Report Shows Manufacturing Skills Gap

A recently released report by Deloitte Consulting LLP and the Manufacturing Institute, conducted in July and August, 2011, shows a significant shortage of skilled manufacturing employees.  Based on a survey of over 1,100 US manufacturing companies, 67% of study respondents reported a moderate to severe shortage of available, qualified workers and 56% anticipated the shortage to grow worse in the next three to five years. In addition, the survey indicated that 5% of current jobs at respondent manufacturers are unfilled due to a lack of qualified candidates.

Other notable findings of the study are as follows:

The hardest jobs to fill are those that have the biggest impact on performance-74% of respondents indicated that workforce shortages or skills deficiencies in skilled production roles are having a significant impact on their ability to expand operations or improve productivity.

ImageHigh unemployment is not making it easier to fill positions, particularly in the areas of skilled production and production support-5% of jobs remain unfilled simply because companies can’t find people with the right skills. This means that as many as 600,000 jobs are going unfilled, a remarkable fact when the country is facing an unemployment rate that hovers above 9%.

The skills gap is expected to take the biggest toll on skilled production jobs, and will likely widen as time passes-respondents identified skilled production jobs as those where the skills gap is likely to have the biggest impact in the future-80% of respondents indicated that machinists, operators, craft workers, distributors, and technician positions will be hardest hit by retirements in the upcoming years. At the same time, companies expect the skilled production group to be the hardest to find in the job market, respondents report that the national education curriculum is not producing workers with the basic skills they need – a trend not likely to improve in the near term.

Overall, 68% of respondents report that highly skilled, flexible workforce will be most important to company future success in the next 3-5 years, more than any other company concern.

ImageSource: “Boiling Point? The Skills Gap in US Manufacturing.” Deloitte and The Manufacturing Institute.  A copy of the complete report can be found on The Manufacturing Institute website.

Washoe County Economic Indicators-November/December 2011-Part 2

Residential

Washoe County’s residential real estate market has seen some positive changes, though the overall outlook is still bleak.  New home sales decreased in December 2011 compared to the previous month and the same period last year.  Existing home sales, however, increased by 75.7% from the previous December and 10.5% from the previous month.  Median single family and condo/townhouse closing price also increased, a 2.6% increase from November for single family homes and 5.8% for condos.  Days single properties remained on the market also increased for single family homes, but decreased for condos/townhouses.

Notice of defaults saw an increase between November and December 2011, as did notices of sales.  Trustees deeds and REO listings decreased during compared to the previous month and previous year.

Note: Notices of default data from the previous year should be disregarded as this data was impacted by restrictions placed on financial institutions regarding issuing these notices.  The number of notices of default is expected to grow as institutions figure out ways to continue issuing these notices.  This may also impact REO listings and notices of sale, as fewer notices of default are issued.  This does not represent the performance of the real estate sector, but rather the impact of these restrictions.

Commercial

The commercial real estate market performed well and poorly, depending on the sector.  The industrial property sector saw a decrease in vacancies, however, this decrease came as a result of reduced rental rates.  The office sector also saw some decrease in its vacancy rates, though not as significant as that for industrial properties.  Office retail rates grew slightly during this time.  Retail properties fared the worst in December.  Retail vacancy rates grew from the previous year and previous month, while retail rental rates declined, a combined negative impact on the sector.

Conclusion

The health of the Washoe County economy remains unclear.  Taxable sales and gaming revenue increased from the previous year, but not from the previous month.  This could be in part due to seasonality associated with the holiday period.  The tourist sector is a bright spot for Washoe County, with positive tourism numbers over the previous year.  This may be due to an improvement in the national economy.  Employment data also shows much improvement from the previous year.

Residential real estate indicators are also monthly positive, though there remains a slowdown in the new homes market.  On the commercial property side, industrial and office sectors are seeing some improvement, while the retail sector continues to struggle.  There is some hope for growth in this sector as taxable sales increase.

Overall, Washoe County is seeing more green numbers than in previous months, and if growth in these indicators continues, it will bode well for our recovery.

