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Federal Reserve Bank of San Francisco

WESTERNECONOMICDEVELOPMENTS
September 1996
Executive Summary
The District economy has expanded more
strongly thus far in 1996 than it did in
1995. In July, payroll employment was
3.2 percent above its year earlier level,
although growth for that month was somewhat below the brisk pace recorded in the
second quarter.
Strong growth continued in California,
with payroll employment expanding at a
2½ percent annualized pace on average
in June and July. The Washington
economy, boosted by expansion at Boeing,
accelerated noticeably in recent months.
Signs of slightly moderated growth have
appeared in the fast growth Intermountain states and Oregon. However, among
all District states, only Hawaii and to a
lesser extent Alaska showed any significant weakness.
Several District states have experienced
sustained or increasing labor market
tightness. Average hourly wage figures
reveal that the associated labor shortages have had a noticeable effect on
wage growth in manufacturing, construction, and wholesale and retail trade in
several states.

District Update
The District economy expanded strongly in July
but at a rate somewhat below the very brisk pace
in the second quarter. Payroll employment grew
3.6 percent at an annual rate in the second
quarter and 2.7 percent at an annual rate in July.
Thus far in 1996, District employment has expanded 3.2 percent at an annual rate, compared
to 2.7 percent during 1995. This improvement
largely has arisen from slightly accelerated
growth in California and strong acceleration in
Washington, where employment growth during
1996 was at more than twice its 1995 pace.
Although job growth continued at rapid rates in
most of the remaining states in the District,
employment and other economic indicators do
not point to fast growth as uniformly as they have
over the past few years. Arizona, Idaho, Nevada, Oregon, and Utah all exhibited signs of
slight slowing in recent months, including moderated growth in employment and planned building
activity. Furthermore, despite exhibiting some
positive economic indicators of late, Hawaii lost
Nonagricultural Payroll Employment
(percent change over year earlier)
4.0
3.5

Twelfth
District

3.0
2.5
2.0
1.5

U.S.

1.0
0.5
0.0
-0.5
Jul-92

Jul-93

Jul-94

Jul-95

Jul-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.

SEPTEMBER 1996

WESTERN ECONOMIC DEVELOPMENTS

jobs in June and July, and employment there
remains below year-ago levels. The Alaskan
economy also lost jobs in July, but employment
there is slightly above year-ago levels.
Much of the recent strengthening in the District
has come from the manufacturing sector. Employment growth in that sector has picked up
substantially in 1996; after expanding at annual
rates of 1.9 and 2.4 percent during the first two
quarters of 1996, annualized District manufacturing employment growth was 5.1 percent in
July. This acceleration largely is due to gains in

District Employment by State

Number Employed
(thousands)
Jul-96
Alaska
Arizona
California

Jun-96

Jul-95

Annualized
% Change
From
Previous
Month

%
Change
From
Previous
Year

264.6
1,859.5

265.5
1,854.9

262.7
1,782.4

-4.0
3.0

0.7
4.3

12,757.1

12,734.8

12,447.4

2.1

2.5

Hawaii

527.1

529.2

531.5

-4.7

-0.8

Idaho

501.3

501.2

474.6

0.2

5.6

850.3
1,476.5

846.1
1,469.8

793.9
1,420.9

6.1
5.6

7.1
3.9

Nevada
Oregon
Utah

961.5

959.3

907.8

2.8

5.9

2,412.1

2,401.1

2,348.6

5.6

2.7

District

21,610.0

21,561.9

20,969.8

2.7

3.1

U.S.

119,748

119,555

117,201

2.0

2.2

Washington

Seasonally adjusted payroll employment data

Washington state emanating from the resurgence at Boeing. Expansion also occurred at a
wide variety of California manufacturing firms,
including those involved in high-tech product
lines such as network computer products and
also in more traditional industries such as metal
products.
However, manufacturing employment in several
smaller states that previously had expanded rapidly—notably Idaho, Oregon, Nevada, and
Utah—was flat or declined in recent months.
Some of this moderation appears attributable to
continued slack in the market for computer
memory chips; evidence suggests that Idaho,
Utah, and Oregon all have experienced slower
growth due to this source of weakness. Also,
District nondurable manufacturing in general has
grown more slowly than durable manufacturing,
even prior to the resurgence at Boeing.
Among other industry sectors, the services sector has been the largest contributor to District
employment expansion for some time. This sector accounts for 30 percent of District employment, and thus far in 1996 it accounted for
approximately 50 percent of the 388 thousand
District jobs created. The finance, insurance,
and real estate sector also has expanded this
year, at a 1.2 percent annualized pace. This is in
sharp contrast to previous years; employment in
this sector decreased substantially in 1994 and

