Sonoma County Economic Development Board BUSINESS BAROMETER

Transcription

1 BUSINESS BAROMETER September 2006 In This Month s Report: Newly revised employment data shows that Sonoma County added 3,000 jobs in the 12-month period ending July The seasonally adjusted unemployment rate in Sonoma County fell to 4.0% in July of (All employment data is seasonally adjusted by the EDB). Home prices in July 2006 declined 1.8% from the 2005 median. Natural gas prices rose, while gasoline prices fell to $3.05 per gallon in the Bay Area. Despite the relief at the pump, inflation increased in June 2006 to 3.9% per year. A special focus this month on the County s Agriculture and Food Processing sector. Produced in partnership with the Workforce Investment Board

2 E With Acknowledgment and Appreciation to the Underwriters of the c o Economic Development Board Foundation Research Initiatives Program Sonoma County Permit & Resources Management Dept. Community Development Commission Sonoma County Health Services Sonoma County Transportation & Public Works Santa Rosa California Realty

3 Employment (Thousands) ,000 July 2006: 188,800 jobs since July ,700 jobs since March 2001 Unemployment Rate United States 5.8 % California 5.6 % 5.4 % Sonoma County 5.2 % 5.0 % 4.8 % 4.6 % 4.4 % July 2006: 4.0% 4.2 % 4.0 % % Jul Sep Nov Jan Mar May Aug Oct Dec Feb Apr Jun Jul 0.4% unemployment rate since July 2005 July s employment data indicate a marked upswing in hiring over the past month. Bolstered by this montly increase of 2,100 jobs from June to July, Sonoma County added 3,000 new jobs in the past year. Despite this sizable increase in employment, job levels are still down from their yearly high and March 2001 peak. The unemployment rate decreased from 4.2% back down to May s 4.0% level. Sonoma s unemployment rate is 17% lower than both California s and the United States, which both stand at 4.8%. Sources: Bureau of Labor Statistics ( Data is seasonally adjusted by the EDB Business Cycle Index Q2 2006: The Sonoma County Business Cycle rose again in the 1st Quarter of Currently, the Index stands at % above 1st Quarter The index bottoms out in the first half of 2003, and has been steadily rising since, a representation of the improving economic conditions experienced in the County The Sonoma County Business Cycle Index attempts to show the current trends of several key economic statistics in one graph. The Index combines four statistics in varying proportions based on their volatility - those statistics, such as employment, which are relatively stable are considered more important than those statistics, such as business confidence, which tend to vary considerably. Currently the 97.5 index is weighted in the following approximate proportions: Employment - 51%, Wages - 28%, Taxable Sales - 18%, Business Confidence - 3%. The index is set so that 1st Quarter = The index provides a visual representation of the overall business cycle in Sonoma County. Following the decline of the technology sector, the index shows the economic contraction experienced in Sonoma County after % index since 2nd Quarter % index since 1st Quarter 2001 Source: Sonoma County Economic Development Board ()

4 Inflation Gasoline prices continued their decline from May s $3.33- per-gallon high, while natural gas prices crept up 11% over the past month. Tightening labor supplies and slowing productivity growth, coupled with high energy prices, have pushed inflation up in the Bay Area to a 3.9% annual level, a 2.8% increase from June Month Prices, San Francisco/Bay Area 8.0 % 7.0 % 6.0 % 5.0 % June 2006: 3.9% 4.0 % Interest Rates 8 % 3.0 % 2.0 % 7 % % 1.0 % 5 % 4 % 0.0 % '99 3 % 2 % 1 % 0 % Mortgage Prime Federal Funds 2.8% Increase in rate of inflation since June % Decrease in rate of inflation since June 2001 Gasoline, San Francisco/Bay Area $350 Sources: Bureau of Labor Statistics ( and The Board of Governors of the Federal Reserve ( Electricity Price per Kilowatt Hour $0.20 Natural Gas Price per Therm 1.75 $300 $3.05 per gallon $0.158 per KwH 1.50 $1.09 per Therm $ $ $200 Aug Oct Dec Feb Apr Jun Sep Nov Jan Mar May July Aug $0.10 Aug Oct Dec Feb Apr Sep Nov Jan Mar May Jun July Aug 0.75 Aug Oct Dec Feb Apr Sep Nov Jan Mar May Jun July Aug % 0% 2% 11% September 2005 peak August 2005 August 2005 Unchanged since May 2006 August 2005 July 2006 Sources: Department of Energy ( and Pacific Gas and Electric (

5 Housing Median Home Price (Thousands) $600 July 2006 $540,000 Housing Starts 400 $500 $400 $ July 2006: 132 $ $ $0 '98 '99 Year Housing Starts ytd 1.8% Decrease since % Increase since last month 12 Decrease since last year ytd Sources: California Association of Realtors ( and The U.S. Bureau of the Census ( Fair Market Rent Four-Bedroom Three-Bedroom Two-Bedroom One-Bedroom Efficiency Sources: Department of Housing and Urban Development ( The median home price fell again for the second month in a row, decreasing $9,000 in value on average from last year s numbers. In fact, home prices have decreased 3.5% since April, when the median home price was $565,000. Housing Starts have declined slightly on a year-to-date basis, suggesting that the construction boom may be cooling. (Housing starts are new homes which begin construction during a calender year -- so a housing start in December of 2005 may not be completed for quite some time). Fair Market Rents, calculated by the Department of Housing and Urban Development, have reached a plateau in Sonoma County. The current fair market rent for a two-bedroom apartment is $1151 per month.

6 Special Focus: Agriculture and Food Processing Employment 25,000 20,000 15, : 18,700 1, Forecasted Employment 25,000 20,000 15, : 19,900 1,200 10,000 5, ,000 5,000 The Sonoma County Agriculture and Food Processing sector comprises a significant portion of the County s economy, employing 18,700 people, or 9.3% of the County s workforce. In 2005, the sector had an economic output of $1.14 billion, its fourth year as a billion dollar industry. Employment and output in the industry are projected to remain relatively stable, with inflation-adjusted output in 2011 expected to be 7.6% higher than 2005, and employment in 2011 expected to be 1,200 or 6.4% higher than in As an export-oriented industry, the Agriculture and Food Processing sector captures consumer spending from outside of Sonoma County, and indirectly supports many more jobs and businesses locally. It also has an important relationship with the County s tourism sector, both of which complement each other. Share of Sonoma County Employment, '07 '08 '09 $ 1200 $ 1000 $ 800 $ 600 $ 400 $ 200 '10 '11 Predicted increase by 2011 Agriculture/Food Processing Output (Millions of 2000 dollars) $ 0 '07 '08 '09 '10 '11 (actual) (forecasted) Agriculture and Food Processing 9.3% Notes and Acknowledgements The purpose of the Business Barometer Report is to provide a sense of how the Sonoma County economy is performing. The indicators selected for this report cover a wide array of economic areas, including employment, housing and construction, prices and inflation, and more. The hope is that briefly presenting this variety of information in one report gives the reader a broad picture of the health and direction of the local economy. The Economic Development Board encourages interested readers to recommend any pertinent local indicator or area that may improve this report. All data is believed to be the most current available at the time of publication. This month s report was prepared by Will Cathcart and Ben Herbert. For more information, please contact: Ben Stone, Executive Director Sonoma County Economic Development Board 401 College Ave, Suite D, Santa Rosa, CA (707)