Washoe County Economic Indicators-November/December 2011-Part 1

Our last blog focused on data for October 2011.  Since then, both November and December data has become available.  Since the blog attempts to cover latest economic data available, we will skip November data and focus on December values, with the exception of taxable sales and taxable gaming revenue, data for which is available through November 2011 only.

As always, data is provided for the latest available period, the period immediately prior to the latest period and the data for the same period the year before. For example, Visitor Count data, available for December 2011 (current period) is compared to November 2011 data (previous period) and December 2010 (same period previous year).

General

Data for population, assessed value and personal income is the same as in the previous report; please see the October indicators for a detailed discussion.

County taxable sales decreased by 9.3% from October, but increased by 5.3% from November of previous year.  Taxable gaming revenue continued to decrease, falling between October and November of 2011, though revenue did increase by 1.4% from November of previous year.

Consumer price index increased by 2.75% between December 2010 and 2011, but fell slightly between November and December 2011.

Tourism

Washoe County’s tourism outlook as of December 2011 is bright, with all indicators showing positive growth.  Area visitors, available rooms, occupied rooms, resulting room occupancy rates, and average room rate increased between November and December 2011 and December 2010.

Note: Tourism indicators are highly seasonal, changing from month to month.  As a result, comparing the current period to the previous period may not be a good indicator of growth or decline, the comparison of the same period in current and previous year is more accurate.

Employment

The employment picture for Washoe County was less positive.  Labor force numbers continue to decline, the County’s labor force numbers decreased by 2.36% between December 2010 and December 2011.  While the number of unemployed workers has also declined significantly since December 2010, between November and December 2011, this number grew by 2.27%.  This resulted in an unemployment rate of 11.9%, which is 14.4% lower than in December 2010, but 2.3% higher than in November.

No new data for new unemployment claims and average weekly wage is available.

Please see next week’s blog for residential and commercial real estate market indicators and conclusions regarding the meaning of indicator changes.

Personal Income and Economic Development

I wanted to share some preliminary findings of an interesting project on which I have been working. By now everyone knows that the state of Nevada has been heavily impacted by the recession, leading to the high unemployment and foreclosure rates in the nation. The usual suspects-the real estate bubble and reliance on gaming operations-are usually blamed. This project looks at another change, Nevada’s shift in personal income components, and its impact on state GDP, which is a good measure of the health of the economy.

A little history; in 1969, 81% of Nevada’s per capita personal income was made up of net earnings, 14% was current transfer receipts, and 6% from dividends, interest and rent. By 2009, per capita net earnings made up 63% of total per capital personal income, 22% in per capital personal current transfer receipts and 15% in per capita dividends, interest and rent. This is a considerable shift from earnings from employment to those received from non-employment activities, such as investments and governmental payments.

Figure 1: Per Capita Personal Income Components Nevada-1969 and 2009 (Bureau of Labor Statistics)

In 2009, eight counties in Nevada 40% or more of per capita personal income from passive sources, such as transfers, dividends, rents and interest. Douglas and Nye counties have the highest percentage of this passive income at 49% of total per capita personal income, followed by Lincoln County at 47%, Mineral at 46%, Carson City at 43%, Lyon at 42%, Washoe at 41%, and Storey at 40%.

Our model compared percent changes in Nevada GDP to those of each component of Nevada personal income between 1970 and 2009. Data used in the analysis was collected from the Bureau of Economic Analysis. The model shows that an increase in per capita net earnings increased NV GDP.  However, an increase in per capita current transfers decreased Nevada GDP, as did an increase in per capita dividend, income and rental income.  This is an interesting finding and a useful one as the State continues to develop its economic growth and development strategy.

The analysis shows that job creation will help drive the health of this economy. However, attracting a population which receives its income from investments, governmental or retirement payments at the expense of jobs will lead to the decline of State GDP. It should be noted that these findings are preliminary, additional analysis, including the analysis of impacts at county-level and determination of other factors impacting GDP need to be conducted. However, the findings are interesting in starting a dialogue regarding economic development in the State.