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Federal Reserve Bank of San Francisco

WESTERN ECONOMIC DEVELOPMENTS
July 1996
Executive Summary
A wide variety of indicators suggest that
economic growth in California was strong in
the first half of 1996. Statistics on the California labor market, personal income, consumer spending, firm formation, and housing
markets all point to large gains in economic
activity this year.
Strength in business and real estate loan
demand contributed to a large increase in
lending by California banks in April and
May.
Job growth accelerated recently in the fastgrowing Intermountain states of Nevada,
Utah, and Idaho. Economic conditions in the
Pacific Northwestern states of Oregon and
Washington also continued to improve. However, the Alaskan and Hawaiian economies
have weakened a bit in recent months.
In terms of job growth over the past year, the
District contains the four fastest-growing
states in the nation: Nevada, Utah, Idaho and
Oregon. Arizona, California, and Washington also are growing faster than the overall
U.S.

District Update
Relatively rapid economic growth continued in
most District states in recent months. Employment growth was strong in California through
May, and other indicators pointed to further
improvement in the state labor market and a
possible acceleration in the rate of economic
growth. In the Intermountain states of Nevada,
Utah, and Idaho, job growth has accelerated
recently, making these three states the topranked in terms of employment growth over the
twelve months ending in April. Oregon payrolls
continued to expand quickly this spring, giving
it the fourth ranking in terms of trend job growth
among U.S. states. Washington state employment growth has picked up recently, to slightly
above the national pace. In contrast, economic
conditions in Alaska and Hawaii deteriorated
somewhat in recent months, and the boom in
Arizona moderated a bit.
Rapid population growth in parts of the West
has strained the current housing supply and
created other infrastructure needs in a number

Nonagricultural Payroll Employment
(percent change over year earlier)
4
3.5
3
2.5
2
1.5
1
0.5
0
-0.5
Apr-92

Apr-93

Apr-94

Apr-95

Apr-96

Western Economic Developments is produced twice quarterly by the Banking and Regional Studies Section of the Economic Research Department. The analyses represent
the views of the staff and do not reflect the official views of the senior bank management of the Federal Reserve Bank of San Francisco or the Federal Reserve System. Western
Economic Developments is prepared by the Economic Research Department and distributed by the Public Information Department, (415) 974-2163. This publication is
available on the World Wide Web at http://www.frbsf.org.

WESTERN ECONOMIC DEVELOPMENTS

of District states. The resulting increase in
building activity has contributed to about a 6½
percent increase in District construction sector
employment over the past twelve months. The
wholesale and retail trade sectors, which provide goods to the swelling number of households and businesses, also have experienced
rapid increases in payroll jobs. Among the components of the fast-growing services sector, the
job gains have been particularly large at computer software developers and other business
services providers. Overall manufacturing payrolls—which are declining in the U.S. as a

District Employment by Industry
%

Total
Mining
Construction
Manufacturing
Transportation
Trade
F.I.R.E.
Services
Government

Number Employed

% Change

Change

(thousands)

From
Previous

Apr-96

Mar-96

Apr-95

Month

Year

21,408.7
81.0
1,025.3
2,842.5
1,101.7
5,110.2
1,214.9
6,395.6
3,637.5

21,373.1
81.0
1,018.9
2,842.7
1,097.2
5,109.0
1,216.0
6,370.3
3,638.0

20,826.0
80.8
964.0
2,807.3
1,083.8
4,973.2
1,203.3
6,092.2
3,621.4

2.0
0.0
7.8
-0.1
5.0
0.3
-1.1
4.9
-0.2

2.8
0.2
6.4
1.3
1.7
2.8
1.0
5.0
0.4

Seasonally adjusted payroll employment data

District Employment by State
Number Employed
(thousands)
Apr-96
Alaska

Mar-96

Apr-95

Annualized
% Change
From
Previous
Month

%
Change
From
Previous
Year
0.4

261.1

263.2

260.1

-9.2

1,842.4

1,839.8

1,773.0

1.7

3.9

12,649.6

12,635.9

12,371.2

1.3

2.3

Hawaii

527.2

529.2

533.0

-4.4

-1.1

Idaho

493.3

488.3

472.6

13.0

4.4

Nevada

836.8

831.5

775.7

7.9

Oregon

1,462.8

1,459.4

1,401.5

2.8

4.4

951.3

944.8

897.6

8.6

6.0

Arizona
California

Utah
Washington

2,384.2

2,381.0

2,341.3

1.6

1.8

District

21,408.7

21,373.1

20,826.0

2.0

2.8

Rest of U.S.

