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Cincinnati, Ohio MSA | First quarter, 2014 Cincinnati – Continuing to Recover The Cincinnati metro area continues to outperform most other Ohio MSAs and many elsewhere in the Midwest. Its recovery continues apace; it benefits from a highly educated workforce, a diversified industrial base, and the presence of several Fortune 500 companies that are headquartered or doing business there. Employment continues to recover: The professional and business services sector, along with the education and health services sectors, show the greatest strength. At 7%, unemployment in the Cincinnati metro is on par with Ohio’s and the nation’s Percent 12 6 — Cincinnati — Ohio — United States — Nearby metro average 4 ■ Recession 10 8 2 0 2000 2002 2004 2006 2008 2010 2012 2014 Source: Bureau of Labor Statistics/Haver Analytics. UNEMPLOYMENT RATE As the nation’s recovery continues, the Cincinnati metro area’s relatively large share of employment in high-growth, high-demand sectors continues to prove beneficial. The area’s unemployment rate of 7.0 percent remains in line with rates for the state of Ohio and the nation. This is largely because the metro area is uniquely positioned in industrial sectors that are benefitting from the national recovery, such as professional and business services, education and healthcare services, and skilled manufacturing. The region also continues to benefit from having a large percentage of its workforce with jobs in consumer marketing. As consumer demand grows in the national recovery, Cincinnati metro employment will naturally benefit. Cincinnati’s per capita GDP exceeds its pre-recession levels GROSS DOMESTIC PRODUCT Index, 2007=100 105 — Cincinnati — Ohio — United States — Nearby metro average 100 95 90 ■ Recession 85 80 2000 2002 2004 2006 2008 2010 2012 After a long recovery from the Great Recession, GDP for the Cincinnati metro area and the surrounding areas exceeds its pre-recession level. This contrasts with Ohio and the nation, which have yet to regain their pre-recession status. Cincinnati’s renewed growth results from strong underlying growth in metro income and production levels; those measures exceed growth in the metro area’s population, which continues to be an area of weakness in the region. By the end of 2012, the Cincinnati metro’s per capita GDP stood 2 percent above its 2007 level, while the state’s was approximately 2 percent below its 2007 level. Source: Bureau of Economic Analysis/Haver Analytics. House prices ended 2.5% higher in 2013 than a year earlier HOUSING Prices Year-over-year percent change 15 10 5 0 –5 –10 –15 2005 2007 2009 2011 2013 Source: Zillow.com/Haver Analytics. — Cincinnati — Ohio — United States — Nearby metro average ■ Recession Despite some temporary weakness in the second half of 2013, house prices finished higher than in 2012. By year’s end, house prices were approximately 2.5 percent higher than they were a year earlier. This growth largely reflects the labor market’s solid performance, growing consumer confidence, and the increasingly tight supply of new homes going on the market. Consistent with the national trend, foreclosure rates have also been declining, which helps reduce additions to the shadow inventory. The real estate sector is likely to continue expanding as employment strengthens further and homebuilding speeds up in response to a shrinking supply of new and existing homes for sale. Cincinnati, Ohio MSA FOURTH DISTRICT METRO MIX YOUR DISTRICT, YOUR DATA first QUARTER, 2014 EMPLOYMENT AND INDUSTRIAL SECTORS Rising payroll employment needs time to exceed pre-recession levels Index, 2007: M12=100 EMPLOYMENT 102 96 — Cincinnati — Ohio — United States — Nearby metro average 94 ■ Recession 100 98 Jobs growth in the Cincinnati metro remains strong; the region capitalizes on its highly educated, innovative workers. The professional and business services sector, along with the education and healthcare, finance, and information sectors, continue to contribute to payroll growth. The region is home to several corporate headquarters and a growing business-analytics sector. These firms’ increased presence increases demand for skilled, highly educated labor. Around 30 percent of the local population has a college degree, surpassing the US. However, despite continued improvement, total payroll employment has not regained its pre-recession peak; that will take 18 months to two years of strong growth. 