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
Month

District Employment by Industry

%
Change
From
Previous
Year

Jul-96

Jun-96

Jul-95

63.3

62.6

62.5

1.1

1.2

107.4

107.1

101.9

0.3

5.4

2810.0

2960.0

4640.0

-5.1

-39.4

117.6

155.6

114.3

-24.4

2.9

24.8

23.7

23.3

4.5

6.4

30.3

34.5

30.0

-12.2

1.0

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

Annualized

Number Employed

% Change

Change

(thousands)

From
Previous
Month

From
Previous
Year

Jul-96

Jun-96

Jul-95

21,610.0
81.4
1,046.9
2,869.1
1,108.4
5,158.1
1,221.9
6,472.2
3,652.0

21,561.9
81.7
1,040.5
2,856.8
1,104.6
5,147.2
1,219.7
6,463.2
3,648.2

20,969.8
81.3
982.1
2,813.3
1,088.0
5,012.9
1,207.9
6,169.0
3,615.3

2.7
-4.3
7.6
5.3
4.2
2.6
2.2
1.7
1.3

3.1
0.1
6.6
2.0
1.9
2.9
1.2
4.9
1.0

(Thousands)

Seasonally adjusted payroll employment data

FEDERAL RESERVE BANK OF SAN FRANCISCO

SEPTEMBER 1996

was essentially flat in 1995. Construction employment has expanded rapidly in 1996, at close
to a 6 percent yearly pace, although growth in
planned building activity has slowed in the District. Government payrolls have grown moderately, at just under a 1 percent pace, for the last
4 years.
On a less sanguine note, the District is now
emerging from one of the worst wildfire seasons
on record, with over 5 million acres of land and
hundreds of houses burned nationwide, most of
them in the 12th District. This has caused substantial losses in public land resources and open
space, and significant expenditures by firefighting
and related public agencies, although dollar estimates of damage and public expenditures are not
yet available.

WESTERN ECONOMIC DEVELOPMENTS

Utah, Washington, and Wyoming. Of these, only
Colorado, Montana, New Mexico, and Wyoming
are outside the 12th District. This index therefore provides useful information regarding wage
and compensation developments in the District.
The year-over-year percentage change in the
quarterly Employment Cost Indices for wages
and salaries, for the U.S. as a whole and the
Western region, is shown in the chart. After
increasing substantially at the end of the 1980s
expansion, then coming down in response to the
early 1990s recession, wage inflation at the
national level generally has remained in the 2.8 to
3.0 percent range since mid-1992. However, a

Unemployment Rates for 12th District States
and the U.S.

District Wage Pressures
As of August, the national unemployment rate
stood at 5.1 percent, which indicates a tight
national labor market. Although the District unemployment rate was 6.4 percent in July, this
represents substantial tightness in the 12th District. In particular, the table shows the long-run
average and current unemployment rates in the
District states, along with the change in unemployment over the past year. The unemployment
rate is below its long-run trend in all states except
Hawaii. Several fast-growing states (particularly Utah and Nevada) have had low unemployment rates for a sustained period of time, and
increasing labor market tightness (as represented
by falling unemployment rates) is apparent in
several states including California and Washington. This labor market tightness may put upward
pressure on wages in the District.
The primary and most reliable source of information on labor cost inflation is the Employment
Cost Index (ECI), which is based on reported
compensation for a fixed sample of occupations
across a large number of private non-farm and
state and local government establishments. The
total compensation and wage and salary ECI’s
are available nationally and for broad U.S. regions. The West region includes the states of
Alaska, Arizona, California, Colorado, Hawaii,
Idaho, Montana, Nevada, New Mexico, Oregon,

FEDERAL RESERVE BANK OF SAN FRANCISCO

Average,
1978-1995

Change from
July 1996

July 1995 - July 1996

Alaska

9.1

7.6

0.5

Arizona

6.4

5.2

0.1

California

7.4

7.1

-0.7

Hawaii

5.0

6.0

0.0

Idaho

6.9

4.9

-0.5
-0.6

Nevada

6.5

4.8

Oregon

7.5

5.3

0.5

Utah

5.5

3.1

-0.5

Washington

7.7

5.8

-0.6

U.S.