97,491.3

97,363.9

96,035.0

1.6

1.5

U.S.

118,900

118,737

116,861

1.7

Seasonally adjusted payroll employment data

JULY 1996

whole—have been expanding in the District.
Job growth over the past twelve months in the
District has fallen noticeably short of the national rate in only a few major sectors; the weak
employment sectors in the District include the
public utilities and financial service providers,
where technological change, deregulation and
other competitive forces are leading to consolidation and downsizing.
California’s Strengthening Economy in 1996
A wide variety of indicators suggest that economic growth in California was strong in the
first half of 1996, and the state is well-positioned for fast growth in the second half of the
year. The official estimates of payroll employment growth show about a 3 percent average
annual gain in April and May, following a 2
percent increase in the first quarter. Because
this payroll employment series is benchmarked
to the more comprehensive employment counts
from the unemployment insurance system only
through March, 1995, an upward adjustment
should be applied for the likely undercount of
subsequent payroll job growth. Final,
benchmarked estimates are likely to show a gain
of at least 3 percent at an annual rate in payroll
employment in the first half of 1996, which is
the pace of job growth predicted by the UCLA
Business Forecasting Project for the year as a
whole.
The California unemployment rate was estimated at 7.2 percent in May and has fallen about
¾ percentage point over the past twelve months.
Moreover, separate household survey questions
on the reasons for unemployment offer other
indications of an improving labor market. An
increasing share of those who are unemployed
have recently entered the labor force to search
for employment, in part because job opportunities now are more plentiful. The fraction of
those unemployed who are re-entrants to the
labor force jumped to about 40 percent in May,
up 7 percentage points from a year earlier.
Correspondingly, if the rate of re-entrance to the
labor force had held steady in May at last year’s
level, the state unemployment rate would have
dropped another .5 percentage point last month.

FEDERAL RESERVE BANK OF SAN FRANCISCO

JULY 1996

WESTERN ECONOMIC DEVELOPMENTS

California Personal Income

California Unemployment Rate

(percent change relative to four quarters earlier)
Percent

Percent

5
7

3
6
2

1
5

Jan-90

Jan-91

Jan-92

Jan-93

Jan-94

Jan-95

Jan-96

90Q1 90Q3 91Q1 91Q3 92Q1 92Q3 93Q1 93Q3 94Q1 94Q3 95Q1 95Q3 96Q1

The flip-side of the increase in job search activity is that the share of the unemployed who are
job losers fell to about 44 percent this May,
down several percentage points from last May.
Separate data from the unemployment insurance (U.I.) system corroborate the declining
trend of job loss in the state. There was a further
drop-off in initial U.I. claims in May, and the
U.I. insured unemployment rate also continued
to decline last month.

California Taxable Sales
(percent change relative to four quarters earlier)
Percent
10

Personal income growth in California has been
accelerating, and this has helped buoy consumer spending in 1996. Overall state personal
income increased 6½ percent last year, quite a
bit faster than the 2.8 percent increase in 1994.
The more rapid gains in 1995 reflected a particularly large pickup in non-labor income—
dividends, interest and rent—but wage and salary income growth also accelerated (to a 5
percent pace). Although estimates of California
personal income are not yet available for early
1996, there is indirect evidence that the acceleration of income growth continued this year:
the state government reports that income tax
withholdings in the first four months of 1996
were running 9 percent ahead of last year’s
pace.

year earlier. State government figures on taxable sales from retail stores and other establishments show an even larger increase in the first
quarter; taxable sales were 8½ percent above a
year earlier. The 7 and 8½ percent year-overyear increases in first-quarter 1996 retail and
taxable sales follow 1995 gains of 4 percent and
5 percent, respectively, so the recent pace represents quite a pickup in consumer spending
growth.

