Forecast: Chances of solid rebound

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University of Oregon State of Oregon Economic Indicators,

This is the University of Oregon State of Oregon Economic Indicators for May 2020. The release date July 6, 2020. Special thanks to our sponsor, KeyBank

The Oregon Measure of Economic Activity rebounded from -14.7 in April to 0.07 in May while the moving average measure, which smooths out the volatility, edged down further -5.23 and indicates below average growth for the Oregon economy. Highlights of the report include:

– Employment data is creating the volatility in the index. After a historic jobs decline in April, some sectors rebounded in May as firms reopened. This created a “start-stop” dynamic in the data that can create large shifts in the measure of activity.

– The moving average measure more likely reflects the underlying economic trend of substantially below economic growth as the state navigates the Covid-19 pandemic.

– The University of Oregon Index of Economic Indicators was virtually unchanged in May relative to April. A substantial decline in initial unemployment claims helped support the index, but note that claims still remained at very elevated levels

– Remaining indicators were largely unchanged to weaker. The most notable declines were in employment services payrolls (largely temporary help workers) and consumer sentiment.

– In a positive development, core manufacturing orders for capital goods edged higher. This indicates that business investment remains resilient despite the widespread declines throughout much of the economy. New housing units permitted fell but remain in their recent range.

– The May jobs gain coupled with resiliency in sectors such as manufacturing and housing indicate that the economy is capable of staging a solid rebound across many sectors even as sectors such as leisure and hospitality remain slow to adapt to the virus. That said, the rising number of Covid-19 cases highlights the fragility of the recovery; some states are reversing their reopenings. Expect a slow and choppy recovery while we struggle to contain the pandemic.

Link to full report (with charts!) here.