6.8

5.4

-0.3

slight upward tilt in both national wage inflation
and inflation in the western states is evident in
recent quarters. As of the second quarter of
1996, the national and western indices stood 3.3
and 3.2 percent above their year earlier levels.
The ECI figures are suggestive of increased
wage pressure at both the national level and in
the West in the second quarter. Given the variation in unemployment across states in the District, additional insights can be gleaned from
examining data on average hourly wages by
state, which are available through July. For the
12th District, data are available for manufacturing employees in all states, and for construction
and retail employees in several states. These

SEPTEMBER 1996

WESTERN ECONOMIC DEVELOPMENTS

Wage and Salary Inflation
(percentage change over four quarters
earlier in Wage and Salary ECI)
5

2
U.S.
West

Mar-96

Mar-95

Sep-95

Mar-94

Sep-94

Mar-93

Sep-93

Mar-92

Sep-92

Mar-91

Sep-91

Mar-90

Sep-90

Mar-89

Sep-89

Mar-88

Sep-88

Mar-87

Sep-87

data are not seasonally adjusted, and they pertain
only to production or non-supervisory employees.
The next table shows growth in average manufacturing wages for the contiguous District states
and the U.S. The figures shown are the average
12-month percentage change in manufacturing
wages for the periods August 1994 to July 1996,
August 1994 to July 1995, August 1995 to January 1996, and February 1996 to July 1996.
The rate of manufacturing wage growth varies
from moderate to high across the District states.
However, all but one of the states listed show a
pick up in average manufacturing wage increases
in 1996. The pick up is particularly pronounced in
Idaho and Washington, perhaps because each is
recovering from low wage growth in previous
periods. The level and degree of acceleration are
striking in Nevada and Utah, two states that have
experienced prolonged labor market tightness
and further tightening over the past year. Manufacturing wage growth also has accelerated noticeably in 1996 in Arizona and to a lesser extent
California, although the level of wage growth in
both states is moderate. The one exception to the
pattern of acceleration is Oregon, where unemployment has increased by half a percentage
point over the last year and manufacturing employment growth has slowed somewhat in 1996.

The acceleration in manufacturing wage growth
documented in the table suggests significant
wage inflation for production workers in much of
the District. An alternative explanation is that
manufacturing expansion in these states is occurring disproportionately in sectors that use
relatively skilled and highly paid workers, so that
rather than wage inflation occurring, the figures
reflect higher manufacturing labor productivity.
This explanation cannot be rejected definitively,
particularly as an explanation of the high levels of
wage growth in several states. However, the
acceleration in 1996 does not appear to be explained by such composition effects, since the
pattern and timing of employment growth by
manufacturing industry sub-sectors is not suggestive of an accelerated shift toward high-wage
manufacturing industries in states such as Utah
and Nevada in 1996.
Data also are available for construction workers
and/or wholesale and retail trade workers in
several states, as shown in the table. Although
these figures do not suggest high wage growth
and acceleration in 1996 as uniformly as the
manufacturing figures do, they nonetheless reinforce several conclusions implied by the manufacturing wage series. In particular, wage growth
has been high in Nevada’s construction sector
and Utah’s trade sector. Furthermore, wage

Growth in Hourly Manufacturing Wages,
Selected 12th District States and the U.S.
(percentage change over same period a year earlier)

Aug '94 July '96

Aug '94 July '95

Aug '95 Jan '96

Feb '96 July '96
2.2

Arizona

0.7

0.3

-0.1

California

0.9

0.2

1.4

1.9

Idaho

0.1

-3.1

0.7

6.1

Nevada

6.0

5.0

5.5

8.3

Oregon

3.0

3.3

3.2

2.3

Utah
Washington
U.S.