The U.S. Department of Commerce’s estimates
show a burst in California retail sales in the first
quarter of 1996, when state retail sales are
estimated to have been 7 percent higher than a

The pace of business firm formation in California also appears to have accelerated in recent
months. Estimates from the California state government show that the number of new business

FEDERAL RESERVE BANK OF SAN FRANCISCO

-2

-4

-6

90Q1 90Q3 91Q1 91Q3 92Q1 92Q3 93Q1 93Q3 94Q1 94Q3 95Q1 95Q3 96Q1

JULY 1996

WESTERN ECONOMIC DEVELOPMENTS

incorporations in the first four months of 1996
increased 10½ percent relative to the same period a year earlier, following a slight decline in
1995.
The California housing market has been improving. The volume of existing home sales was
quite high in early 1996. For the state as a whole,
the California Association of Realtors (C.A.R.)
reports a 16½ percent increase in home sales
volume in the first quarter, relative to a year
earlier. The largest gains were in the San Francisco Bay Area, where sales were almost 25
percent higher than a year earlier, and Los Angeles area home sales also posted double-digit
increases in the first quarter. More recently,
strong sales volumes in Southern California
continued; according to statistics from Data
Quick, the cumulative pace of Southern California home sales through May of this year was up
about 25 percent relative to a year earlier, which
is the highest level of home sales volume since
1990.
California residential real estate values are increasing now. In the San Francisco Bay Area,
the median single-family home price increased
about 3 percent over the year ending in the first
quarter. In Los Angeles, the C.A.R. median
home price estimate has not yet shown an upturn, but other evidence suggests that residential
real estate values have bottomed out. For one, as
reported by the UCLA Business Forecasting
group, the history of individual home sales in
the Los Angeles area shows that prices have just
recently stabilized in most subareas of Los Angeles, including the high-priced neighborhoods
with the largest runups in house prices in the late
1980s and the largest declines in the 1990s.
Second, rental values for single-family houses
in Los Angeles are beginning to increase again;
the CPI index of owners’ equivalent rent for Los
Angeles increased at a 1 percent annual rate in
the first five months of 1996, an acceleration
from virtually no change in 1994 and from about
a ½ percent increase in 1995. For San Francisco,
owners’ equivalent rents have accelerated to
about a 2 percent annual pace so far in 1996.

The market for apartments also is reported to be
very tight in much of the San Francisco Bay
Area; the latest available estimates from the
Census Bureau show a drop in the San Francisco
rental vacancy rate to 3.8 percent in 1994, and
anecdotal reports suggest that the market has
tightened substantially since then. For Los Angeles, the evidence of a tightening multi-family
market is quantitative: as an indicator of vacancies, the Real Estate Research Council monitors
the number of idle electric meters in multi-unit
dwellings, and this series moved down to 5.0
percent in March, 1996, after peaking at 5.6
percent in mid-1994.
The recent pickup in housing market fundamentals in California has not yet translated into
much of an increase in residential building activity. Over the course of the 1990 to 1993
recession in the state, the total number of building permits issued for new residential construction fell from about 20,000 units per month to
about 7,000 units per month, and total permits
generally have remained in the 6,000 to 9,000
unit range since 1993. In the first four months of
1996, building permits were issued for an average of 7,000 housing units per month, a large
increase relative to the weak early-year pace in
1995, but still only about one-third of the prerecession level. California is well-positioned for
fast growth in residential construction later this
year or in 1997.
California Residential Construction Permits
(total permits issued on new housing units,
25000

20000

15000

10000

5000

Jan-90

three month moving average)

