Montgomery County Quarterly Economic Indicators July 2018...Montgomery County economic indicators...

Montgomery County Quarterly Economic Indicators July 2018

1

The purpose of this report is to keep policy makers apprised of changes in

the national and local economies that

the Montgomery County Department of Finance

believes may impact current and/or future revenues and expenditures.

This report is also available through the Internet

on the Montgomery County Web Page:

http://www.montgomerycountymd.gov

For questions regarding this report, please contact:

David Platt

Chief Economist

Montgomery County Department of Finance

101 Monroe Street, 15th Floor

Rockville, Maryland 20850

Phone: (240) 777-8866

Email: [email protected]


2

INTRODUCTION

This quarterly report provides an analysis of national, state, regional, and

Montgomery County economic indicators for the month of July 2018, the second quarter of

calendar year 2018, and completed fiscal year 2018. For this report, data for the second

quarter cover the April to June period of the calendar year, and data for the fiscal year

cover the July 2017 to June 2018 period. The data presented in this report are not

seasonally adjusted to ensure comparability among the national, state, regional and

Montgomery County economic indicators. Since the data are not seasonally adjusted, the

comparative periods for the quarterly data are the second quarter of this calendar year

and the second quarter of calendar year 2017. The only data that are seasonally adjusted

are the national real gross domestic product (GDP) and its components.

NATIONAL ECONOMY

According to the advance estimate by the Bureau of Economic Analysis (BEA), U.S.

Department of Commerce, real gross domestic product (GDP) increased at a 4.1 percent

seasonally adjusted annual rate during the second quarter of 2018. That increase followed an

increase of 2.2 percent during the first quarter and is the largest quarterly increase since the third

quarter of 2014 (+4.9%). Based on the Wall Street Journal (WSJ) July survey of sixty

economists, the average of the responses expects economic growth to increase 3.0 percent during

the current third quarter, and 2.9 percent during the fourth quarter of this year. Based on the

forecast for the next two quarters of 2018, the survey of economists by The Wall Street Journal

estimates that real GDP will increase 2.9 percent in 2018. The results of the survey also forecast

an increase of 2.3 percent in 2019 and 1.8 percent in 2020. Following its June 2018 meeting, the

Federal Open Market Committee (FOMC, Committee) of the Board of Governors of the Federal

Reserve System released its latest economic projections from 2018 to 2020. Real GDP is

expected to increase 2.8 percent in 2018, 2.4 percent in 2019, and 2.0 percent in 2020.

Data released by BEA for the second quarter showed that the increase in real GDP was

largely attributed to an increase in personal consumption expenditures (↑4.0% - compared to an

increase of only 0.5% during the first quarter). Purchases of nondurable goods increased 4.2

percent and purchases of durable goods were up 9.3 percent. Exports were up 9.3 percent while

real non-residential fixed investment increased 7.3 percent which followed an 11.5 percent

increase during the first quarter. Federal and state and local government spending were up 3.5

percent and 1.4 percent, respectively. However, residential real estate decreased during the

second quarter with residential fixed investment decreasing 1.1 percent which followed a

decrease of 3.4 percent in the first quarter but an increase of 11.1 percent during the fourth

quarter of 2017.


3

1.5%

3.7%3.0%

2.0%

-1.0%

2.9%

-0.1%

4.7%

3.2%

1.7%0.5% 0.5%

3.6%

0.5%

3.2% 3.2%

-1.0%

5.1% 4.9%

1.9%

3.3% 3.3%

1.0%0.4%

1.5%2.3% 1.9% 1.8% 1.8%

3.0% 2.8%2.3% 2.2%

4.1%3.0% 2.9% 2.5% 2.5%

-10.0%

-8.0%

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%2

01

0:I

201

0:I

I

201

0:I

II

201

0:I

V

201

1:I

201

1:I

I

201

1:I

II

201

1:I

V

201

2:I

201

2:I

I

201

2:I

II

201

2:I

V

201

3:I

201

3:I

I

201

3:I

II

201

3:I

V

201

4:I

201

4:I

I

201

4:I

II

201

4:I

V

201

5:I

201

5:I

I

201

5:I

II

201

5:I

V

201

6:I

201

6:I

I

201

6:I

II

201

6:I

V

201

7:I

201

7:I

I

201

7:I

II

201

7:I

V

201

8:I

201

8:I

I

201

8:I

II (

est.

)

201

8:I

V (

est

.)

201

9:I

(est

.)

201

9:I

I (e

st.)

Pe

rce

nt

Ch

an

ge

Year:Quarter

Percent Change in Real GDP

SOURCE: Bureau of Economic Analysis, U.S. Department of Commerce. Hatched bars from Wall Street Journal survey conducted July 2018.

NOTE: Percent changes are at annual rates.

