GPR and U.S. economies will recover at about the same time, with output recovering first, but with more robust employment growth resuming in late 2012
Philadelphia, PA (August 15, 2011) – The rate of economic growth in Greater Philadelphia remains positive, but has slowed down this summer. According to Select Greater Philadelphia’s and IHS Global Insight’s Leading Index (GPLI) for the Greater Philadelphia region, both the Greater Philadelphia and U.S. economies will likely recover at the same time with faster growth resuming late next year.
The most recent monthly values show, as did the spring 2011 release, that the GPR’s economy continues a moderate recovery that began during first quarter of 2010, but that the rate of the recovery has slowed and the region’s economic growth will remain lackluster in the second half of the year. The GPLI started rising at the end of 2010, peaked in April 2011 and has declined gradually since then, but it remains above its 12-month moving average, signaling continued, albeit moderate growth ahead.
“The current monthly values of the GPLI have been above its 12-month moving average since August 2009,” said Phil Hopkins, vice president and director of research for Select Greater Philadelphia. “The difference between the two series has narrowed over the last few months, indicating that the region’s economic growth, while still remaining positive, will decline slightly over the next several quarters.”
“The monthly values of the U.S. Leading Index have been above its 12-month moving average for a slightly longer period, suggesting that U.S. economy is recovering a bit more quickly, but is also climbing out of a deeper trough,” Hopkins added.
Two of the variables that comprise the GPLI – the Philadelphia Stock Index and the Employment Services Index fell slightly in recent months, while the two others – IHS Global Insight’s U.S. Leading index and export vessel trips – increased.
It has now been two years since the Great Recession officially ended in June 2009 according to the National Bureau of Economic Research (NBER). However, since then the U.S. economy has grown slowly, the unemployment rate has remained near or above 9 percent, large numbers of persons remain underemployed or have been out of work for an extended period, and housing prices have continued to fall. In other words, while the recession officially ended more than 24 months ago, it does not feel like it is over.
“A number of factors are creating concern about the sustainability of the US recovery including the end of various Federal stimulus programs, depressed state of the housing market, the ongoing European debt crisis, and others,” said James Diffley, senior director of IHS Global Insight’s U.S. Regional Services Group. “Added to this was the uncertainty arising from the negotiations (late July 2011) in Washington DC to increase the national debt ceiling which threatened an immediate sharp reduction in government spending and a freeze in the financial markets.”
The GPR’s economy was gradually improving through February 2011 as shown below by the monthly values for the Greater Philadelphia Coincident Index (GPCI), but has been trending downward since then, with especially sharp drops the past two months. The primary reason is that employment growth has slowed noticeably since February 2011 when the y/y percent change in total employment in the Philadelphia and Trenton MSAs was 0.6% (1.2% for private employment). Since then, the y/y percent change has declined so that in June total employment was down 0.6% y/y, while private sector employment was up only 0.1% y/y, both well below the comparable US figures over the same period as noted above. Over the past few months the seasonally adjusted (SA) unemployment rate in the two MSAs has edged upward from 8.2% to 8.3%, though the rate is still about 1 percentage point below the US figure.
Based on recent trends in both the GPLI and the GPCI, Select and IHS Global Insight conclude that the GPR’s economy began to recover in March 2010, about nine months after the US economy. One likely explanation for the difference in the turning points is that the GPR’s economy didn’t start slowing until well after the US economy turned down, and will trail it coming out of the Great Recession. The gradual rate of economic recovery means, according to IHS Global Insight’s most recent economic forecasts, that the region’s total non-farm employment will not return to its pre-recession peak until the second half of 2013 at the earliest.
###
About Select Greater Philadelphia
Select Greater Philadelphia (Select) is an economic development marketing organization dedicated to attracting companies to the Greater Philadelphia region. Select assists companies interested in the vicinity by providing detailed information about the 11-county area and a one-stop connection to numerous resources that help companies make informed decisions about locating to the region. Through global marketing efforts, Select works to promote the region’s key assets to help build the area’s economy. The Greater Philadelphia region encompasses northern Delaware, southern New Jersey and southeastern Pennsylvania. Select is a private, non-profit organization and an affiliate of the Greater Philadelphia Chamber of Commerce. For more information, visit www.selectgreaterphiladelphia.com or call 215-790-3777.
About IHS (www.ihs.com)
IHS (NYSE: IHS) is the leading source of information and insight in critical areas that shape today’s business landscape, including energy and power; design and supply chain; defense, risk and security; environmental, health and safety (EHS) and sustainability; country and industry forecasting; and commodities, pricing and cost. Businesses and governments in more than 165 countries around the globe rely on the comprehensive content, expert independent analysis and flexible delivery methods of IHS to make high-impact decisions and develop strategies with speed and confidence. IHS has been in business since 1959 and became a publicly traded company on the New York Stock Exchange in 2005. Headquartered in Englewood, Colorado, USA, IHS employs more than 5,100 people in more than 30 countries around the world.
IHS is a registered trademark of IHS Inc. All other company and product names may be trademarks of their respective owners. Copyright © 2011 IHS Inc. All rights reserved.