Jan-91

Jan-92

Jan-93

Jan-94

Jan-95

Jan-96

FEDERAL RESERVE BANK OF SAN FRANCISCO

JULY 1996

WESTERN ECONOMIC DEVELOPMENTS

Financial Conditions
Total bank lending (adjusted for loan sales and
reclassifications) in the District outside of California and Nevada (where credit card institutions significantly distort consumer loan figures) slowed in April and May from the first
quarter, according to a survey of large banks.
Cutbacks in business loans outstanding, as well
as declines in real estate loan growth, contributed to the overall lending slowdown.
In contrast, in California, the annualized rate of
adjusted loan growth jumped to an average 19.5
percent in April and May, from 8.6 percent in the
first quarter. Vigorous growth in business loans
outstanding in May, in addition to double-digit
growth in real estate loans in April and May,
contributed to the acceleration in total lending.
On average, consumer loan growth fell slightly
in April and May.
In addition to the monthly large bank data,
quarterly data for all banks in each of the individual District states are available through the
first quarter. These data show positive and accelerating growth in loans outstanding in Alaska
in the first quarter, and strong and steady growth
in Utah. In contrast, contractions in total loans
were seen in Hawaii, Idaho, Nevada, and Oregon in the first quarter. Oregon’s cutback in
lending was the first in three years and stemmed
from contractions in real estate and consumer
loans.
District Banking Indicators

Total Loans
Commercial

May-96

Apr-

235.3

232.

50.8

50.

Real Estate

116.7

Consumer

37.5

36.

Total Deposits

244.2

245.

Large Time

21.3

20.

Small Time

39.3

40.

MMDAs / Savings

90.2

116.

89.

First-quarter earnings in all states in the District
were good, with banks reporting healthy to very
strong return on assets (ROA) and return on
equity. ROA for the banks in the District averaged 1.36 percent, compared to 1.12 percent for
banks nationally.
Asset quality for most banks in the District was
good, with the average ratio of past- due loans to
total loans lower than or only slightly above that
seen in the nation as a whole in the first quarter.
However, banks in Alaska and Hawaii, where
the economies have been sluggish relative to the
rest of the District, showed somewhat higher
past-due ratios.
Total Loan Volume
Large Commercial Banks
(seasonally adjusted)

Percent
20

-5

-10

-15
May-92

May-93

May-94

May-95

May-96

District Manufacturing and Construction Indicators

Aerospace Employment
(1992=100)
Electronics Employment
(1992=100)
U.S. Semiconductor Orders
($ Million)
Non-Residential Awards
(1992=100)
Residential Permits
(Thousands)
Western Housing Starts

%
Change
From
Previous

%
Change
From
Previous
Year

Apr-96

Mar-96

Apr-95

Month

62.4

62.3

65.8

0.0

-5.2

106.9

106.6

100.1

0.3

6.8

3130.0

3330.0

4070.0

-6.0

-23.1

131.1

97.0

122.4

35.1

7.1

25.3

25.9

21.5

-2.2

17.7

37.4

27.4

27.9

36.5

34.1

(Thousands)

Figures in billions of dollars, seasonally adjus

FEDERAL RESERVE BANK OF SAN FRANCISCO

JULY 1996

WESTERN ECONOMIC DEVELOPMENTS

ALASKA, OREGON, AND WASHINGTON
Alaska’s economy has weakened so far this
year. The employment count fell again in April
and is now only 0.4 percent above its yearearlier level. During the past year, Alaska’s
manufacturing sector has lost over 7 percent of
its jobs, due primarily to reduced employment
in seafood processing and lumber. In contrast,
the number of jobs has grown 3 percent or more
in both the mining and service sectors during the
past year. In most of the state’s other major
sectors, employment has fluctuated in recent
months, but there is no clear trend.
Construction activity in Alaska has edged down
so far this year from the peak levels attained
after large gains last year. This pattern is evident in the construction employment figures,
which show a 5¾ percent gain in 1995, followed
by slight declines in early 1996. Also, residential construction permit issuance and nonresidential contract awards have been flat to down
slightly in recent months. Looking ahead, residential building activity is expected to pick up
as a result of the recent fire in the Mat-Su Valley
north of Anchorage, which reportedly burned
over 36,000 acres and destroyed about 300 buildings, including businesses, primary residences
and recreational cabins.

