Our most recent industry index for the construction industry in the Reno MSA showed that while the index increased slightly between December 2015 and January 2016 (0.35%), it actually decreased by 5.31% compared to January of previous year. Historical graph for the construction index is shown below, showing the index declined since July 2015 with a slight increase in January 2016.
The major reason for this decline, as shown in the table below for January 2016 is a decline in the number of commercial building permits between December 2015 and January 2016. Both the number of commercial building permits and commercial permit valuation declined between January 2015 and 2016.
The graph below shows Washoe County’s number of commercial permits issued and the value of these permits. The data is the graph is monthly moving average (MMA) data, which means that for each month, the data is the average of that month and the 11 previous months. Based on MMA data, the graph shows a peak in commercial building permits and permit valuation in July 2015 (consistent with the index) before falling through January 2016. Commercial building permit data has been released for all three jurisdictions (Reno, Sparks, and Washoe County) for February 2016 showing a total of 13 building permits issued and valuation of $11.0 million. This is greater than in terms of the number of building permits of 9 in January 2016, but lower in value compared to $15.1 million. March 2016 commercial permit data has been released for the City of Reno only, showing 26 building permits valued at $15.2 million. As a result, March 2016 will exceed both January and February permits data.
While of some concern, the decline in the number of commercial permits needs to be considered in its historical context. Permit data for 2014 was at the highest level since 2008, just before the full impact of the recession in the region. There were 240 commercial permits valued at $365.4 million issued in 2014. In 2015, 196 permits were issued with a value of $231.9 million, representing another strong year of activity, but lower than 2014.
The total number of permits in January and February 2015 of 34 was higher than the 22 permits issued in the first two months of 2016. However, the valuation of these permits in the first two months of 2015 was $20.5 million compared to $26.1 million in 2016. As a result, while our late 2015 and 2016 commercial permit levels have been lower than the stellar commercial permit year we had in 2014, these levels are still the highest commercial permit activity the region experienced since 2009. If March 2016 City of Reno activity is any indication, this activity will continue to improve.
On the residential construction front, single family permits continue their increase since the bottom in 2010-2011, with permit activity increasing in terms of both the number of permits and value of permits issued, as shown below on an MMA basis.
Multi-family permit activity spiked in 2015, before declining to permit valuation levels seen during the real estate boom. The decline in the number of permits issued is attributed to normal construction cycles of the large number of multi-family projects approved and planned for the area, not because of lack of demand for these projects.
This week, we are introducing the Single-Family Housing Index for the Reno MSA. The full Housing Dynamics Report can be found on our website by following the link provided below. Some of the findings of the index for 3Q 2015 are summarized below:
-Reno MSA Single-Family Housing Index, based on seasonally and inflation adjusted data, increased by 0.57% between 2Q and 3Q 2015, totaling five straight quarters of continued growth in residential housing activities in the region.
-Year-over-year, the Index increased 4.73% in 3Q 2014 compared to 3Q 2015.
Clink here for the full copy of the Single Family Housing Dynamics Report-Reno MSA for January 2016.
This week, we are introducing the Business Activity Index for the Reno MSA. The full Business Activity Dynamics Report can be found on our website by following the link provided below. Some of the findings of the index for 3Q 2015 are summarized below:
-Reno MSA Business Activity Index, based on seasonally and inflation adjusted data, increased 1.51% between 2Q and 3Q 2015, totaling 13 straight quarters of growth in business activities in the region.
-Year-over-year, the Index increased 4.65% between 3Q 2014 and 2015.
Clink here for the full copy of the Business Activity Dynamics Report-Reno MSA for January 2016.
In addition to the Leading Economic Index for the overall Reno MSA economy, we are introducing three specialized indices: Construction, Business Activity, and Single-Family Housing. These are areas that drive the Reno MSA economy and deserve special attention. These indices, along with a discussion of index trends, will be updated quarterly as part of our Industry Dynamics Reports.
This week, we are introducing the Construction Index for the Reno MSA. The full Construction Dynamics Report can be found on our website by following the link provided below. Some of the findings of the index for 3Q 2015 are summarized below:
-Reno MSA Construction Index, based on seasonally and inflation-adjusted data, decreased by 7.63% between the 2Q and 3Q 2015, indicating a decline in construction activities in the region.
