Greater Cincinnati’s economy should pick up steam in 2011, growing at a faster pace than was thought just a few months ago, according to the region’s top economists.
Indeed, the local economy should “modestly outperform” the national economy, said George Vredeveld, director of the University of Cincinnati’s Economics Center for Education & Research.
“We’re starting to see a turn in business confidence levels and more business investments,” Vredeveld said. “I believe that confidence is going to be contagious.”
Economists project the metro area’s economy to grow at 3 percent to 3.5 percent this year. Those forecasts have risen as U.S. growth estimates have trended higher, because the local economy tracks closely with national growth. Back in November, most experts anticipated national growth of 3 percent or less. Now many are edging projections closer to 3.5 percent, bringing local projections up, too. Either would be a big improvement from last year’s U.S. growth of around 2.7 percent.
Manufacturing leads the way
Manufacturing improvement is fueling the growth predictions. That sector is growing faster in the local market, both in production and employment, than nationally. In the first half of last year, local manufacturing jobs rose by 3.2 percent, triple the national pace. Manufacturing jobs totaled 111,000 locally in November, up 5 percent from a year ago.
Richard Stevie, a downtown-based economist at Duke Energy Corp., is calling for economic growth for the Cincinnati metro area of about 3 percent this year. That compares to growth of slightly less than 2 percent last year.
The total Greater Cincinnati economic output in 2008 – the most recent figures available – was $99 billion. So that 1 percentage point improvement translates into an increase of about $1 billion in value of all local goods and services produced.
“That’s quite an improvement,” Stevie said. “Conditions are improving a lot faster than they were previously.”
One local manufacturer is seeing growth, and is ready for more.
Sales at Richards Electric Supply Co., a Bond Hill supplier to commercial construction and manufacturing firms, rose by more than 10 percent last year to the mid-$60 million range, said Mike Misrach, the company’s president.
Richards’ backlog is at a decent level, giving him hope for more growth this year.
Misrach, who took the helm last year after his father, Ivan, died, expects to add this year to his staff of 130. He’s encouraged by customer interest in price quotes, too.
“We’ve seen more activity from the private sector than we have in the last three years,” he said.
Reasons are mixed. The manufacturing sector got hit so hard it had to rebound at some point, Vredeveld said. He also figures some local manufacturers have revamped during the recession and created new competitive edges.
Whatever the cause, he expects manufacturing’s local growth to continue this year.
“Because we’re a bit overweighted (locally) in manufacturing employment, that’ll be some good news for this economy,” Vredeveld said.
Business investment will drive gains, too. Businesses have gotten clarity on how much they’ll have to pay in taxes and the regulatory environment they’ll have to navigate, so they’re more confident and willing to invest dollars now than they were a few months ago.
Hiring has picked up in the region. Greater Cincinnati’s jobless rate improved to 9.2 percent in November from as high as 10.9 percent in February 2010, according to the Ohio Department of Job and Family Services. Companies added 29,300 jobs over that time.
But local employment has been flat from a year ago. Janet Harrah, economist at Northern Kentucky University, expects that to change. She predicts net job growth of about 1 percent this year. That’s nearly 10,000 new jobs.
She forecasts the local unemployment rate will drop below 9 percent and improve to 8 percent by year-end. The job market’s recent improvement should build on itself.
“We’ll continue that cycle,” said Harrah, who expects the local economy to grow about 3 percent this year. “Once you have jobs, it begets more jobs.”
The hiring of temp workers is picking up, said Kevin Grosse, owner of the Express Employment Professionals office in Colerain Township. His office’s activity has grown even more than the company’s national average of about 45 percent growth from a year ago. Much of his business is in engineering and manufacturing jobs.
“We’re definitely seeing more hiring than we have in quite some time, over the last couple years,” Grosse said. “It’s a positive trend.”
Read more: Cincinnati economy could beat nation | Business Courier
Related posts:
