Courtesy of DECON First
Delaware is into its 34th month of positive year over year gains in employment. The over 6,500 net jobs added over the past 12 months amounts to a healthy 1.6% growth rate. This leaves the state 14,600 jobs below the pre-recession peak, meaning the gap could be closed by early 2016.
Since hitting 7.4% in August, the state’s unemployment rate is down to 6.5% for November, once again registering below the U.S. rate of 7%. Delaware’s unemployment rate is below all the other states in the region except Maryland. The unfortunate news is that the drop in Delaware’s unemployment rate has been spurred on by almost 6,500 Delaware residents leaving the labor force during the past 12 months. And while jobs at Delaware businesses have been booming as 3,600 fewer Delaware residents are employed compared to a year ago. This does not bode well for Delaware businesses dependent upon local residential spending.
Some storm clouds are appearing on the horizon for Delaware’s healthcare industry. Health care has been the one consistent bright spot in the Delaware economy over the long term. While private industry employment dropped over 10,000 since 2001, Delaware health care had a net increase of 15,500 jobs…constituting a 45% increase and ahead of the national figure.
The turmoil created by the transition to Obamacare appears likely to dampen the growth in Delaware health care, at least through the first half of 2014. Nationally, in November hospital admissions fell for the first time in over a decade. After adding 27,000 jobs per year in 2012, healthcare in the U.S. averaged an only 17,000 gain through 2013. And a loss of 6,000 jobs was registered in December of 2013.
Delaware health added a net 2,100 jobs in 2011, 1,700 in 2012, and down to 1,300 through 2013. DECON First expect this to fall to below 1,000 jobs during 2014.
Delaware personal income continues to grow at just half the rate experienced before the recession. Transfer payments (e.g., Social Security, Medicaid) and dividends are the personal income drivers and, not surprisingly, the growth rate in wages and earnings lags. Transfer payments constitute 28% of total personal income in Sussex County and 24% in Kent County.
DECON First Expects these trends to continue through 2014: jobs being added by Delaware businesses, but slow growth in residential employment and personal income.
INDICATORS:
Of the more than 60 indicators followed by DECON First the most notable changes have occurred in the following: Delaware’s labor force continues to shrink Inflation in the Delaware region has fallen below 1%, led by a large drop in gasoline prices The proportion of non-accrual home equity loans hold by banks in Delaware is on the rise The growth rate in residential building permits is falling off and will eventually affect housing starts
DECON First uses economics to strengthen Delaware business. This is accomplished by providing accurate, objective, and relevant analysis of the economy, coupled with best practice recommendations that deliver new customers. The detailed analysis for the Indicators above is found in the DECON First monthly Delaware Economic Review (www.deconfirst.com). Direct questions to info@deconfirst.com
