But experts don’t foresee a recession for Tennessee

By ROSE FRENCH, Associated Press
December 28, 2006

NASHVILLE – Tennesseans saw fewer new jobs in 2006 and economists are projecting even slower employment growth next year, though they don’t foresee the state sliding into a recession anytime soon.

The state’s health care industry made some of the biggest business news in 2006, with hospital operator HCA Inc. going private in a $21.3 billion leveraged buyout, and drugstore chain CVS Corp. merging with prescription benefits manager Caremark Rx Inc.

But those high-profile deals didn’t equate to many new jobs. And even though employment growth increased modestly in 2006, it hasn’t keep pace with last year’s job growth rate, economists say.

Based on the most recent state Department of Labor and Workforce Development data, Tennessee’s job growth rate so far in 2006 has dropped to 1.16 percent from last year’s rate of 1.38 percent.

In 2005, that amounted to about 37,000 new jobs, while this year the state has seen about 32,000 more jobs.

“Even though it’s a lower job growth rate, it is still growing,” said Bill Fox, an economics professor at the University of Tennessee. “Yes, we’re growing a little bit more slowly, but we continue to be in an economic expansion that’s been under way the last five years. We don’t have a recession on our horizon.”

Between October 2005 and October 2006, trade, transportation and utilities jobs showed the greatest boost in jobs, which increased by 10,000. Jobs in leisure and hospitality rose by 8,700 and educational and health services jobs increased by 7,400.

Manufacturing jobs continued to suffer some of the biggest losses, with the sector set to lose nearly 8,000 jobs in 2006. Jobs in food and beverage stores decreased by 1,500 and administrative, support and waste services lost 1,200 jobs.

The construction industry cooled off, too, and job growth dropped from 2.7 percent in 2005 to 2 percent this year because of a continued weak housing market brought on by an increase in mortgage rates.

Tennessee’s unemployment rate in October was 4.5 percent, slightly higher than the 4.4 percent national rate for the month.

Fox said economists expect to see the state unemployment rate rise over the first part of next year in the face of slower job growth and higher gas prices.

Linda Davis, a labor market analyst with the Tennessee Department of Labor and Workforce Development, said gas prices definitely had an effect in cooling Tennessee’s economy in 2006.

“Something like that can affect the market across the board. If businesses are shipping things, for example, those costs are going to be higher. From the consumer point of view, if you’re talking about a shopping expedition, you are going to drive shorter distances.

“It drives business decisions as well as consumer decisions,” she said.

A report on the state’s economy issued by UT economists in October projects that the state will see 1.3 percent growth in non-farm jobs in 2006 and 1.2 percent growth next year.

“We think the first part of 2007 will be a modest growth period,” Fox said. “You’ll see the economy get better in the latter quarters. Business investment will continue to be very strong. The negative effects of housing will have kind of played themselves out.”

Some of the biggest manufacturing layoffs in 2006 came from truck maker Paccar Inc., which announced it’s eliminating one shift at its Peterbilt Motors Co. plant in Madison, with close to 667 of 1,200 workers in Madison projected to be laid off.

Alcoa Inc.’s Tennessee operations will lose 30 to 60 workers beginning in January through voluntary layoffs. The job cuts at Alcoa’s 2,000-employee Tennessee operations are part of a local restructuring independent plans by the world’s largest aluminum producer to cut 6,700 jobs worldwide to boost profits.

About 180 machinists at a Boeing Co. airliner components factory in Oak Ridge are slated to be laid off as part of a new three-year contract ratified by union workers last month.

A series of buyouts and early retirements this year have trimmed General Motor Corp.’s Saturn plant work force in Spring Hill from 5,700, to about 3,700.

The world’s largest automaker launched a restructuring plan a year ago that calls for closing 12 plants by 2008 and slashing 35,000 – nearly one-third – of its U.S. hourly workers in 2006 through buyouts and early retirement deals.

United Auto Workers Local 1853 Chairman Mike Herron has put a positive spin on GM cutbacks and said many Saturn employees have benefited by being able to go back to school or start their own businesses.

“It’s not all been negative,” Herron said. “It’s never good when you have plant closures, consolidation of the industry. But it was definitely done in a people-friendly way.”

Davis said nearly 3,000 manufacturing workers are currently on strike in the state and they’re not considered employed. But if those strikes are settled, the state may not lose all the projected 8,000 manufacturing jobs this year, she said.

Tennessee’s health care industry remains a bright spot for the state’s economy and is expected to continue to grow as baby boomers reach retirement age, Davis said.

Monday, 12/11/06

Single-family sales alone fall by twice that much; average prices still strong

By CHAS SISK
Staff Writer

Property sales fell 4 percent in November, led by a sharp decline in single-family home sales as the number of homes on the market actually fell from the previous month.

A total of 2,867 properties were sold last month, 118 fewer than in November 2005, according to figures released Monday by the Greater Nashville Association of Realtors. The decline was driven entirely by a 9 percent fall in single-family home sales.

Meanwhile, sales of condos, multifamily buildings and tracts all increased.
But despite slower sales, prices for both single-family homes and condos rose. The median price for a single-family house sold last month was $174,900, a 4 percent gain over last year. The median price for a condo jumped 17 percent to $159,900.
The number of properties for sale declined slightly to 17,175 units from a four-year high set in October. The decrease could be seasonal, or it could reflect a slower pace by area homebuilders, local real estate professionals said.
Christie Wilson, president of the Greater Nashville Association of Realtors, said the figures show the market is steadying itself after several years of rapid growth.
“2006 will be a record-breaking year, unless nothing sells in December,” Wilson said. “For the first time in a long time, this is a normal market, a very even market. I don’t think you could consider it a correction.”