3.3

2.8

2.6

5.0

-1.5

-1.8

-7.2

4.8

2.7

2.5

2.8

3.1

FEDERAL RESERVE BANK OF SAN FRANCISCO

SEPTEMBER 1996

WESTERN ECONOMIC DEVELOPMENTS

Angeles/Long Beach SMSA to the south, manufacturing wage increases have been weak to
moderate in most areas, with only limited indications of an acceleration in 1996. Even the San
Jose SMSA, which is in the heart of the Bay
Area’s “Silicon Valley” high-tech center, recently has experienced average manufacturing
wage growth at a pace less rapid than in the
U.S. as a whole.

growth in these sectors and in Nevada’s trade
sector has accelerated substantially in 1996. Wage
inflation also has been strong for some time in
Oregon’s construction sector, and it increased
further in 1996. In contrast, construction wage
growth has come down in Arizona, as have construction and trade wage growth in Idaho. In
California, construction wage growth has been
moderate, although there has been an acceleration in 1996. Retail sector wage growth is high in
California, although it has come down somewhat
in 1996 compared to 1995.

Overall, these figures suggest high and accelerating wage increases in Nevada and Utah,
which have had low unemployment rates over a
sustained period. The evidence for high and
accelerating wage increases is less clear for
other fast-growth states. However, wages in
Idaho’s manufacturing sector and Oregon’s
construction sector have accelerated to high
growth levels in 1996. There also has been some
pick up in wage inflation in California and Washington, where growth has accelerated in 1996;
the rate of growth to date, however, remains
moderate in California.

Although wages in California have not yet accelerated much beyond moderate growth rates, statelevel figures may mask developments occurring
in different areas of the state. In particular, the
Los Angeles County labor market continues to be
somewhat weak, whereas other areas—notably
the San Francisco Bay Area—have substantially
tighter labor markets. However, with the exception of Orange County, which borders the Los

Growth in Hourly Wages,
Selected 12th District States and Industries
(percentage change over same period a year ago)
Aug '94 July '96
Arizona
Construction
California
Construction
Retail Trade
Idaho
Construction
W&R Trade
Nevada
Construction
W&R Trade
Oregon
Construction
W&R Trade
Utah
W&R Trade
Washington
Construction
W&R Trade
U.S.
Construction
W&R Trade

Aug '94 July '95

Aug '95 Jan '96

Feb '96 July '96

3.1

3.5

4.4

1.1

1.6
3.0

0.8
1.7

2.0
4.8

2.6
3.7

5.4
0.3

8.0
-0.2

8.2
0.8

-2.7
0.6

3.6
2.5

2.8
2.1

2.0
2.2

6.9
3.7

5.0
2.6

4.1
2.8

5.7
3.4

6.1
1.2

5.9

5.3

5.1

8.0

2.4
4.2

2.8
5.6

1.4
3.3

2.6
2.3

2.4
3.1

2.7
2.8

2.4
3.1

1.9
3.5

FEDERAL RESERVE BANK OF SAN FRANCISCO

SEPTEMBER 1996

WESTERN ECONOMIC DEVELOPMENTS

ALASKA, OREGON, AND WASHINGTON
The Alaskan economy has been highly variable
in recent months but continues to expand at a
slow pace on average. Following strong second
quarter growth of 3.5 percent at an annual rate,
payroll employment declined 4.0 percent at an
annual rate in July, and job growth over the past
12 months has only been 0.7 percent. The July
downturn was broad based, with all major sectors except manufacturing experiencing declines.
State manufacturing employment has fallen 7.5
percent over the last year, but it recorded sizeable increases in June and July, despite flat
employment in the key seafood processing sector. Although this year’s salmon harvest was
good, the outlook for that industry is slightly
downbeat, due to very low salmon prices arising
from stiff international competition.
Anchorage has fared better than the state as a
whole over the last year, and service and trade
employment there grew during July. However,
growth there and in the remainder of the state
has been hampered by accelerating out-migration in recent years, including a loss of 9000
residents due to net out-migration in 1995.
Oregon’s payroll employment jumped in July,
after moderate gains in the second quarter. July
employment growth accelerated to 5.6 percent