Real final sales of domestic product (real GDP less the change in private inventories)

increased 5.1 percent in the second quarter compared to an increase of 1.9 percent during the first

quarter. Real final sales are a good measure of future production. If the growth rate in real final

sales exceeds the growth rate for GDP over an extended period of time, it indicates strong

demand and an expansion of the national economy. For the second quarter, the percent increase

in real final sales (5.1%) was above the percent increase in real GDP (4.1%) which suggests

sustained growth in real GDP through the remainder of 2018 as forecast by the July WSJ survey.

Sales of existing homes decreased 2.5 percent during the second quarter compared to the

second quarter of 2017. Median home prices for existing homes increased 5.1 percent year-over-

year during the second quarter of 2018 compared to a 6.1 percent increase during the same

period in 2017. The inventory level decreased 3.6 percent during the second quarter compared to

the same quarter in 2017. That decline is the thirteenth consecutive quarterly decrease in

inventory levels. With home prices increasing and inventory decreasing during the second

quarter, the national real estate market continues to show signs of improvement. Both the

National Association of Realtors (NAR) and the Mortgage Bankers Association (MBA) forecast

that sales of existing homes will increase 2.1 percent and 3.8 percent in 2018 and 2019,

respectively. Thirty-year fixed rate mortgages are expected to average 5.1-5.3 percent in

CY2019.

Monthly national employment, as measured by the survey of establishments (Current

Employment Statistics), averaged 149.3 million (not seasonally adjusted) during the second

quarter of this year – an increase of nearly 2.4 million or 1.6 percent from the second quarter of

2017. Employment reached nearly 147.8 million in fiscal year 2018 – an increase of nearly 2.3

million or 1.5 percent from fiscal year 2017.


4

134,404

130,203 131,005133,082

135,209137,565

140,447143,122

145,519147,771

120,000

125,000

130,000

135,000

140,000

145,000

150,000

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

No

nfa

rm E

mp

loym

en

t (i

n t

ho

usa

nd

s)

Fiscal Year

Total U.S. Nonfarm Employment(in thousands)

SOURCES: Bureau of Labor Statistics, U.S. Department of LaborMontgomery County Department of Finance

The unemployment rate during the second quarter stood at 3.8 percent (not seasonally

adjusted) and was an improvement from the 4.2 percent in the second quarter of 2017. For fiscal

year 2018, the unemployment rate declined 0.6 percentage points from 4.7 percent in fiscal year

2017 to 4.1 percent in fiscal year 2018. The July WSJ survey expects the jobless rate to be at 3.8

percent by December 2018. Both the WSJ July survey and the economic projections by the

FOMC in June suggest that the unemployment rate will gradually decrease to 3.5-3.6 percent by

the end of 2019.

7.6%

9.8% 9.3%8.5%

7.8%6.8%

5.7%5.0% 4.7% 4.1%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Un

em

plo

ym

en

t R

ate

Fiscal Year

U.S. Unemployment Rate



5

Inflation, as measured by the personal consumption expenditure (PCE) index, the preferred

measure of inflation used by the FOMC, will increase from 1.6 percent in 2017 to 2.0 percent by

2018. The July WSJ survey suggests that inflation, as measured by the consumer price index

(CPI), will increase from 1.8 percent in December 2017 to 2.3 percent by December 2018.

Subsequent to the July 31-August 1 meeting of the FOMC, they stated that “information

received since the FOMC meeting in June indicates that the labor market has continued to

strengthen and that economic activity has been rising at a strong rate. Job gains have been

strong, on average, in recent months, and the unemployment rate has stayed low. Household

spending and business fixed investment have grown strongly. On a 12-month basis, both overall

inflation and inflation for items other than food and energy remain near 2 percent. Indicators of

longer-term inflation expectations are little changed, on balance.” Based on the review of the

outlook for the economic activity and the labor market, the Committee voted to maintain the

targeted federal funds rate at the current 1.75 to 2.00 percent range.

Following its June meeting, the FOMC released its latest forecast of rate increases - the “dot

plot”. The median of responses indicated increasing the target federal funds rate to 2.4 percent in

2018, 3.1 percent in 2019, 3.4 percent in 2020, and 2.9 percent thereafter. While the increase in

2018 exceeds that of the federal funds futures market (2.2-2.3 percent by December 2018), it

should be noted that all of the responses ranged from 2.1 percent to 2.4 percent. According to

the Chicago Mercantile Exchange’s implied probability data, the next rate increase would occur

in September followed by another increase in December. The July WSJ survey projects on

average that the federal funds rate will reach 3.3-3.4 percent by December 2018 and 3.0 percent

by December 2019.

