Oregon economy hints at retreat

chart-duy-oct2015University of Oregon Regional Economic Indexes
By Tim Duy
Oregon Economic Forum
University of  Oregon

The Oregon Measure of Economic Activity retreated in August after a very strong July as employment numbers softened. Highlights of the report include:

· The three-month moving average, which smooths month-to-month volatility in the measure, remained above average at 0.58, where “zero” indicates average growth over the 1990-present period.
· Average weekly hours worked again supported the manufacturing sector while other components were nearly neutral. Within the construction sector, the employment component weakened compared to last month, highlighting the importance of following underlying trends.
· Note that a rising unemployment rate is reducing the positive contribution from that component. The rising unemployment rate, however, is a reversion to trend from the sharp drop in unemployment earlier this year that was inconsistent with the degree of strength in the Oregon economy. Employment data is subject to possible revisions.
· The University of Oregon Index of Economic Indicators fell 0.4% in August, the first decline since April. Initial unemployment claims rose after declining to very low levels the previous month; the indicator remains in a range consistent with solid job growth. Employment services payrolls – mostly temporary help workers – fell.
· Residential building permits (smoothed) held steady at still below-normal levels. The Oregon weight distance tax (a measure of trucking activity) and average weekly hours worked both posted solid gains during the month, consistent with firm underlying demand in the goods sector of the economy.
· Core manufacturing orders (a national indicator) were flat, while consumer sentiment softened further. The interest rate spread narrowed as market participants reacted to weaker global indicators that suggested a less aggressive policy path on the part of the Federal Reserve.

The two indicators suggest ongoing growth in Oregon at an average pace of activity. The ongoing US economic expansion provides sufficient support to expect that Oregon’s economy will continue to grow for the foreseeable future.

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