plus review Q3 2012
Quarterly economic indicators 18 Counties of northeast ohio
The Cleveland Plus economy continues to make steady progress toward recovery. Unemployment is lower than the national average and manufacturing employment continues to grow year-over-year, adding 7,000 jobs from Q3 2011 to Q3 2012. One of the factors that is making this recession less severe than others is the regions economic diversification. This report examines how industry sector employment and Gross Regional Product (GRP) has changed since 1990, as well as projected shifts through 2020.
Change in eMploYMent: 1990-2012 historiCal eMploYMent growth shifts Like many industrial areas throughout the country, Northeast Ohio experienced significant declines in manufacturing employment from 1990 to 2012 from 453,000 to 268,000 workers (-41%). However, the loss in manufacturing jobs was offset by significant increases in (1) healthcare, where employment rose from 196,000 to 303,000 jobs (+55%); (2) professional, scientific and technical services, which increased from 67,000 to 85,000 jobs (27%); and (3) headquarters employment, which more than doubled, from 19,000 to 43,000 jobs (+125%).
DiversifiCation fuels fuels eConoMiC eConoMiC growth growth
historical and projected employment and gross regional product (grp) indicate a 30-year growth trend (1990 - 2020) for the Cleveland plus economy. Manufacturing is among the sectors that will contribute to this positive momentum, with its effects becoming particularly strong as the shale play potential is fully realized. in addition, employment is expected to increase by more than 150,000 workers (8%) over this 30-year period. the ongoing transformation of the northeast ohio economy continues to strengthen the industrial base for employment and grp performance, as it has since 1990.
arts & entertainment real estate information headquarters education trans & warehousing Construction finance & insurance professional, scientific & tech wholesale trade accomodation & food services retail all other government Manfacturing health Care & social assistance in thousanDs 0 50 100 150 200 250 300 350 400 450
1990 2012
500
projeCteD Change in eMploYMent: 2012-2020 projeCtions inDiCate growth in ManY seCtors From 2012 to 2020, nearly every sector in Cleveland Plus is expected to grow: healthcare (13% or +40,000 jobs); finance (11% or +8,000 jobs); professional, scientific and technical services (16% or +12,000 jobs); and construction (19% or +12,000 jobs). The only exceptions are manufacturing, and transportation and warehousing, where employment is expected to remain essentially flat.
arts & entertainment real estate information headquarters education trans & warehousing Construction finance & insurance wholesale trade professional, scientific & tech accomodation & food services retail all other Manfacturing government health Care & social assistance in thousanDs 0 50 100 150 200 250 300 350 400
2012 2020
Source: Economy.com
Change in neo gross regional proDuCt (grp): 1990-2012 grp rises in nearlY everY seCtor With the exception of construction, every sector of the economy showed a real* increase in GRP from 1990 to 2012. Significant gains occurred in healthcare (44% or $6B), real estate (64% or $9B), wholesale trade (97% or $6B) and headquarters (92% or $2.5B).
projeCteD Change in (grp): 2012-2020 looking forwarD to grp growth Northeast Ohio GRP is projected to continue its upward path toward 2020 in every sector but government. Significant increases are anticipated in manufacturing (23% or $8B), real estate (19% or $4B) and professional, scientific and technical services (25% or $3B).
