Economy deserves 'cautious optimism'

Monday, December 18, 2006

Two reports that landed on my desk last week won't make business owners jump for joy. They won't make store managers rub their hands together in glee or reassure an out-of-work truck driver.

But that doesn't mean they don't offer reason for some optimism, even, as the headline suggests, if it needs to be tempered and cautious.

The winter editions of Southeast Missouri Business Indicators and Manpower's Employment Outlook Survey came out and both are worthy of our attention.

Business Indicators -- put out by the Center for Economic and Business Research at Southeast Missouri State University -- says, along with even a routine glimpse of the Wall Street Journal, that the national economy slowed in the third quarter to an average annual growth rate of 2.2 percent. This was half a percentage point less than the previous quarter's growth rate. The unemployment rate remains low at 4.6 percent.

Southeast Missouri saw unemployment fall by about 1 percent from the previous quarter, but routine glances at the Southeast Missourian suggests that's not going to improve soon, with 260 jobs lost with the upcoming closings of K's Merchandise and the 2008 closing of the Dana Corp. facility.

Still, the report says that personal income growth was strong in the first half of the year and retail sales continued at a healthy level. Anybody who ventured out into the stores on Black Friday -- I did -- knows that to be true.

We'll delve into BI a bit more in a bit. But let's consider Manpower's survey, which is done quarterly. Southeast Missouri employers expect to hire at a cautiously optimistic pace during the first quarter of 2007, the survey says. From January to March, 20 percent of the companies interviewed plan to hire more employees, while 13 percent expect to reduce their payrolls. Another 67 percent expect to maintain their current staffing levels.

"Employers' hiring intentions are similar to a year ago when 17 percent of companies surveyed thought job gains were likely and 10 percent intended to cut back," said Manpower spokeswoman Debbie Glenn.

For the coming quarter, job prospects appear best in the manufacture of nondurable goods, Glenn said. She added that employers that make durable goods and those in the wholesale/retail trade and services industries had mixed hiring intentions and hiring in construction, transportation/public utilities, finance/insurance/real estate, education and public administration is expected to remain unchanged.

Business Indicators goes into a bit more detail, reiterating what must seem like a broken record on these business pages -- that Southeast Missouri is somewhat insulated from national trends. As the national economy slowed during the third quarter of 2006, we saw unemployment decline by 1 percent over the previous quarter.

Almost every county in the region experienced a decline in unemployment, ranging from a 5.9 percent decline in Reynolds County to slight increases in Franklin, Washington and Jefferson counties. Some of this, according to the report, reflects seasonal factors as unemployment frequently pulls back in the third quarter.

Another interesting note about income: Personal income in the 24-county region exceeds $22.5 billion on an average annual basis. Personal income is growing at close to a 7 percent rate on an average annual basis in the first half of 2006. Continued growth in personal income is important to the region, particularly to retail sales.

Data from retail sales also are positive. Retail sales topped $2 billion in the third quarter of the year. Sales were up 0.4 percent over the previous quarter. If we compare the previous 12 months with the last year at this time, retail sales are up a healthy 3.2 percent.

So let's summarize: The national picture doesn't look great. But the economy in our area appears to be in good shape. The folks at the university say as we move ahead to 2007, expect personal income to continue to rise in the 5 to 6 percent range, retail sales to increase another 3 to 4 percent and unemployment to rise 1 to 2 percent.

"Barring some unforeseen events, 2007 should be a pretty good year both nationally and locally," the report concludes.

Not too shabby.

Scott Moyers is the business editor of the Southeast Missourian. Send your comments, business news, information or questions to "Biz Buzz," 301 Broadway, Cape Girardeau, Mo., 63702-0699, or e-mail them to or call (573) 335-6611, extension 137

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