Nonagricultural Payroll Employment
5.0

(percent change over year earlier)
OR

4.0

3.0

U.S.
2.0
WA
1.0

at an annual rate, nearly double the growth rate
for the second quarter. Job growth has been
particularly strong in business and professional
services. Also, the manufacturing sector perked
up in July, benefitting from an increase in the
demand for lumber and wood products, and from
recent strong growth in computer and electronics
employment; the latter occurred in spite of moderation arising from slack in the market for
computer memory chips. The unemployment rate
remains low, at 5.3 percent in July, but it has been
slightly higher in 1996 than it was in 1995. Furthermore, although construction employment
growth accelerated sharply in July, growth in the
number of building permits has moderated.
Sustained strong economic growth has helped to
fill the state coffers. Currently, an excess of state
personal and corporate income tax revenues
over the state’s legislative prediction is expected
to produce a rebate of approximately $275 million
dollars in late 1997 under the state’s “2% Kicker
Law.”
Growth in Washington continues to accelerate.
Payroll jobs expanded 2.7 percent over the past
year, but at 3.4 and 5.6 percent rates during the
second quarter and July, respectively. Although
growth has been broad-based, much is attributable to Boeing’s resurgence. Manufacturing
employment grew at annualized rates of 10.5 and
15.6 percent in June and July, and growth in this
sector during 1996 has completely reversed the
significant job losses of 1995. Boeing plans to add
13,200 jobs in total this year, 5000 more than
previously announced. This alone will increase
state manufacturing employment by 4 percent
during the year, and salutary spillover effects on
Boeing’s suppliers and other firms are likely to be
large. Expansion by software companies and
computer makers such as Intel also are fueling
state growth, and the state’s strong business
climate has encouraged a recent upswing in
planned nonresidential construction.

AK
0.0
Jul-92

Jul-93

Jul-94

Jul-95

Jul-96

FEDERAL RESERVE BANK OF SAN FRANCISCO

SEPTEMBER 1996

WESTERN ECONOMIC DEVELOPMENTS

CONSTRUCTION
Non-Residential Construction Awards

Residential Construction Permits

1992=100

375

275
AK

325
AK

225

OR
275

175

225

OR
175

125

WA
75

25
Jul-92

Jul-93

Jul-94

Jul-95

Jul-92

Jul-96

Jul-93

Jul-94

Jul-95

Jul-96

Annualized
% Change
From
Previous
Month

%
Change
From
Previous
Year

Data are seasonally adjusted three month moving averages

EMPLOYMENT
Number Employed
(thousands)
Jul-96
Alaska
Total
Mining
Construction
Manufacturing
T.C.P.U.
Trade
F.I.R.E.
Services
Government

Jun-96

Jul-95

Annualized
% Change
From
Previous
Month

%
Change
From
Previous
Year

264.6
10.0
13.3
16.0
22.0
55.8
11.5
62.6
73.4

265.5
10.2
13.7
15.4
22.1
56.1
11.7
62.8
73.5

262.7
9.8
13.0
17.3
22.8
54.3
11.6
61.2
72.7

-4.0
-21.2
-29.9
58.2
-5.3
-6.2
-18.7
-3.8
-1.6

0.7
2.0
2.3
-7.5
-3.5
2.8
-0.9
2.3
1.0

1476.5
1.8

1469.8
1.8

1420.9
1.7

5.6
0.0

3.9
5.9

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

76.4
230.1
73.5
374.5
90.2

74.6
229.5
72.7
373.2
90.5

68.4
227.9
71.1
360.3
87.3

33.1
3.2
14.0
4.3
-3.9

11.7
1.0
3.4
3.9
3.3

Services
Government

394.8
235.2

392.4
235.1

366.1
238.1

7.6
0.5

7.8
-1.2

Oregon
Total
Mining

Number Employed
(thousands)
Jul-96
Washington
Total
Mining
Construction
Manufacturing
T.C.P.U.
Trade
F.I.R.E.
Services
Government

