Tennessee report sees positive signs in manufacturing economy
Auto growth, housing increases signal a stronger outlook, researchers find
Falling unemployment rates, an increase in vehicle sales and a long-awaited rebound in the residential housing market are all indications that the national and state economies are making a comeback.
Despite sequestration of federal spending and a payroll tax increase that have slowed consumer spending, the economy is poised for strong growth in both 2014 and 2015, according to the spring 2013 Tennessee Business and Economic Outlook.
The study, prepared by the Center for Business and Economic Research (CBER) at the University of Tennessee, predicts the trajectory of the state and national economies by examining many economic and fiscal factors and trends.
"The economy has finally found a firm footing," said Matt Murray, CBER associate director and the report's author. "This will be the third year of payroll employment growth and a falling unemployment rate following the Great Recession."
The national unemployment rate dropped to 7.7% in first quarter of the year and is expected to average 7.6% this year, compared to 7.8% in 2012. It is predicted to fall to 7.2% in 2014.
Additionally, payroll employment for the nation is projected to be up 1.5% this year and 1.6% next year, according to the report.
"These modest employment gains will help support modest reductions in the unemployment rate," Murray said.
Vehicle sales are inching closer to pre-recession levels, according to the report. They bottomed out at 10.4 million vehicle sales in 2009 but are rebounding. Sales are expected to total 15.3 million vehicles this year and 15.7 million next year. By 2016, sales will likely be restored to the levels that prevailed in 2006.
The nation's manufacturing sector is expected to continue to see job gains as well.
Tennessee's economy improved in recent quarters, notably in its unemployment rate. The state unemployment rate is projected to average 7.8 percent this year compared to 8.0 percent last year. It is expected to fall to 7.5 percent in 2014, according to the report.
Tennessee outperformed the United States in many measures, and the state's manufacturing sector employment growth in the first quarter was more than twice as large as the growth recorded for the nation.
Manufacturing will see employment growth continue into 2015. Jobs in the state's industrial sector will be up 1.6% this year and next year. Employment losses will continue to take place in nondurable goods manufacturing.
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Before the calendar turned, 2016 already had the makings of a pivotal year for manufacturing, and for the world.
There were the big events for the year, including the United States as Partner Country at Hannover Messe in April and the 2016 International Manufacturing Technology Show in Chicago in September. There's also the matter of the U.S. presidential elections in November, which promise to shape policy in manufacturing for years to come.
But the year started with global economic turmoil, as a slowdown in Chinese manufacturing triggered a worldwide stock hiccup that sent values plummeting. The continued plunge in world oil prices has resulted in a slowdown in exploration and, by extension, the manufacture of exploration equipment.
Read more: 2015 Salary Survey