-However, year-over-year, the Index grew by 11.99% for 3Q 2014 and 2015.
-Prior to the recent decline, the Index experienced 11-quarters of growth between 3Q 2012 and 1Q 2015.
Clink here for the full copy of the Construction Dynamics Report-Reno MSA for January 2016.
Economic indicator data published in our previous blogs is useful in understanding changes occurring in each individual area, but do little to provide a picture of the overall economy and its changes over time. Economic indices, which combine multiple indicators into a single number, can represent either the current state of the economy (coincident index) or future economic changes (leading index), providing a clearer picture of the economy and its trends.
Ekay Economic Consultants, Inc., in cooperation with the Center for Regional Studies at the University of Nevada, Reno, is pleased to announce the release of its Leading Economic Index and Coincident Economic Index for the Reno MSA area. The indices are referred to as RLI and RCI, respectively. Latest results of the two indices are summarized below, along with a graph of their historic changes. For more details about index indicators, values, and methodology, please click here.
-Reno MSA Leading Index (RLI) increased between September and October 2015 (0.48%), indicating expected growth in the regional economy over the next 6-12 months. This is the 41st consecutive increase in the index since May 2012.
-Reno MSA Coincident Index (RCI) increased between October and November 2015 (0.24%), (most recent data), verifying that the current economy continues to expand.
Center for Regional Studies (CRS) at the University of Nevada, Reno recently released an update of employment and wage information for the Reno-Sparks MSA and Washoe County (the difference between Reno-Sparks MSA and Washoe County is that the MSA includes both Washoe and Storey counties).
A graph summarizing employment data for the Reno-Sparks MSA is shown below. Due to seasonal fluctuations in monthly employment data, it is important to compare employment for the same month over multiple years. As December typically has the highest levels of employment, the below graph emphasizes results for December months across the study period (2006 to 2014). The highest level of December employment was in 2006 at 228,100 employees. December employment fell by over 36,000 jobs to its lowest point in 2011 (191,500). The MSA reached the highest level of December employment since the recession of 204,800 in 2014, gaining over 13,000 jobs between 2011 and 2014. While we are still approximately 23,000 jobs below the December 2006 level, this trend is encouraging. As of June 2015, year to date average employment increased by 4,700 jobs (2.4%) over the same period in 2014.
In terms of income and wages, CRS reported data for Washoe County on an annual basis between 2006 and 2014. The below graph shows countywide median household income peaked at $57,392 in 2008, before declining to $49,026 in 2012. Median household income is estimated for 2014 at $54,727, an 11.6 percent increase over 2012 levels and a 4.6 percent decrease since 2008.
Average wages in Washoe County increased from $39,520 in 2006 to $44,980 in 2014, growing steadily over this period, with a total increase of 13.8 percent. While this is positive, wages are reported in nominal terms, unadjusted for inflation. Consumer price index for All items, West Size Class B/C as reported by the Bureau of Labor Statistics increased by 14.8 percent between 2006 and 2014. This indicates that wages are increasing at a rate below inflation. While this discrepancy still exists, it is lower than the difference between 2006 and 2013 wage and inflation growth. During this period, wages in Washoe County increased by 11.4 percent, while inflation increased by 13.3 percent, a difference of almost two percentage points. The difference decreased because for the first time since 2009, Washoe County wage growth in 2014 exceeded inflation, with wages increasing by 2.1 percent between 2013 and 2014, compared to inflation increase of 1.3 percent.
Ekay Economic Consultants, in cooperation with the Center for Regional Studies at the University of Nevada, Reno, recently completed a study of the impact of the new Commerce Tax on business entities operating within the state of Nevada. The study found that the tax will impact approximately 9.2% of all business entities and generate approximately $142 million in 2016 dollars. The tax is also estimated to provide a $71 million credit, starting in fiscal year 2017, against Modified Business Tax liabilities estimated at $562 million per year given changes to the MBT contained in SB 483. For detailed findings, methodology, study limitations, and other information, click on the link below to access the full study: