Monday, March 9, 2009

U of O Index of Economic Indicators - January 2009

Professor Duy released the U of O Index of Economic Indicators for January last week.

The University of Oregon Index of Economic Indicators rose slightly in January, gaining 0.5 percent to 86.5 (1997=100). In part, the gain reflects a downward revision of December figures, due to worse than initially estimated core manufacturing and employment numbers. Three index components — the Oregon weight-distance tax, new orders for nondefense nonaircraft capital goods, and consumer confidence — deteriorated during the month. Remaining indicators improved.

The slight rise in the UO Index should not be interpreted as a sign of imminent recovery, as it largely reflects an offset from the Decembers’ 2.8 percent decline. Compared to six months ago, the index is down 10.6 percent (annualized), a figure consistent with ongoing recession in Oregon.

As a general rule of thumb, a decline of 2.5 percent (annualized) over six months, coupled with a decline in more than half of its components, signals that a recession is likely imminent.

On the job market:
The labor market components of the index improved in January, but still indicate substantial and persistent weakness. Initial jobless claims edged back from the sharp spike in December. Still, the current level of 13,865 is consistent with ongoing steep nonfarm payroll declines. Payrolls at employment services firms (largely temporary help agencies) rose slightly, but from a significantly lower December figure (28,959) than initially reported (34,337). The revisions were the result of the Oregon Employment Department’s annual review of estimates.

Total nonfarm payrolls (not included in the UO Index) fell by 14,600 jobs in December while the unemployment rate climbed to 9.9 percent.

On housing starts:
Residential housing permits rose in January from a drop the previous month, still tracking a level just below 1,000— well below the peak level of 2,600 during 2005 and early 2006.