N.C. economy to grow for fifth consecutive year, UNC Charlotte economist reports
Jobs are expected to grow by 2 percent in North Carolina and the state economy should expand by 2.2 percent in 2006, marking the fifth consecutive year of growth, UNC Charlotte economist John Connaughton reported today in his TIAA-CREF/UNC Charlotte Economic Forecast for North Carolina.
The forecast, funded by TIAA-CREF and published quarterly by the University of North Carolina at Charlotte, provides both a review of North Carolina’s recent economic performance and an estimate of the state’s future growth. Connaughton, who directs the forecast, is the TIAA-CREF professor of economics at UNC Charlotte’s Belk College of Business.
“The forecast gives us another way to fulfill our commitment to the community by providing decision-makers with key information about the direction of the North Carolina economy,” said Kevin Brown, TIAA-CREF vice president, client services.
The projected job growth in the state should translate into a net gain of about 77,800 jobs. This will be a “welcome improvement” from 2005, Connaughton said, when rising interest rates and high energy prices led to sluggish job growth in many sectors of the economy.
The projected increase in jobs is below the state’s historical average. Despite the slower job growth the state’s seasonally adjusted unemployment rate should remain stable during the year. The unemployment rate is forecast to close 2006 at 4.5 percent and should end 2007 at a slightly lower rate of 4.4 percent.
The employment increase is a combination of job gains in some industries and job losses in others with seven of 10 nonagricultural sectors of the economy projected to add jobs. The sectors expected to display the strongest employment growth rates in 2006 are construction at 4.3 percent, government at 3.7 percent, services at 2.6 percent, and finance, insurance, and real estate (FIRE) at 2.2 percent. Three sectors, durable goods manufacturing, nondurable goods manufacturing, and mining are not expected to add jobs during 2006.
The N.C. manufacturing sector continues to struggle during this recovery. Real output in the nondurable goods sector has been flat for the past five years. Real durable goods output has grown by less than 1 percent on average since 2001. “This flat output growth in the manufacturing sector has led to a loss of over 200,000 jobs since January of 2000,” Connaughton said.
The N.C. economy has done fairly well during the past four years (2002-2005), with last year’s growth of 4.8 percent exceeding the U.S. rate of 3.5 percent. Though not quite as robust as 2005, expected N.C. growth for 2006 is expected to be quite stable, Connaughton said. During the first quarter, GSP is expected to increase by an annualized growth rate of 2.9 percent, with growth for the second, third and fourth quarters expected to come in at an annualized rate of 2.6 percent.
Eight of the state’s 11 economic sectors are forecast to experience growth during 2006. The sectors with the strongest expected growth forecasts are construction with a projected real growth rate of 5.5 percent; FIRE with a projected real growth rate of 5.1 percent; transportation, warehousing, utilities, and information (TWUI) with a projected real growth rate of 3.3 percent; and services with a projected real growth of 2.3 percent.
The outlook for the FIRE sector is a welcome change from 2005, when an annualized decline of 6.8 percent in this sector contributed to a significant second-quarter slump. FIRE accounts for 20 percent of total North Carolina GSP.
The comprehensive forecast report for June 2006 is available on the Web at www.belkcollege.charlotte.edu/forecast. The next forecast report will be released in September.
About TIAA-CREF:
TIAA-CREF is a national financial services organization with more than $380 billion in combined assets under management and the leading provider of retirement services in the academic, research, medical and cultural fields.
About the Belk College of Business at UNC Charlotte:
Accredited by AACSB International, the Belk College of Business at UNC Charlotte prepares students and professionals for management careers in financial services, technology management, distribution and operations, accounting and international business. With more than 2,500 undergraduate students and 500 graduate students, the Belk College is one of the largest business programs in the Carolinas.