Nonagricultural Payroll Employment

5.0

4.0

3.0

2.0

0.0
Apr-92

Apr-93

Apr-94

Apr-95

While construction billing volumes and employment currently are very strong, the longer-term
outlook for construction in Oregon is less robust.
The strain on local resources from the high level
of current construction activity is putting upward pressure on labor and materials costs, forcing increases in construction budgets or scaling
back in the scope of planned projects.
Economic activity in Washington has picked up
in recent months. On average, payroll employment increased at about a 4 percent annual rate in
March and April, after little change in the first
two months of the year. Cumulatively, most of
the job gains this year have been in the services
and finance, insurance, and real estate sectors.
Transportation employment is down a bit since
the end of last year, and overall manufacturing
employment is little changed.

(percent change over year earlier)

1.0

Oregon’s economy continues to perform very
well, with the overall pace of payroll job growth
remaining near 4 percent at an annual rate in
recent months. Employment gains have been
broad-based, but the construction sector has been
especially strong. The number of construction
jobs in April was up 12.1 percent from a year
earlier, reflecting many government and private
projects moving into construction phase this
summer. The service sector has expanded its job
count by 9 percent during the past year, with
especially rapid growth in amusement and recreational services, health services, and business
services. Robust growth also is reported for the
trade sector, where employment has risen 4.5
percent during the past year. Job losses in nondurable goods industries pushed manufacturing
employment down in April; however, several
durable goods manufacturing industries have
experienced growth rates of greater than 5 percent during the past twelve months, including
electronics, transportation equipment, logging
and industrial machinery.

Apr-96

The residential real estate market in the state
continues to be active. Home resales for the first
quarter of 1996 were relatively high and have
increased about 10 percent relative to the same
period a year ago.
FEDERAL RESERVE BANK OF SAN FRANCISCO

JULY 1996

WESTERN ECONOMIC DEVELOPMENTS

CONSTRUCTION
Non-Residential Construction Awards

Residential Construction Permits

1992=100
375

1992=100
275

325
225
275
175

225

175
125
125
75
75

25
May-92

25
May-93

May-94

May-95

May-96

May-92

May-93

May-94

May-95

May-96

EMPLOYMENT
Number E
(thous
Apr-96
Alaska
Total
Mining
Construction
Manufacturing
T.C.P.U.
Trade
F.I.R.E.
Services
Government

Mar

261.1
10.2
12.8
15.2
22.7
54.5
11.6
61.9
72.2

263.2
10.2
12.4
17.8
22.8
54.4
11.5
61.5
72.6

260.1
9.7
12.6
16.4
23.1
53.6
11.7
60.1
72.9

-9.2
0.0
46.4
-85.0
-5.1
2.2
10.9
8.1
-6.4

0.4
5.2
1.6
-7.3
-1.7
1.7
-0.9
3.0
-1.0

1462.8
1.8

1459.4
1.9

1401.5
1.7

2.8
-47.7

4.4
5.9

Construction
Manufacturing
T.C.P.U.
Trade
F.I.R.E.

73.9
230.6
73.0
370.7
89.4

72.7
231.3
72.9
369.1
89.2

65.9
227.0
70.8
354.7
86.3

21.7
-3.6
1.7
5.3
2.7

12.1
1.6
3.1
4.5
3.6

Services
Government

388.3
235.1

387.0
235.3

356.4
238.7

4.1
-1.0

9.0
-1.5

Oregon
Total
Mining

Washington
Total
Mining
Construction
Manufacturing
T.C.P.U.
Trade
F.I.R.E.
Services
Government

2384.2
3.2
123.7
333.3
121.8
588.4
123.3
643.4
447.1

2381.0
3.2
124.7
332.5
121.7
586.5
123.5
640.8
448.1

2341.3
3.4
122.0
338.4
119.5
578.1
120.8
614.8
444.3

1.6
0.0
-9.2
2.9
1.0
4.0
-1.9
5.0
-2.6

1.8
-5.9
1.4
-1.5
1.9
1.8
2.1
4.7
0.6

Unemployment Rates (%)
Apr-96

Mar-96

Feb-96

Apr-95

Mar-95

Alaska
Oregon
Washington

7.2
5.4
6.2

7.9
5.1
6.1

7.5
4.9
6.0

7.0
4.7
6.4

7.3
4.6
6.3

U.S.

