Local Business Stable in 2004
by Dr. Bernard Goitein, Director, Center for Business and Economic Research & Douglas Antola Crowe, Assistant to the Dean, Foster College of Business Administration
The Summary Peoria Metropolitan Statistical Area (MSA) Index in the fourth quarter of 105.9 stayed close to the 106 level reached one year before. The Summary Peoria MSA Index peaked at 109 during the first half of 2000 and fell to a low of 105 by 2002. The Index recovered to 106 levels by the fourth quarter of 2003 and has remained at about that level since.
Detailed discussion of the fourth quarter 2004 indicators appears below. All data have been seasonally adjusted unless otherwise indicated. All discussions of quarter-to-quarter changes (fourth quarter 2004 changes from the previous quarter) and involve "seasonally adjusted" changes (changes that occur above and beyond normal seasonal quarterly growth or decline).
Jobs at area firms increased to over 169,000, up by some 2000 jobs since last year. Further strength in the labor market over the last year is exhibited by a 19.2% increase in the Job Opening Index as firms search for new staff, and the area's unemployment rate decreased from 5.4% to 5.1%.
The fourth quarter rise in new unemployment claims shows some firms boosting layoffs of area residents. Overall growth in employment is found, however, in five of the seven private sectors reviewed by the Center for Business and Economic Research (CBER), including Construction, Manufacturing, Professional/Business Services, Health Care and Hospitality/Entertainment.
Continued growth was found in manufacturing, which experienced its fourth consecutive quarterly growth in employment. Manufacturing payrolls were up 0.6% for the quarter and 5.3% for the year, a growth of over 1,000 jobs during the last calendar year. The growth in manufacturing activity likely drove increases in demand for employees at Professional/Business Services (businesses that provide services to firms). Major manufacturer Caterpillar had equipment sales of $8.06 Billion, up 4.4% (seasonally adjusted) from the previous quarter and stands 34.1% higher than the same time last year.
Hourly wage costs held steady during the fourth quarter. The Average Factory Weekly wage grew by 1.7%, and the factory workweek grew by 1.5% to 41.2 hours per week.
The CBER preliminary estimate of $1.152 billion in tri-county fourth quarter retail sales was up over the previous quarter after two quarters with no significant gains. However, no significant increase in employment in the retail trade sector was recorded.
Real Estate and Construction
While single family building permits decreased during the fourth quarter, other factors, such as the ongoing construction of Interstate 74, contributed to a rise in construction employment of 2.3%.
Number of Homes Sold showed no significant change during the last quarter. An increase in the number of available homes for sale during the fourth quarter may have contributed to the 2.1% decline in the average price of homes since the third quarter. The average price of Homes Sold in the fourth quarter remains 2.3% higher than last year.
Continued improvement in local business conditions are indicated by growth in retail sales, manufacturing payrolls, number of new job openings, and the number of jobs on local payrolls.
The higher interest rates for firms, indicated by a local prime interest rate of 5.17%, could slow business investment, as exhibited already in the decline in the number of building permits.
Looking ahead, indicators are mixed. While decreases in number of single-family building permits, and the U.S. Leading Indicator point to a less positive future for some sectors, the increases in the local employer confidence index and the average factory workweek point to increases for other sectors of the area's economy.
For comments or questions, please contact Dr. Bernard Goitein, CBER Director, at 309-677-2262.