Economist: Oregon business index dip doesn’t mean recession
The Oregon Measure of Economic Activity fell to 0.51 in August from a downwardly revised July reading of 0.74, but the economist who compiles the data said Thursday he doesn’t see a recession looming on the immediate horizon.
Highlights of this month’s report include:
The moving average measure, which smooths out the volatility, stood at 0.83, well above average (“zero” indicates average growth over the 1990-present period). The manufacturing sector made a negative contribution, with hours worked again a particularly weak spot (the employment component was also negative but that tends to be more volatile). Although job growth slowed, the unemployment rate, however, reached a record low of 3.8 percent in August, and low initial unemployment claims, a forward-looking indicator, suggest job growth will rebound in the months ahead. The University of Oregon Index of Economic Indicators held steady in August. Underlying data was mixed. Employment services payrolls look to be normalizing after experiencing a steep run-up and subsequent decline over the past year. Building permits, smoothed, declined again as the market adjusts to a slower pace of multi-family construction. Manufacturing average weekly hours worked fell again. Traditionally this tends to be a very cyclical indicator, but in this instance the indicator is deviating from national manufacturing numbers which reveal a strong pace of activity. Moreover, the declines appear to be concentrated among production employees. This may reflect new workweek limitations for Oregon manufacturing firms and as such would not indicate a cyclical shift in the economy.
“Together, these indicators suggest ongoing growth in Oregon at an above average pace of activity. Recent declines in the UO Index are not sufficient to raise recession concerns,” Duy wrote.
An index reading of “zero” corresponds to the average growth rate for that particular region. In other words, the measures identify periods of fast or slow growth relative to trend.
The Oregon Measure of Economic Activity uses a methodology that allows for the incorporation of a larger number of variables. The University of Oregon Index of Economic Indicators focuses on a narrower set of variables using a different methodology used by the Conference Board to compute leading indicators for the United States. Using different indicators allows for a more complete picture of the Oregon economy, according to the report from Duy, director of the Oregon Economic Forum.
