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Third Quarter Summary
The Northeast Wisconsin economy experienced a slight downturn in the third quarter 2019, as the impact of trade restraints and labor market constraints to restrict output. The theme of this quarter’s indicators is reassurance as the indicators underlying this quarter’s downturn continue to point towards modest macroeconomic growth. Employment growth in the region trended negative at -0.2 percent annualized growth and the unemployment rate continues to decline. Nationally, there remains more than 7.2 million unfilled job vacancies with several local employers reporting little interest in recent hiring events.
Commodities and lending markets continue in a highly competitive state. Of interest and potential concern is continuing sluggishness in the region’s residential real estate market. The continued slow pace of new residential construction points both to the hiring difficulties of the industry and a tightening of available inventory.
The recent opening of Green Bay’s Titletown Tech complex marks the region’s most significant foray into high-growth entrepreneurship. This month also marked Manufacturing Month, shedding light on the region’s largest industry sector.
The outlook for 2019 remains cautiously optimistic as GDP growth remains at a robust rate, though industrial production and international trade remain in flux. The near-term domestic outlook remains nearly as uncertain as the pending winter weather as retailers anticipate another strong holiday shopping season.
Annualized Employment Growth
January 2016 - September 2019
- Growth patterns have diverged since March 2013 but have recently realigned. The trends have again tightened but look to diverge as local hiring rates have decreased across several sectors, including manufacturing and retail trade.
- Regional employment growth has averaged a 1.1 percent annualized rate since 2015.
- Annualized wage growth of 3.2 percent suggests that employers are beginning to respond more aggressively to respond to talent shortages.
Monthly Unemployment Rate
January 2010 - September 2019
- Unemployment rates have decreased precipitously since 2010 as a reflection of improving economy and hiring markets.
- Regional unemployment trend has followed state pattern since end of recession.
- Current unemployment rate of 2.8 percent remains near historic lows and is echoed in the national unemployment rate (3.5) percent which recently reached a 40-year low.
- Three-month forecast suggests a generalized stable rate of 3.1 percent as Q4 historically brings slightly higher unemployment rates.
Total Unfilled Job Vacancies for the United States
2010 - 2019
- Monthly online job openings averaged 7.2 million over the past year, representing an unprecedentedly competitive hiring market.
- Current average duration of 42 days remains historically high, suggesting that employers have considerably more difficulty locating talent but that they are beginning to adapt their recruiting practices in response.
- Greatest demand continues to exist in the manufacturing, health care, and construction industries.
- Average wage on offer has increased 3.2 percent YTD. This represents a near-term increase of 0.1 percent since Q2, reflecting both increasing wage pressures as well as greater availability of higher-income occupations.
Industrial Commodities Snapshot
- Industrial commodity price indices increased by nearly 28 percent YTD, or 11 percent above 2017 benchmarks.
- Recent daily metal markets have become increasingly volatile since September 1 due to trade uncertainty. Futures volatility appears to be accelerating as the details of a so-called “Phase 1” trade agreement with China are in negotiation, Congressional ratification of the USMCA is not assured in 2019, and the deadline for Brexit has been extended to January 2020.
- Recent daily metal markets have become increasingly volatile since September 1 due to trade uncertainty. Futures volatility appears to be accelerating as the details of a so-called “Phase 1” trade agreement with China are in negotiation, Congressional ratification of the USMCA is not assured in 2019, and the deadline for Brexit has been extended to January 2020.
New Housing Starts - September 2019 Annualized Change
- New housing starts and total valuation continue to decrease both regionally and statewide.
- Contractor availability and increased materials costs has delayed construction in many communities, though activity and interest remain generally low.
- Labor constraints in the industry continue to delay projects and extend deadlines.
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