2412.1
3.3
124.6
340.9
121.9
593.8
124.5
653.4
449.7

Jun-96
2401.1
3.3
125.3
336.8
122.0
591.4
124.5
649.8
448.0

Jul-95
2348.6
3.3
121.5
333.9
119.6
582.7
120.7
621.6
445.3

5.6
0.0
-6.5
15.6
-1.0
5.0
0.0
6.9
4.6

2.7
0.0
2.6
2.1
1.9
1.9
3.1
5.1
1.0

Unemployment Rates (%)
Jul-96

Jun-96

May-96

Jul-95

Jun-95

Alaska
Oregon
Washington

7.6
5.3
5.8

7.5
5.1
6.1

6.8
5.2
6.2

7.1
4.8
6.4

7.1
4.9
6.4

U.S.

5.4

5.3

5.6

5.7

5.6

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

SEPTEMBER 1996

WESTERN ECONOMIC DEVELOPMENTS

ARIZONA, CALIFORNIA, AND HAWAII
Arizona experienced solid economic growth in
early summer, albeit at a slower rate than in the
first five months of the year. Payroll employment
increased at an average annual rate of about 2½
percent in June and July, down from the 5
percent average pace earlier in the year. Recently, construction employment gains have
slowed noticeably, and government payrolls have
been trimmed. The Arizona unemployment rate
has remained near 5¼ percent in recent months,
up about ½ percentage point from the low point
at the end of 1995.
A recent slowdown in labor force growth has
helped prevent further increases in the Arizona
unemployment rate. Population growth has
slowed to about a 3 percent yearly pace. State
demographers trace this to a smaller influx of
residents from other states and from abroad; net
migration to Arizona in the second quarter was
estimated to be about 20,000 persons, down
about 25 percent from the same period a year
ago.
The California economy improved further in
recent months. After a large increase in May,
payroll employment increased in June and July
by about 2½ percent at an annual rate, which is
½ percentage point higher than the pace in the
first four months of the year. In recent months,

Nonagricultural Payroll Employment
8.0

(percent change over year earlier)

7.0
6.0
5.0
AZ

4.0
3.0

CA
2.0
U.S.

1.0
0.0

-1.0
-2.0
Jul-92

Jul-93

Jul-94

Jul-95

Jul-96

construction and manufacturing employment
growth both accelerated. Among services, some
of the most rapid job gains continued to be in the
motion picture industry and in business services,
which includes software development.
The growth in business services jobs has been
particularly rapid in the San Francisco Bay Area,
where employment in this industry increased
17½ percent during the past year. The 5 percent
pace of manufacturing employment gains in the
Bay Area also is notable and includes rapid gains
in the electronics, computers, and other industrial
machinery and equipment sectors. The Bay Area
unemployment rate has dropped about 1½ percentage points over the past twelve months to
4.3 percent in July.
In contrast, the Los Angeles Area unemployment rate edged down only a quarter point to 7¼
percent over the same period, as a slight increase
in unemployment in Los Angeles County partly
offset declining unemployment rates in surrounding counties. The latest report on drivers license
address changes from the California Department of Motor Vehicles reveals that these surrounding counties—Orange, Riverside, San Bernardino, and Ventura—and other states continue
to attract a substantial number of residents from
Los Angeles County. In contrast, the report
suggests that for the state as a whole, net migration to other states slowed substantially in the
most recent fiscal year.
The labor market in Hawaii remains weak. Nonagricultural employment fell 2½ percent at an
annual rate in June and July, reversing slight
gains during February through May. The unemployment rate has remained near 6 percent,
which is about 1 percentage point above the
long-run average unemployment rate in Hawaii.
However, other indicators of Hawaii economic
activity have improved this year. Through May,
cumulative state gross business receipts increased 3.8 percent and the visitor count increased 4.3 percent relative to the same period
in 1995.