5.4

5.6

5.5

5.7

5.5

Unemployment rates are from the household employment survey, all other data are for nonagricultural payroll employment.

FEDERAL RESERVE BANK OF SAN FRANCISCO

JULY 1996

WESTERN ECONOMIC DEVELOPMENTS

ARIZONA, CALIFORNIA, AND HAWAII
Employment growth in Arizona was moderate
in early spring, after posting large gains in 1995
and the beginning of 1996. The rapid gains
through February included a 6 percent expansion of construction jobs and a 5 percent increase in service sector jobs, relative to a year
earlier. In March and April, the service sector
job growth slowed, construction employment
retraced a little of the earlier huge gains, and
employment in finance, insurance and real estate edged down. Nevertheless, the Arizona labor market is tight, with a 4.8 percent unemployment rate in April, down 0.6 percentage point
from a year earlier.
Among other economic indicators, Arizona retail sales slowed at the beginning of the year,
after a very strong Christmas season. Residential building permit issuance has been strong in
1996. Also, first-quarter 1996 existing home
sales were up 25 percent relative to a year
earlier, and median home prices in Phoenix have
increased 10 percent over this four-quarter period.
Economic growth in California is accelerating.
The estimates of payroll employment growth
show about a 3 percent average annual gain in
April and May, following a 2 percent increase in
the first quarter. Employment growth at whole-

Nonagricultural Payroll Employment
(percent change over year earlier)
8
7
6
5
4
3
2
1
0
-1
-2
Apr-92

Apr-93

Apr-94

Apr-95

Apr-96

sale and retail trade establishments has been
strong, and over the past twelve months the pace
of job gains has exceeded 4 percent in each of the
construction and service sectors.
Among services, some of the largest job increases have been in the business services area,
an industry group which includes consulting
services and other establishments developing
computer software, such as applications for the
fast-growing World Wide Web. Many of these
establishments are in what has been loosely
defined as the “multimedia” business, providing
information or entertainment content through a
multiplicity of media, such as text, graphics and
sound. The UCLA Business Forecasting Project
recently reported on various attempts to measure activity in this new, rapidly growing line of
business. For example, the Multimedia Yearbook shows that 30 percent of all its listed multimedia firms are in California, with the second
largest concentration of 11 percent in New York
state. Most of the more than 900 multimedia
firms in California are in the San Francisco area.
Payroll employment continues to contract in
Hawaii. Employment fell about 1 percent over
the twelve months ending in April, with much of
the decline coming in recent months. About onehalf of the 2,300 jobs lost between January and
April were in the construction sector. However,
the weakness in employment is broad-based.
The manufacturing, transportation, and finance,
insurance and real estate sectors also have shed
jobs this year, and services sector employment
is flat.
The decline in construction employment reflects
weakness in both residential and non-residential
building. In recent months, contract awards for
nonresidential projects have remained well below year-earlier levels, and residential housing
permits continued a downward march. The market for existing homes is too weak to support
much residential building. Sales of existing
homes fell to about 10,000 units last year and
remained at this lower level through the first
quarter of this year.

FEDERAL RESERVE BANK OF SAN FRANCISCO

JULY 1996

WESTERN ECONOMIC DEVELOPMENTS

CONSTRUCTION
Non-Residential Construction Awards

Residential Construction Permits
1992=100

1992=100
225

225

200

175

150

125

100

50
25

25
May-92

May-93

May-94

May-95

May-92

May-96

May-93

May-94

May-95

May-96

EMPLOYMENT
Number
(thou
Apr-96
Arizona
Total
Mining
Construction
Manufacturing
T.C.P.U.
Trade
F.I.R.E.
Services
Government

