Full text of Pieces of Eight : Business : An Eighth District Perspective, Summer 1987

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

Business
AN EIGHTH DISTRICT PERSPECTIVE
SUMMER 1987

The Eighth District’s Economy: A Microcosm
of the Nation’s
Employment growth in the Eighth District economy
generally has mirrored national growth. The average annual
growth rates of nonfarm payroll employment in the District
and nation were virtually identical from 1971 through 1986.
During this period, average annual employment growth in
the District was 2.1 percent, just one-tenth of a percent less
than the nation’s. The chart on the following page, which
compares yearly growth rates of District and national
nonfarm employment, indicates that the District’s growth
was a bit stronger in the early seventies and slightly weaker
in the early eighties, but the general similarity of the growth
rates throughout the period is clear.
This issue discusses two factors that help explain the
similarity of District and national employment growth: the
distribution of employment among sectors in the region and
the nation, and the growth rates of the individual sectors.

The table on the next page shows the 1986 distribution of
employment among the eight major employment sectors for
the District and the United States. Although manufacturing
accounts for a somewhat larger, and services a somewhat
smaller, share of the District economy, the resemblance is
striking.
This structural similarity has existed for years. In the 1950s
and 1960s, for instance, both the regional and the national
economies were characterized by relatively larger
manufacturing sectors and smaller services sectors than in
1986.

Comparing Growth of Individual Sectors

The resemblance of employment composition at the
District and national levels helps explain, but does not
guarantee, similar expansions of total nonfarm employment.
If the growth of individual sectors is dissimilar at the regional
Employment Composition
and national levels, dissimilar growth of overall employment
would be likely as well.
If the structure of the District’s economy differed
In the Eighth District and the nation, however, employment
substantially from the nation’s, differences in employment
growth has been similar in each of the major employment
growth would not be surprising. For example, if a region
sectors of the nonfarm economy. The table shows the
is more heavily specialized than the nation in relatively slowsimilarity. The largest difference, between the regional and
growing sectors, such as mining or manufacturing, its overall
national financial sectors, is only one half of one percent.
employment growth would tend to trail the nation’s. Last
Although slight differences exist between the regional and
year’s employment declines in states heavily dependent on
the struggling oil extraction industries —
national growth rates for six of the eight
Texas, Oklahoma and Louisiana — are
sectors, statistical tests indicate that these
examples.
differences are likely due to random variation
THE
On the other hand, to the extent a region’s
in the data. The test also indicates that the
FEDERAL
economic structure is similar to the nation’s,
average growth rates of total nonfarm
KISIKM
RAN
K
of
its growth tends to parallel the nation’s
employment for the region and the nation are
ST. IXH IS
growth. The Eighth District and the nation
not significantly different in a statistical
sense.
share very similar employment structures.




SUMMER 1987

FEDERAL RESERVE BANK OF ST. LOUIS

A n n u al Nonfarm Payroll Em plo ym ent Grow th
Percent

Summary
The District’s economy has mirrored the nation’s both in
employment composition and in growth of individual sectors.
Together, these similarities have insured that the District’s
overall employment growth has resembled the nation’s since
1971. Similar growth paths also have been found for regional
and national personal income, retail sales and the value of
construction contracts. These similarities are not surprising

given the integration of the region with the rest of the nation.
To the extent that past trends persist, continued similarity
of regional and national economic growth is likely. The
knowledge of this similarity is useful in predicting change
in the regional economy. Since economic forecasts are scarce
at the regional level, national forecasts can be used to infer
probable changes in the region’s economy.
—Thomas B. Mandelbaum

Composition and Growth of Nonfarm Employment by Major Sector
Percent of Nonfarm
Employment, 1986

Nonfarm em ploym ent
Mining
Construction
Manufacturing
Transportation and public utilities
W holesale and retail trade
Finance, insurance and real estate
Services
Government

District

U.S.

...

...

0.9%
4.6
22.4
5.7
23.5
5.2
20.8
16.8

0.8%
4.9
19.2
5.3
23.8
6.3
23.0
16.7

Average Annual
Growth, 1971-86
District
2.1%
1.4
1.9
0.3
1.4
2.9
3.0
4.3
1.8

U.S.
2.2%
1.8
2.2
0 .0

1.0
2.9
3.5
4.4
1.8

Business—An Eighth District Perspective is a quarterly summary of business conditions in the area served by the Federal Reserve
Bank of St. Louis. Single subscriptions are available free of charge by writing: Research and Public Information Department,
Federal Reserve Bank of St. Louis, P.O. Box 442, St. Louis, Missouri 63166. Views expressed are not necessarily official
positions of the Federal Reserve System.
2



FEDERAL RESERVE BANK OF ST. LOUIS

SUMMER 1987

EIGHTH DISTRICT BUSINESS DATA
Rates of Change1
C u rre n t Q u a rte r
G e n e r a l B u s in e s s In d e x e s 2

Arkansas
Kentucky
Missouri
Tennessee
P a y ro ll E m p lo y m e n t

United States
District
Arkansas
Little Rock
Kentucky
Louisville
Missouri
St. Louis
Tennessee
Memphis
M a n u fa c tu r in g E m p lo y m e n t