arts, entertainment & recreation education headquarters Construction transportation & warehousing information pro, sci, and tech finance & insurance wholesale trade government retail all other health Care & social assistance real estate Manfacturing in Millions 0
5,000 10,000 15,000 20,000 25,000 30,000 35,000
1990 2012
arts, entertainment & recreation education headquarters Construction transportation & warehousing information pro, sci, and tech finance & insurance wholesale trade government retail all other health Care & social assistance real estate Manfacturing
2012 2020
40,000
in Millions 0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
*real= adjusted for inflation
Source: Economy.com
DevelopMent aCtivitY
Major Downtown ClevelanD ConstruCtion Continues Work continues on both the $465 million Medical Mart and Convention Center and the $275 million Flats East Bank project. Final exterior treatments are close to being completed, including completion to the roof which acts as a green space. The faade of both the Medical Mart and Convention Center entrance are being installed. Meanwhile, the final pieces of exterior are being affixed to the 18-story Ernst & Young office tower and 150-room Aloft Hotel. Other downtown Cleveland activities include: Cleveland Museum of Contemporary Art (MOCA) Opens Its Doors The new Museum of Contemporary Art, the latest of many new additions to the ever-growing University Circle neighborhood, opened its doors to the public on Oct. 8. The $27 million museum serves as the distinctive focal point for the $45 million first phase of the Uptown neighborhood, which includes 114 rental units, a full service grocery store, bookstore, and a bevy of restaurants. Regional Transit Authority Cedar-University Rapid Station The Greater Cleveland Regional Transit Authority (RTA), the public transit agency for Cleveland and surrounding suburbs, recently broke ground on its new $15 million Cedar-University Rapid Station near University Circle. southwest airlines offers flights froM akron-Canton airport Southwest Airlines recently began offering service from Akron-Canton Airport to its hubs at Denver International Airport and Chicago Midway International Airport. Southwest also offers service to five destinations from Cleveland Hopkins International Airport. general Motors to invest $220 Million in northeast ohio General Motors recently announced an investment of $200 million in the Lordstown assembly plant and $20 million at the Parma metal center. The investment will support tooling and equipment to manufacture the next generation Chevrolet Cruze. national aDDitive ManufaCturing innovation institute (naMii) launCheD in Youngstown A $69 million federally funded research laboratory opened in September at the Youngstown Business Incubator. The research laboratory for the software-driven additive manufacturing industry will give companies in the region first-hand access to next generation manufacturing technologies. ClevelanD heart inC. reCeives $30 Million investMent for DevelopMent of artifiCial heart Cleveland Heart, Inc., a Cleveland Clinic Innovations spin-off company, has received a $30 million investment that will allow the company to continue international clinical trials, expand laboratory research and implement new design concepts for the SmartHeart. The SmartHeart is a total artificial heart and left ventricular assist device designed for long-term, durable use in patients suffering from biventricular heart failure.
northeast ohio total eMploYMent
(not seasonallY aDjusteD)
2.20 13%
uneMploYMent rates through septeMBer 2012
2.15
12%
total eMploYMent in Millions
2.10
11%
ohio
10% 2.05 9% 2.00 8% 1.95 7% 1.90
us
neo
6%
1.85
5%
1.80 2009 2007 2007 2007 2007 2010 2008 2008 2009 2008 2009 2008 2009 2010 2010 2010 2011 2011 2012 2011 2012 2012 2011 2012
Q1 07
Q2 07
Q3 07
Q4 07
Q2 08
Q3 08
Q4 08
Q2 09
Q3 09
Q1 09
Q1 08
Q4 09
4%
Q2 10
Q3 10
Q4 10
Q2 11
Q3 11
Q4 11
Q1 12
Q2 12
Q1
Q2
Q3
Q4
neo
ohio
us
eMploYMent in Q3 reaChes 2.06M workers Cleveland Plus employment was up 8,000 jobs year-over-year (from Q3 2011 to Q3 2012). This increase represents nine consecutive quarters of year-over-year growth in the region.
Source: Ohio Labor Market Information (LMI)
neo uneMploYMent lower than national rate The unemployment rate for Northeast Ohio averaged 7.0% in Q3 2012, similar to the state of Ohio (6.9%) and more than 1% lower than the US rate of 8.1%. Year-overyear, this represents a decline of 1.5%, compared with the US decline of 1%.
Source: Ohio Labor Market Information (LMI)
Change in eMploYMent BY seCtor 0=2007 average
+10%
+15%
reCession eMploYMent CoMparison
governMent
0
+10%
-10%
serviCes ManufaCturing
+5%
-20%
0
-30%
ConstruCtion
-40%
-5%
Q1 07
Q2 07
Q3 07
Q4 07
Q2 08
Q3 08 Q4 08
Q2 09
Q3 09
Q4 09
-50%
-10%
Q1 09
Q1 08
Q2 10
Q3 10
Q4 10 Q1 11
Q2 12
Q3 12
Q2 11
Q3 11
Q4 11
Q1 10
Q1 12
Year 1 us: neo:
Year 2
Year 3
Year 4
Year 5
Year 6
Manufacturing
services
Construction
government
81-82 81-82
90-91 90-91
00-01 00-01
07-09 07-09
0 = employment for Year 1 of each recession Year 6 for 07-09 recession represents estimate
ManufaCturing eMploYMent outpaCes 2011 Manufacturing increased 3.1% year-over-year, adding 7,000 jobs. The services sector averaged 1.25 million workers year-over-year, or up 1.1%, while construction remained steady, averaging 63,000 workers. Government employment decreased by 4%, averaging 218,200, down by about 8,000 workers than in Q3 2011.
