased signifi cantly with several employers deciding not to post positions.
Commodities and lending markets also refl ect a highly competitive state. Of interest and potential concern is continuing sluggishness in the region’s residential real estate market. Th e continued slow pace of new residential construction points both to the hiring diffi culties of the industry and a tightening of available inventory.
A great deal of market interest over the past quarter has returned to fundamentals with several blue-chip fi rms reporting underwhelming quarterly and annual earnings. Th e national and regional economy continued to be bolstered by strong consumer spending, which is belied by ongoing struggles in retail markets including the closure of Shopko.
Th e outlook for 2019 has dimmed slightly as GDP growth has decelerated and manufacturing inventories are on the rise. Th e near-term domestic outlook remains bullish though labor and wage constraints continue to pump the brakes on the market’s potential.
Source: Current Employment Statistics Program, U.S. Bureau of Labor Statistics, July 2019
Monthly Unemployment Rate: January 2010 - June 2019
• Unemployment rates have decreased precipitously since 2010 as a refl ection of improving economy and hiring markets. • Regional unemployment trend has followed state patterns since end of recession. • Current unemployment rate of 3.6 percent remains near historic lows. • Th ree-month forecast suggests a generalized stable rate of 3.7 percent as Q3 historically brings the most profound seasonal eff ects to the local economy.
Unfi lled Job Vacancies for the United States: 2010 - 2019
• NOTE: Th e source of job posting activity has changed moving forward and will present a national perspective. • Current average duration of 46 days remains unchanged from Q1, suggesting that employers have considerably more diffi culty locating talent but that they are beginning to adapt their recruiting practices in response. • Greatest demand continues to exist in the manufacturing, logistics and construction industries. • Average wage on off er has increased 3.0 percent YTD. Th is represents a near-term increase of 0.2 percent since Q1, refl ecting both increasing wage pressures as well as greater availability of higher-income occupations.
Industrial Commodities Snapshot • Industrial commodity price indices increased by nearly 26 percent YTD, or 9 percent above 2017 benchmarks. • Recent daily metal markets have become increasingly volatile since May 1 due to trade uncertainty. Futures volatility has been incorporated into most pricing models despite continued trade confl icts with China and the European Union. • Commodity pricing increases continue to impact production costs and product availability, especially in iron and steel intensive industries. Th is has been noted by suppliers and producers throughout the region and is starting to be refl ected in fi nished goods pricing.
Source: Local Area Unemployment Statistics, U.S. Bureau of Labor Statistics, July 2019
Source: Analysis of Online Job Openings, TalentNeuron, July 2019
Source: TradingEconomies, July 2019
New Housing StartsJune 2019 YTD Annualized Change
• New housing starts and total valuation continue to decrease both regionally and statewide.• Low growth is matched by continued low inventory rates, suggesting a slowing of aggregate housing demand.• Labor constraints in the industry continue to delay projects and extend deadlines.
Appleton • Green Bay • Manitowoc • Stevens PointLoan Production Offi ces: Darlington • Eau Claire • Fond du Lac • Sheboygan
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Source: Building and Construction Survey, U.S. Census Bureau, July 2019
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