92 90 2005 2007 2009 2011 2013 Source: Bureau of Labor Statistics. The metro’s well-diversified economy positions it for growth EMPLOYMENT GROWTH BY SECTOR Cincinnati’s economy enjoys a well-educated workforce and a large presence in service-sector employment. Its largest employers—the Kroger Company, the University of Cincinnati, the Cincinnati Children’s Hospital Medical Center, and the Procter & Gamble Company—have all grown and can anticipate further growth in their sectors. The Cincinnati manufacturing sector is positioned well to accommodate possible growth as the national sector resumes its growth. However, since the end of the recession, growth in local manufacturing has lagged both the state’s and the nation’s performance. Cincinnati’s concentration of aerospace parts and equipment manufacturers will increase greatly as the world’s air carriers replace their aging fleets. For example, one of the region’s top employers, GE Aviation, recently received a $2.5 billion order from German air carrier Lufthansa for Boeing aircraft. Education and health services Financial activities Information Professional and business services Trade, transportation, and utilities — Cincinnati — Ohio — United States Manufacturing Government Construction –2 -1 0 1 2 Percentage change Source: Bureau of Labor Statistics. 3 4 Employment in high-paying sectors is expected to keep rising RELATIVE EMPLOYMENT GROWTH Increasing employment growth Percent 2.5 2 Education and health services Financial activities 1.5 1 .5 Professional and business services Information Trade, transportation, and utilities 0 –.5 Larger share of metro’s overall employment Manufacturing Construction –1 0 2 4 6 8 Source: Bureau of Labor Statistics. FEDERAL RESERVE BANK of CLEVELAND Government 10 12 Percent 14 16 18 20 22 24 Ten Fortune 500 companies are headquartered in the Cincinnati metro area. On a per capita basis, this is more than New York, Los Angeles, or Chicago—the nation’s three largest metros. Collectively, these companies employ more than 50,000 people in the metro, and many of them are boosting their hiring as the US economy moves forward. This also benefits small companies in the region, many of which supply significant amounts of goods and services to the corporate giants. Employment in highpaying professional and business services is expected to keep rising over the near-to-medium term, as are the education and healthcare services sectors. cincinnati, Ohio MSA FOURTH DISTRICT METRO MIX YOUR DISTRICT, YOUR DATA First QUARTER, 2014 HOUSING MARKET Housing permits stand at 64% of their pre-recession levels H OUSING PERMITS Index, 2007: M12=100, three-month moving average 300 — Cincinnati — Ohio — United States — Nearby metro Cincinnati average Average of ■ nearby Recessionmetros 250 200 150 100 United States 50 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Ohio Source: Census Bureau/Haver Analytics. Although above its post-recession lows, Cincinnati’s homebuilding remains sluggish. At the beginning of 2014, building permits stood at about 64 percent of their pre-recession level, lagging the nation’s 86 percent and Ohio’s 69 percent. In contrast, metros near Cincinnati are expanding construction at 109 percent of precession levels. The supply of housing remains exceptionally tight, propping up prices. Multifamily vacancy rates are still low because apartment construction lags demand in the region. Two factors often blamed for supply’s slow resurgence are continued tight credit and a scarcity of skilled construction labor. Area realtors and homebuilders anticipate that new home construction will increase in 2014. Consumer Finances Mortgage, auto, and credit card debt has continued to decline Thousands of dollars C ONSUMER DEBT 55 — Cincinnati — Ohio — United States — Nearby metro average 50 45 40 35 ■ Recession 30 25 20 2000 2002 2004 2006 2008 2010 2012 Since 2006, consumers in the Cincinnati metro have had less mortgage, auto, and credit card debt per capita than the national average. However, consumer debt in the Cincinnati area still exceeds that of nearby metro areas and Ohio as a whole. The metro has actively sought to deleverage since the recession’s onset late in 2007 and has progressed at a rate similar to the nation’s. Reasons for the debt’s decline include lower mortgage debt due to foreclosures and the