United States
District
Arkansas
Kentucky
Missouri
Tennessee
R e ta il S a le s 3

United States
Arkansas
Kentucky
Missouri
Tennessee
P e rs o n a l In c o m e

United States
District
Arkansas
Kentucky
Missouri
Tennessee

1986

1985

1 /1 9 8 7

3.8%
- 1 .5
3.0
4.5

0.6%
0.8
2.0
3.5

0.8%
0.6
2.4
2.9

2.6%
4.4
4.4
5.4

2.4%
2.5
2.5
0.7
2.3
2.9
1.5
1.2
3.6
4.2

2.9%
2.5
1.7
2.9
2.3
2.4
2.1
2.3
3.2
3.1

4.5%
4.5
3.8
3.6
5.3
4.0
4.7
4.3
4.2
5.1

- 0.6%
- 0 .2
2.4
- 0 .4
- 3 .0
1.1

-1 .2 %
- 1 .6
- 1 .6
- 2 .0
- 1 .4
- 1 .6

3.2%
3.3
2.6
4.7
3.5
2.6

6.3%
2.3
- 2 .4
2.9
5.4

6.4%
2.2
12.6
2.1
7.8

7.3%
2.4
0.1
9.3
10.8

4.4%
3.5
2.5
2.2
2.6
5.9

6.2%
5.7
4.8
4.2
6.2
6.6

8.4%
8.7
8.2
8.1
8.9
9.2

1 /1 9 8 7

3.0%
5.1
4.8
5.1
4.8
2.9
2.3
2.9
8.4
5.3
1 /1 9 8 7

0.9%
2.7
4.4
5.3
0.4
2.5
IV /1 9 8 6

0.3%
-1 .1
- 8 .2
-4 .1
- 5 .5
IV /1 9 8 6

3.6%
2.7
2.0
0.9
1.0
6.4

District Employment1
K e y In d u s tr ie s

Fabricated Metal Products
Electrical and Electronic Equipment
Nonelectrical Machinery
Transportation Equipment
Food and Kindred Products
Textile and Apparel
Printing and Publishing
Chemicals and Allied Products
Construction




1984

Prices1

C u rre n t Q u a rte r

C u rre n t Y e a r

C u rre n t Q u a rte r

C u rre n t Y e a r

1 /1 9 8 7

1/1 9 8 6 - 1 /1 9 8 7

1 /1 9 8 7

1 /1 9 8 6 - 1 /1 9 8 7

-5 .2 %
6.9
1.4
- 4 .5
- 4 .5
- 1 .5
- 2 .0
1.0
-2 3 .6

-0 .2 %
- 1 .9
- 0 .9
- 5 .0
4.9
1.3
- 1 .2
- 0 .6
8.9

0.8%
1.2
2.0
0.0
-2 .1
1.1
7.2
5.6
1.3

0.6%
1.5
1.6
3.2
1.9
0.4
3.7
- 0 .6
1.0

3

EIGHTH DISTRICT BUSINESS DATA

U n e m p lo y m e n t R a te

U n ite d S tates
D is tric t
A rk a n s a s
L ittle R o ck
K e n tu c k y
L o u is v ille
M isso u ri
St. Lo uis
Tennessee
M e m p h is

C o n s tr u c t io n C o n tr a c ts 4

Current
Quarter

Previous
Quarter

1 /1 9 8 7

IV /1 9 8 6

Average
1986

Average
1985

6.7%
7.4
8.1
7.1
9.7
7.4
5.8
6.7
7.2
6.0

6.8%
7.5
9.0
7.7
8.5
6.5
6.2
7.2
7.6
6.6

7.0%
7.7
8.8
6.9
9.2
7.0
6.1
7.0
8.0
6.8

7.9
8.7
6.4
9.5
7.9
6.4
7.5
8.0
6.6

Current
Quarter

Previous
Quarter

Same Period
1986

Same Period
1985

1 /1 9 8 7

IV /1 9 8 6

1 /1 9 8 6

1 /1 9 8 5

$584.4
52.1
113.8
213.6
204.9

$552.5
59.4
104.2
195.0
193.8

$513.9
68.3
108.2
169.3
168.1

$497.8
62.9
99.6
145.8
189.5

$388.7
30.7
120.7
108.0
129.3

$368.4
28.8
101.8
119.6
118.3

$345.7
38.0
73.6
133.7
100.4

$376.1
31.6
68.0
123.2
153.4

7.20/0

(m illio n s o f d o lla rs )
R e s id e n t ia l C o n s tr u c t io n

D is tric t
A rk a n s a s
K e n tu c k y
M isso u ri
Tennessee
N o n r e s id e n tia l C o n s tr u c t io n

D is tric t
A rk a n s a s
K e n tu c k y
M is s o u ri
Tennessee

the exception of employment and prices in key industries, all data are seasonally adjusted. Data for Arkansas,
Kentucky, Missouri and Tennessee are used to represent the District.
1 All growth rates are compounded annual rates of change. The 1984 through 1986 growth rates compare the fourth quarter of
the year listed with the fourth quarter of the previous year.
2Although each index is a comprehensive measure of economic activity, the Arkansas and Missouri indexes, computed by Southwestern
Bell, are not strictly comparable to the Kentucky and Tennessee indexes, which are computed by South Central Bell.
3Sources: Arkansas from Southwestern Bell, Kentucky from the Kentucky Revenue Department, Missouri and Tennessee from the U.S.
Department of Commerce.
4Excludes nonbuilding construction. Source: F. W. Dodge Construction Potentials, proprietary data provided by special permission.


N O TE: With