1842.4
12.6
122.9
197.7
88.2
460.8
107.9
543.4
308.9
May-96

Ma
1839.8
12.4
122.7
197.4
88.1
460.1
108.3
542.1
308.7

1773.0
12.2
116.8
192.0
86.4
447.6
107.0
516.5
294.5

1.7
21.2
2.0
1.8
1.4
1.8
-4.3
2.9
0.8

3.9
3.3
5.2
3.0
2.1
2.9
0.8
5.2
4.9

Apr-96

May-95

12695.3
29.1

12649.6
28.9

12405.6
30.0

4.4
8.6

2.3
-3.0

Construction
Manufacturing
T.C.P.U.
Trade
F.I.R.E.
Services

503.9
1814.1
636.9
2990.9
735.7
3883.7

499.6
1807.1
636.3
2979.6
733.7
3862.2

483.0
1785.7
629.5
2921.4
735.7
3716.9

10.8
4.7
1.1
4.6
3.3
6.9

4.3
1.6
1.2
2.4
0.0
4.5

Government

2101.0

2102.2

2103.4

-0.7

-0.1

California
Total
Mining

Hawaii
Total
Mining
Construction
Manufacturing
T.C.P.U.
Trade
F.I.R.E.
Services
Government

527.2
.
24.8
16.5
40.1
135.0
36.9
164.9
109.0

Unemployment Rates (%)
Apr-96
Arizona
Hawaii
U.S.

California

529.2
.
24.7
16.5
40.7
134.8
37.1
165.3
110.1

533.0
.
26.5
16.9
40.6
135.2
37.0
164.5
112.3

-4.4
.
5.0
0.0
-16.3
1.8
-6.3
-2.9
-11.4

-1.1
.
-6.4
-2.4
-1.2
-0.1
-0.3
0.2
-2.9

Mar-96

Feb-96

Apr-95

Mar-95

4.8
5.8
5.4

4.9
5.9
5.6

4.9
5.9
5.5

5.4
5.8
5.7

5.3
5.6
5.5

May-96

Apr-96

Mar-96

May-95

Apr-95

7.2

7.5

7.7

7.9

Unemployment rates are from the household employment survey, all other data are for nonagricultural payroll employment.
All data are seasonally adjusted.

FEDERAL RESERVE BANK OF SAN FRANCISCO

JULY 1996

WESTERN ECONOMIC DEVELOPMENTS

IDAHO, NEVADA, AND UTAH
The Idaho economy accelerated substantially
in recent months. Payroll employment growth
surged to an average annual rate of 10 percent in
March and April. The April jobs tally was 4.4
percent above its year-earlier level, which places
Idaho third in the employment growth ranking
of U.S. states. The state’s unemployment rate
declined 0.3 percentage point to 4.8 percent in
April, despite rapid recent growth in the state
labor force.
The recent employment surge was led by the
construction sector, where job growth was approximately 27 percent at an annual rate during
the first four months of 1996, reflecting high
current building activity. Durable manufacturing employment also continues to expand rapidly, led by the industrial equipment and electronics sectors. The state’s electronics sector
continues to perform well despite the slowdown
in semiconductor sales, perhaps because it is
diversified beyond chip manufacturing. Currently, a major manufacturer of computer
memory chips in the state is expanding its hightech product line to diversify further the risk
associated with the volatile memory chip market.

Nonagricultural Payroll Employment
(percent change over year earlier)
12

Nevada’s stellar pace of growth picked up further. Payroll employment increased at about a
7½ percent average annual rate so far in 1996,
up from the 7 percent gain in 1995. Construction
employment continues to lead the way, followed by trade and service employment growth.
However, previously torrid manufacturing employment growth slowed somewhat in early
1996, with an actual decline in April. Some
restraint on manufacturing expansion may be
arising from pronounced wage growth; average
wages in the state’s manufacturing sector grew
nearly 10 percent during the 12 months ending
in April.
The key contribution to the state’s rapid expansion is commercial development aimed at the
tourist and this shows no signs of deceleration,
particularly in Las Vegas. In April, overall nonresidential construction awards in Nevada
jumped sharply, owing to the start of a $950
million dollar hotel/casino facility in Las Vegas.
Growth in Utah has returned to very rapid rates
after a slight deceleration around the turn of the
year. Jumps in employment of about 9 percent at
an annual rate in each of March and April left the
number of jobs on state payrolls about 6 percent
above a year earlier. Recent growth has been
particularly strong in the construction and manufacturing sectors. Furthermore, government
employment growth accelerated markedly in
early 1996. This may reflect substantial current
and planned growth in state government expenditures, for which Utah is expected to be ranked
near the top of the nation in 1996 and 1997.