smaller average outstanding balances on revolving debt instruments, such as credit cards and home equity loans. Source: FRBNY Consumer Credit Panel. Cincinnati’s credit profile is in better shape than the nation’s Percent of delinquent credit card balances C REDIT CARD DELINQUENCY RATES 14 — Cincinnati — Ohio — United States — Nearby metro average 12 10 8 6 ■ Recession 4 2 0 2000 2002 2004 2006 2008 2010 The credit card delinquency rate is an indicator of households’ financial health. The credit profile of Cincinnati remains much better than the nation’s and is in line with the state of Ohio. Declines in credit card delinquency rates continued through 2011, the latest year for which data is available. In 2011, the share of credit card balances that were 90 or more days delinquent was approximately 3 percentage points lower in Cincinnati than in the United States, falling back to its pre-recession level. 2012 Source: FRBNY Consumer Credit Panel/Haver Analytics. FEDERAL RESERVE BANK of CLEVELAND cincinnati, Ohio MSA FOURTH DISTRICT METRO MIX YOUR DISTRICT, YOUR DATA first QUARTER, 2014 INCOME The metro’s stagnant weekly wages are expected to pick up eventually Dollars, three-month moving average A VERAGE WEEKLY EARNINGS 900 850 In the Cincinnati area, average weekly wages fell from $825 in December 2007, the start of the recession, to $786 in December 2013. Average wages in nearby metros and Ohio saw similar declines, but have recovered faster than the Cincinnati metro. The stagnancy of the Cincinnati metro’s wages results largely from relatively slower growth in the higherpaying manufacturing sector. While significant growth continues in the professional and business services and education and healthcare sectors, wage growth has been muted because the oversupply of labor has kept pressure on wage growth across most sectors. However, this phenomenon is expected to decrease as consumer demand picks up, increasing general labor demand and, ultimately, average weekly earnings. — Cincinnati — Ohio — United States — Nearby metro average 800 750 700 ■ Recession 650 600 2007 2008 2009 2010 2011 2012 2013 Source: Bureau of Labor Statistics/Haver Analytics. Income per capita has risen since the end of the recession Thousands I NCOME PER CAPITA 46 44 The Cincinnati metro and the nation continue to see stronger income growth per capita than Ohio and nearby metros. The Cincinnati metro also had a much smaller decline during the recession. A significant reason for this superior performance is that the Cincinnati metro area continues to contend with slowing population growth. The metro’s population growth has risen in recent years as out-migration accelerated and the natural rate of population growth slowed. However, as income growth per capita continues to increase, it should stimulate increased in-migration to the region in the future and help to slow the population drain. — Cincinnati — Ohio — United States — Nearby metro average 42 40 38 36 ■ Recession 34 32 30 2002 2004 2006 2008 2010 2012 Source: Bureau of Economic Analysis/Haver Analytics. DEMOGRAPHICS AND EDUCATION Cincinnati metro 2012 Population United States Change from 2009 2012 Change from 2009 2,128,603 -2.0% 313,914,040 +2.2% Adults with less than a high school diploma 10.7% -1.8% 14.1% -0.7% Adults with an undergraduate degree or higher 29.6% +1.1% 28.5% +0.6% 37.6 +0.7 years 37.4 +0.6 years $54,093 -5.6% $52,991 -4.6% Median age (years) Median household income Cincinnati, OHIO According to 2012 Census estimates, Cincinnati is the 28th largest of the 381 metropolitan statistical areas in the United States. Sources: Census Population estimates; American Community Survey. All monthly figures are seasonally adjusted and all dollar figures are in current dollars. Several charts use indexed measures to facilitate comparisons across regions and have a reference line at 100. These numbers can be thought of as the percentages of pre-recession levels. If levels were growing before the recession, pre-recession indexes will be below 100; if levels were falling before the recession, pre-recession indexes will be above 100. The Federal Reserve Bank of Cleveland, including its branch offices in Cincinnati and Pittsburgh, serves the Fourth Federal Reserve District (Ohio, western Pennsylvania, the northern panhandle of West Virginia, and eastern Kentucky). www. clevelandfed.org FEDERAL RESERVE BANK of CLEVELAND