ECONOMIC SCORECARD: Fewer jobs, shrinking labor market prove worrisome
A new year brings new worries for the New Haven area’s economy as the number of economic indicators for the region headed in a negative direction is now outpacing the positive ones.
Five of January’s eight economics indicators that make up the New Haven Register’s economic scorecard earned a negative rating from Donald Klepper-Smith, chief economist and director of research for New Haven-based DataCore Partners. The only positive indicators for January were a 0.6 percent decrease in the unemployment rate; a 2.5 percent decrease in the consumer price index; and new housing permit activity that more than doubled.
Klepper-Smith, who is the author of the scorecard, said he is most concerned about the current troubles with the region’s labor and housing markets, whether they are temporary or more long-term in nature.
“We’re going to hit soft spots from time to time, because in the current economic climate, nothing grows in a linear fashion,” Klepper-Smith said. “There’s a strong connection between the labor market and the housing market and right now we’re at a critical point.”
Two of the three labor-related indicators that are part of the scorecard were problematic in January, according to Klepper-Smith.
There were 2,200 fewer jobs in the New Haven area in January of this year compared to the same period year ago, he said. And the size of the region’s labor force, which describes the number of people in the area who are either employed or are actively looking for work, shrunk by 700 people in January of this year.
Pharmaceutical giant Bristol Myers-Squibb continued the methodical shutdown of its Wallingford-based research and development facility in January. The drugmaker is leaving Connecticut entirely by the end of 2018 and, according to filings with the Connecticut Department of Labor in January, will be pulling 703 jobs out of the New Haven area economy in the process.
“When your marquee employers start shedding jobs, that’s a red flag,” Klepper-Smith said. “And if we can’t get sufficient traction in the labor market, it could have a cascading effect.”
A lack of confidence by New Haven-area consumers about whether they will have jobs in the future is driving down consumer confidence, which serves to keep area homebuyers from spending too freely. Consumer confidence was down slightly and that helped fuel a 2.5 percent, or $5,100, decrease during January in median single-family housing prices.
But while there is uncertainty in the single-family housing market, a surge in the number of apartment complexes and multi-family dwellings being built in the New Haven area is resulting in a bullish forecast for retail development in the region, according to a recent 2017 forecast released by Marcus & Millichap, a leading commercial realtor.
Marcus & Millichap is predicting strong interest by retailers in taking space along the Interstate 95 corridor as employers in the New Haven and Fairfield County markets are expected to add about 6,500 jobs over the remainder of this year .
“Retailers are looking to capture the strongest anticipated retail sales growth in half a decade,” the Marcus & Millichap report says, in part.
Call Luther Turmelle at 203-680-9388.