FEDERAL RESERVE BANK OF SAN FRANCISCO

SEPTEMBER 1996

WESTERN ECONOMIC DEVELOPMENTS

CONSTRUCTION
Non-Residential Construction Awards

Residential Construction Permits

1992=100
225

200

175

150

125

100

50
HI

25
Jul-92

25
Jul-93

Jul-94

Jul-95

Jul-96

Jul-92
Jul-93
Jul-94
Data are seasonally adjusted three month moving averages

Data are seasonally adjusted three-month moving averages

Jul-95

Jul-96

EMPLOYMENT
Number Employed
(thousands)
Jul-96
Arizona
Total
Mining
Construction
Manufacturing
T.C.P.U.
Trade
F.I.R.E.
Services
Government

Jun-96

Jul-95

Annualized
% Change
From
Previous
Month

%
Change
From
Previous
Year

1859.5
12.6
123.4
198.6
88.8
465.3
109.1
550.8
310.9

1854.9
12.6
122.5
197.9
88.5
463.3
108.7
547.1
314.3

1782.4
12.5
116.5
192.6
86.0
450.2
106.2
521.4
297.0

3.0
0.0
9.2
4.3
4.1
5.3
4.5
8.4
-12.2

4.3
0.8
5.9
3.1
3.3
3.4
2.7
5.6
4.7

12757.1
28.5
514.5

12734.8
28.7
511.3

12447.4
29.9
491.3

2.1
-8.0
7.8

2.5
-4.7
4.7

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

1824.5
642.1
3003.7
737.0

1817.7
639.1
3000.9
735.0

1794.7
633.2
2929.8
737.6

4.6
5.8
1.1
3.3

1.7
1.4
2.5
-0.1

Services
Government

3898.2
2108.6

3899.2
2102.9

3736.2
2094.7

-0.3
3.3

4.3
0.7

California
Total
Mining
Construction

Number Employed
(thousands)
Jul-96
Hawaii
Total
Mining
Construction
Manufacturing
T.C.P.U.
Trade
F.I.R.E.
Services
Government

527.1
.
24.1
16.5
40.5
134.0
36.4
165.6
110.0

Jun-96
529.2
.
24.2
16.6
40.7
134.9
36.6
165.6
110.6

Jul-95

Annualized
% Change
From
Previous
Month

%
Change
From
Previous
Year

531.5
.
26.1
16.8
40.7
135.9
36.7
164.4
110.9

-4.7
.
-4.8
-7.0
-5.7
-7.7
-6.4
0.0
-6.3

-0.8
.
-7.7
-1.8
-0.5
-1.4
-0.8
0.7
-0.8

Unemployment Rates (%)
Jul-96

Jun-96

May-96

Jul-95

Jun-95

Arizona
Hawaii
California

5.2
6
7.1

5.3
6.2
7.2

5.2
6
7.2

5.1
6
7.8

5.2
5.9
7.8

U.S.

5.4

5.3

5.6

5.7

5.6

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

SEPTEMBER 1996

WESTERN ECONOMIC DEVELOPMENTS

IDAHO, NEVADA, AND UTAH
The Idaho economy slowed somewhat in July,
following torrid second quarter growth. Although
employment in most sectors expanded at a healthy
pace in July, total payroll employment was flat,
due to flat manufacturing employment growth
and government employment cutbacks. Given
continued weakness in the computer memory
chip market, employment in the electronics sector has declined in recent months, and further
cuts are likely later this year. However, total
payroll employment in July was 5.6 percent
higher than a year earlier, and the unemployment
rate continues to hover around 5.0 percent.
Other indicators of state economic activity also
tell a mixed story. State income tax revenues
were above projections during the first half of
the year, but were offset by reduced corporate
tax receipts. Automobile sales were 12 percent
above 1995 levels for the first 7 months of the
year. Although single-family housing starts have
been high, multi-family residential and commercial construction activity are down relative to
1995 levels.
In Nevada, employment growth has been holding steady at a rapid pace (around 7 percent
annualized) for the past year, although signs of
slight moderation have appeared of late. Manu-

