2005 Review and 2006 Forecast

1
2005 Review and 2006 Forecast

• Presented by
• Janet Harrah
• Director
• Center for Economic Development and Business
  Research
• Wichita State University
• December 2005

2
Wichitas Economy Now

• Recovery underway
• Not yet broad-based
• Overall net job growth, but

3
Employment Losses for 2005

• Wholesale trade
• Retail trade
• Financial services
• Leisure and hospitality
• Information

4
Employment Gains for 2005

• Mining Construction
• Manufacturing
• Transportation Utilities
• Professional Business Services
• Education Health Care
• Other Services
• Government

5
Employment Gains for 2006

• Manufacturing
• Prof. Business Services
• Some sectors stay weak

6
Personal Income Going Up!

• 2005
• Up 3.4
• 2006
• Up 5.1

7
Consumer Expectations Index Slide
Over?
but prices, interest rates to rise?
3-Month Moving Average
Boeing Sale Announced
8
Consumer Expectations Weak

• Fewer consider conditions right for big-ticket
  purchases
• Most still cautious overall

9
Labor Market

• 2005 Employment
• Up 0.9
• 2006 Employment
• Up 2

10
Labor Market 2006

• End of 2006
• 7,800 fewer jobs than before 9/11
• Despite 3rd year of employment growth

11
Labor Market 2005

• Unemployment
• Initial claims
• Down 20.2
• Rate
• Down 0.3

12
Labor Market 2005

• Avg. manufacturing
• hours worked
• Up 4.8
• Avg. manufacturing
• Earnings
• Up 0.1

13
Labor Market Forecast 2006

• Total wage/salary employment
• Up 2
• or
• 5,573 jobs

14
Mining Construction Sector

• 2005 rising energy prices support expansion
• 2006 prices moderate
• Employment growth slows

15
Value of Construction Permits
3-Month Moving Average
16
Mining Construction Sector 2005

• New comm. const
• Down 5.1
• Value of permits -
• Remod/repair/adds
• Down 29
• School bond ends

17
Mining Construction Forecast 2006

• Mining Construction employment
• Up 2.5
• or
• 403 jobs

18
Manufacturing Sector 2005

• Manufacturing employment
• Up 2.6
• or
• 1,500 jobs

19
Manufacturing Sector 2005

• Boeing orders
• 616 planes YTD vs.
• 191 planes YTD 04
• Deliveries
• Up 36 from 05

20
Manufacturing Sector 2005

• GAMA deliveries
• Up vs. 2004
• Billings
• Up 28.2YTD
• Shipments
• Up 25.7YTD

21
Non-Durable Mfg. Sector Weakness 2005

• 05 Employment
• Down 2.3
• 06 Employment
• Down 1.3

22
Manufacturing Forecast 2006

• Manufacturing employment
• Up 4.8
• or
• 2,895 jobs

23
Wholesale Trade Forecast 2006

• Wholesale trade employment
• Up 1.2
• or
• 136 jobs

24
Retail Trade Forecast 2006

• Retail trade employment
• Up 0.9
• or
• 271 jobs

25
Retail Trade Sector

• 1,800 jobs (5.7) lost since 1998 peak
• 2006 first job gain in 7 years

26
Taxable Retail Sales
Nominal Sales
Inflation-Adjusted
27
Retail Trade Sector

• 2004 taxable sales rebound well below 1998 peak
  
• 2005-06 growth continues

28
Transportation Utilities Sector 2005

• Transp. Utilities employment
• Up 1.7
• or
• 136 jobs

29
Transportation Utilities Forecast 2006

• Transp. Utilities employment
• Down 0.4
• or
• 30 jobs

30
Information Services Forecast 2006

• Information services employment
• Down 3.2
• or
• 180 jobs

31
Financial Services Forecast 2006

• Financial services employment
• Down 0.7
• or
• 87 jobs

32
Professional Business Sector

• Small firms, large growth
• Infonxx, Airbus hiring

33
Professional Business Forecast 2006

• Professional, business services employment
• Up 3
• or
• 807 jobs

34
Education Health Care Sector

• No significant job losses
• Good news
• IBM donation
• Cisco Systems partnership
• Barton family gift WSU

35
Education Health Care Sector 2006

• Growth continues
• Challenge tight labor market

36
Education Health Care Forecast 2006

• Educational, health services employment
• Up 0.7
• or
• 277 jobs

37
Leisure Hospitality Sector

• Job losses annually since 2000
• 2004 an exception
• WIBC
• Temporary job growth

38
Leisure Hospitality Forecast 2006

• Leisure, hospitality employment
• Down 0.6
• or
• 159 jobs

39
Leisure Hospitality Sector 2005

• Weakness in Tourism
• Airport passengers down
• Hotel occupancy down
• Guest tax collections down
• Attendance down

40
Other Services Forecast 2006

• Other services employment
• Up 1.2
• or
• 147 jobs

41
Government Forecast 2006
Government employment Up 2.8 or 1,117
jobs
42
Major Forecast Assumptions

• Real GDP 2.7
• National Employment 1.5
• 30 yr. Fixed Rates 6.25
• Fed. Funds Rate 4.5

43
Major Forecast Risks

• Another shock to energy prices
• Rising construction input prices
• Rising core inflation
• Bird Flu outbreak

44
Forecast Summary 2006

• Continued recovery
• Income, jobs, retail sales, population
• Pre-9/11 levels Not yet, but