0
Apr-92

Apr-93

Apr-94

Apr-95

Apr-96

Among other indicators, taxable sales increased
notably in early 1996, following two years of
strong growth. Commercial building vacancy
rates are very low in most areas of the state, and
$2 billion worth of new commercial building
projects reportedly are planned. In the state’s
tourist sector, ski areas recovered from light
early season snowfalls to post the second strongest ticket sales on record, and during early
1996 visits to national park sites were well
above 1995 levels.
FEDERAL RESERVE BANK OF SAN FRANCISCO

JULY 1996

WESTERN ECONOMIC DEVELOPMENTS

CONSTRUCTION
Non-Residential Construction Awards

Residential Construction Permits
1992=100
300

1992=100
1050
950

250

850
750

200

650
550

150

450
UT

350

100

250
150

50
May-92

May-93

May-94

May-95

May-92

May-96

May-93

May-94

May-95

May-96

EMPLOYMENT
Number E
(thous
Apr-96

Idaho
Total
Mining
Construction
Manufacturing
T.C.P.U.
Trade
F.I.R.E.
Services
Government

493.3
2.8
33.8
73.8
23.4
123.9
23.7
116.3
95.6

488.3
2.9
32.7
73.0
23.4
123.4
23.6
114.1
95.2

472.6
2.7
29.3
70.8
22.4
120.2
24.2
107.9
95.1

13.0
-34.4
48.7
14.0
0.0
5.0
5.2
25.8
5.2

4.4
3.7
15.4
4.2
4.5
3.1
-2.1
7.8
0.5

Nevada
Total
Mining
Construction

836.8
13.8
71.0

831.5
13.5
70.2

775.7
12.9
59.1

7.9
30.2
14.6

7.9
7.0
20.1

38.6
42.4
168.6
37.9
364.5
100.0

38.7
42.2
168.0
37.8
361.9
99.2

36.2
40.3
154.2
34.8
341.8
96.4

-3.1
5.8
4.4
3.2
9.0
10.1

6.6
5.2
9.3
8.9
6.6
3.7

Manufacturing
T.C.P.U.
Trade
F.I.R.E.
Services
Government

Utah
Total
Mining
Construction
Manufacturing
T.C.P.U.
Trade
F.I.R.E.
Services
Government

951.3
7.7
62.8
129.7
53.8
228.7
50.5
250.7
167.4

944.8
7.9
62.7
128.4
53.2
226.3
50.4
248.8
167.1

897.6
8.1
52.3
123.1
51.6
217.5
46.5
234.6
163.9

8.6
-26.5
1.9
12.8
14.4
13.5
2.4
9.6
2.2

6.0
-4.9
20.1
5.4
4.3
5.1
8.6
6.9
2.1

Mar-96

Feb-96

Apr-95

Mar-95

Unemployment Rates (%)
Apr-96
Idaho
Nevada
Utah

4.8
5.0
3.1

5.1
4.7
3.2

4.9
5.0
3.2

5.2
5.5
3.7

5.2
5.5
3.5

U.S.

5.4

5.6

5.5

5.7

5.5

Unemployment rates are from the household employment survey, all other data are for nonagricultural payroll employment.

FEDERAL RESERVE BANK OF SAN FRANCISCO

1996 Issues

Mailing Date

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Federal Reserve Bank of San Francisco
101 Market Street
San Francisco, CA 94105

WESTERN ECONOMIC DEVELOPMENTS / JULY 1996

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Full text of Western Economic Developments : July 1996

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