Nonagricultural Payroll Employment
(percent change over year earlier)
12.0

10.0

8.0

6.0

4.0
ID
2.0
U.S.
0.0
Jul-92

Jul-93

Jul-94

Jul-95

facturing employment growth has slowed substantially this year, and manufacturing payrolls
declined in July. In contrast, both wholesale and
retail trade continue to create large numbers of
jobs in the state, and the state unemployment rate
stood at a very low 4.8 percent in July. However,
employment in services—which include the hotel and gaming sectors—contracted in July, and
overall employment performance for the month
would have been weak were it not for a large
increase in local government employment.
Commercial and residential development signals
in the state are mixed. Although both residential
and nonresidential construction are continuing at
high rates, construction employment growth has
been highly variable and thus far in 1996 remains
below the pace of previous years. However, the
state’s rapid population and income growth continues to fuel commercial development plans in
many areas, including plans for significant expansion of supermarket stores in the Reno area.
Utah’s economic expansion continued at a rapid
rate, although it has been uneven in recent months.
Payroll employment expanded at a 5.5 to 6
percent rate during the last 3 quarters, but the
July expansion was at half that rate. Manufacturing employment declined in July, and construction payrolls have varied substantially but
registered no net job growth during March-July.
In contrast, perhaps spurred by strong income
and spending growth in the state, retail job expansion has been rapid in recent months. Furthermore, the state unemployment rate dropped from
3.4 percent in June to 3.1 percent in July.
The real estate sector also reflects the cumulative impact of a strong state economy for several
years. The state is characterized by high rates of
home ownership, and new home building and
purchasing continue at impressive rates. Housing price appreciation has been rapid in the state,
however, and affordability indices (based on a
combination of home prices, interest rates, and
incomes) have declined.

Jul-96

FEDERAL RESERVE BANK OF SAN FRANCISCO

SEPTEMBER 1996

WESTERN ECONOMIC DEVELOPMENTS

CONSTRUCTION
Non-Residential Construction Awards
1992=100

Residential Construction Permits

1992=100
300

1050
NV
250

850
200

650

UT
150

450

ID
100

250

ID
50

50
Jul-92
Jul-93
Jul-94
Data are seasonally adjusted three month moving averages

Jul-95

Jul-92
Jul-93
Jul-94
Data are seasonally adjusted three month moving averages

Jul-96

Jul-95

Jul-96

EMPLOYMENT
Number Employed
(thousands)
Jul-96

Jun-96

Jul-95

Annualized
% Change
From
Previous
Month

%
Change
From
Previous
Year

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

501.3
2.9
34.6
73.7
23.4
126.6
24.0
120.7
95.4

501.2
2.9
34.4
73.7
23.3
126.1
23.9
119.6
97.3

474.6
2.7
29.2
70.1
22.7
120.8
24.2
108.9
96.0

0.2
0.0
7.2
0.0
5.3
4.9
5.1
11.6
-21.1

5.6
7.4
18.5
5.1
3.1
4.8
-0.8
10.8
-0.6

Nevada
Total
Mining
Construction

850.3
14.3
73.3

846.1
14.2
72.7

793.9
13.2
62.0

6.1
8.8
10.4

7.1
8.3
18.2

38.7
42.9
171.4
38.2
368.7
102.8

38.9
42.6
170.2
38.2
369.9
99.4

36.8
40.7
157.8
35.9
350.3
97.2

-6.0
8.8
8.8
0.0
-3.8
49.7

5.2
5.4
8.6
6.4
5.3
5.8

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

Number Employed
(thousands)

Annualized
% Change
From
Previous
Month

%
Change
From
Previous
Year

Jul-96

Jun-96

Jul-95

961.5
8.0
62.7
130.1
53.3
233.0
51.0
257.4
166.0

959.3
8.0
61.8
130.3
53.6
231.1
50.6
256.8
167.1

907.8
8.2
54.1
123.2
51.2
221.1
47.7
238.9
163.4

2.8
0.0
18.9
-1.8
-6.5
10.3
9.9
2.8
-7.6

5.9
-2.4
15.9
5.6
4.1
5.4
6.9
7.7
1.6

Jul-96

Jun-96

May-96

Jul-95

Jun-95

Idaho
Nevada
Utah

4.9
4.8
3.1

5.2
4.7
3.5

5
5.4
3.3

5.4
5.4
3.6

5.3
5.4
3.7

U.S.

5.4

5.3

5.6

5.7

5.6

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

Unemployment Rates (%)

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

1996 Issues

Mailing Date

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February 1
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Federal Reserve Bank of San Francisco
101 Market Street
San Francisco, CA 94105

WESTERN ECONOMIC DEVELOPMENTS / SEPTEMBER 1996

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