Source: Bureau of Labor Statistics (BLS)
neo, us realiZe slower reCoverY in 2007 reCession This graph compares Northeast Ohio vs. US changes in employment in all recessions since 1981. By looking at each year and how employment has recovered, its evident that the recovery for both Northeast Ohio and the US is much quicker in previous recessions than in the current recession, which began in 2007.
Source: Ohio Labor Market Information (LMI)
Q3 12
Q1 10
Q1 11
neo 18 CountY real regional gross proDuCt (grp) in Billions
$200 2.0% $190 2.7% neo real grp in Billions $180 5.3%
(-6.8%)
1.9% 1.3%
(-2.4%)
1.4%
1.2%
.4%
(-1.6%) (-0.1%) (-2.7%)
1. % 1 2.9%
1.0%
$170 4.0% $160
3.4%
$150
neo grp Continues upwarD trenD Moodys Economy.com continuously changes projections for GRP. For the 18-counties of Cleveland Plus, the projection was adjusted to grow by approximately 1% in 2012, with GRP at more than $183 billion. Since 1994, our economy has grown by more than $25 billion, or almost 14%.
Source: Economy.com
$140
2000
2002
2003
2004
2005
2006
2008
2007
2009
1994
1995
1996
1997
1998
1999
2001
$130
real grp
average annual growth = 1%
offiCe & inDustrial vaCanCY rates through septeMBer 2012
12%
11%
vaCanCY rate
inDustrial anD offiCe spaCe vaCanCY reMains flat The vacancy rate for industrial space rose slightly in Q3 2012, to 9.1%. Office vacancy is at 11.1%, down slightly from Q2 2012.
Source: CoStar
10%
9%
8%
7%
Q4 09
Q4 07
Q2 08
Q3 08
Q4 08
Q2 09
Q3 09
Q1 09
Q1 08
Q2 10
Q3 10
Q4 10
Q2 11
Q3 11
Q4 11
Q1 12
Q2 12
offiCe
inDustrial
neo horiZontal well aCtivitY BY funCtion non-CuMulative
40
35
30
25
20
15
well aCtivitY gaining MoMentuM aCross northeast ohio Well activity first began in Ohio in Q1 2010 and migrated to Northeast Ohio in Q2 2011. Activity has extended most recently into Ashtabula and Portage counties. While activity is still in the very early stages, 87 wells were permitted or drilled, and four more are completed and/or producing through three quarters of 2012.
Source: Ohio Department of Natural Resources
10
0 Q1 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012
perMitteD/DrilleD
CoMpleteD/proDuCing
Q3 12
Q1 10
Q1 11
6%
2012
2010
201 1
our partners inCluDe
Data sourCes
Team Northeast Ohio uses a number of data sources for the Regional Economic Review. One of the primary sources is Moodys Economy.com (economy.com) data for Northeast Ohio. Moodys Economy.com county-level output, employment and payroll historical data are estimated from several publicly available sources and are summarized into the Team NEO regional footprint. It is important to understand data provided by Economy.com are estimates of economic activity. Team NEO also uses data from federal and state sources as part of the report. We rely heavily on data from the U.S. Bureau of Labor Statistics (bls.gov) and Ohios Labor Market Information (lmi.state.oh.us) for information on wages, unemployment and both general and industry-specific employment. Industrial and office real estate data for this edition were derived from the CoStar Group. Due to market limits within the CoStar database, historic trend data for the Team NEO region are reflective of 14 of the 18 counties forming the regional footprint. These counties include: Ashtabula, Cuyahoga, Erie, Geauga, Huron, Lake, Lorain, Mahoning, Medina, Portage, Richland, Stark, Summit and Trumbull. Recession employment data for this edition reflect a 16-county footprint. Employment sector data reflect MSA data (Cleveland-Akron-Canton-Youngstown).
aBout teaM neo anD the ClevelanD plus 18-CountY region
Team NEO advances Northeast Ohios economy by serving as the 18-county regions private-sector economic development hub. It builds collaboration among the regions economic development organizations, attracts new businesses from around the world and connects the region to the states JobsOhio program. Since 2007, the organization has attracted 63 new company operations, almost 5,900 new jobs and more than $214 million in annual payroll to Northeast Ohio, leading to a total annual regional payroll benefit of $396+ million
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