0.00%0.25%0.50%0.75%1.00%1.25%1.50%1.75%2.00%2.25%2.50%2.75%3.00%3.25%3.50%3.75%4.00%

Jan-08

Apr-08

Jul-08

Oct-08

Jan-09

Apr-09

Jul-09

Oct-09

Jan-10

Apr-10

Jul-10

Oct-10

Jan-11

Apr-11

Jul-11

Oct-11

Jan-12

Apr-12

Jul-12

Oct-12

Jan-13

Apr-13

Jul-13

Oct-13

Jan-14

Apr-14

Jul-14

Oct-14

Jan-15

Apr-15

Jul-15

Oct-15

Jan-16

Apr-16

Jul-16

Oct-16

Jan-17

Apr-17

Jul-17

Oct-17

Jan-18

Apr-18

Jul-18

Oct-18

Jan-19

Apr-19

Jul-19

Oct-19

Fed

Fund

s R

ate

Date

Effective Federal Funds Rate (solid bars) and Federal Funds Futures (hatched bars)

SOURCES: Federal Reserve Bank of St. Louis (solid bars) and theChicago Mercantile Exchange (hatched bars) as of July 28, 2018


6

After experiencing a weak performance during the first quarter of 2018, the returns in the

stock market strengthened during the second quarter. The Dow-Jones Industrial Average (DJIA)

was up 0.70 percent in the second quarter compared to a decrease of 2.5 percent in the first

quarter; the Standard & Poor’s 500 (S&P 500) increased 2.9 percent compared to a decrease of

1.2 percent increase in the first quarter; the NASDAQ also continued to increase in the second

quarter with an increase of 6.3 percent compared to an increase of 2.3 percent during the first

quarter resulting in an increase of 8.8 percent for the first half of 2018; and the Russell 2000

increased 7.4 percent in the second quarter that followed a decrease of 0.4 percent in the first

quarter. Overall, three of the four indices increased during the first half of 2018 with the DJIA

index experiencing a decrease during the first half of this year. Since the end of the second

quarter, all four indices continued to increase in July. The DJIA increased 4.7 percent,

NASDAQ increased 2.2 percent for the month, the S&P 500 increased 3.6 percent for the month,

and the Russell 2000 increased 1.7 percent for the month.

STATE AND REGIONAL ECONOMY

Each month, the Federal Reserve Bank of Richmond (Baltimore Branch) provides the results

of the Maryland Survey of Business Activity. According to the latest survey results dated July

26, 2018 “Maryland business activity dampened in July.” According to the survey:

“Firms saw slowing growth in sales and in business expenditures. However, respondents

were optimistic that conditions will improve in the coming months.

Survey results suggest slightly slower employment growth in July, and firms continued to

struggle to find workers with the skills they required. They expect this difficulty to persist in

the next six months, and a larger portion of firms also expect to see a decrease in the

workweek than an increase.

Growth of both prices paid and prices received increased slightly among Maryland firms in

July, and growth in prices paid continued to outpace growth of prices received. Respondents

expect this trend to continue in the coming months.”

According to the latest data from BEA, real gross domestic product, or gross state product,

for Maryland increased 1.5 percent during the first quarter of this year – an increase from the 1.2

percent during the fourth quarter of last year and an increase from the -2.9 percent during the

first quarter of 2017. The increase was attributed to 5.4 percent increase in construction, a 4.7

percent increase in manufacturing, a 3.5 percent increase in educational services, a 3.4 percent

increase in retail trade, and a 2.3 percent increase in health care and social assistance.


7

1.3%

4.0%

-2.4%

-4.4%

-2.4%

6.4%

1.7%

3.8%

2.5%

3.4%

2.1%

6.4%

-2.7%

2.7%

3.9%

0.4%

1.3%

-3.1%

2.6%

-5.2%

3.7%

-0.5%

1.1%

2.7%

-2.4%

5.7%

4.0%

-3.8%

5.9%

-1.8%

1.0%

3.1%

2.1%

4.8%

2.6%2.2%

-2.9%

2.6%

5.4%

1.2%1.5%

-8.0%

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

2008:Q1

2008:Q2

2008:Q3

2008:Q4

2009:Q1

2009:Q2

2009:Q3

2009:Q4

2010:Q1

2010:Q2

2010:Q3

2010:Q4

2011:Q1

2011:Q2

2011:Q3

2011:Q4

2012:Q1

2012:Q2

2012:Q3

2012:Q4

2013:Q1

2013:Q2

2013:Q3

2013:Q4

2014:Q1

2014:Q2

2014:Q3

2014:Q4

2015:Q1

2015:Q2

2015:Q3

2015:Q4

2016:Q1

2016:Q2

2016:Q3

2016:Q4

2017:Q1

2017:Q2

2017:Q3

2017:Q4

2018:Q1

Pe

rce

nt

Ch

an

ge

Year: Quarter

Percent Change in Real Maryland Gross State Product

SOURCE: Bureau of Economic Analysis, U.S. Department of Commerce

According to payroll employment data from the Bureau of Labor Statistics (BLS), U.S.

Department of Labor and based on the survey of establishments, monthly payroll employment in

the State of Maryland averaged 2.751 million during the second quarter of 2018 – an increase of

0.5 percent from the second quarter of 2017. In fiscal year 2018, payroll employment in

Maryland reached nearly 2.728 million - an increase of 0.5 percent from fiscal year 2017.

0.0

500.0

1,000.0

1,500.0

2,000.0

2,500.0

3,000.0

3,500.0

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Em

plo

ym

en

t (t

ho

usan

ds)

Fiscal Year

Nonfarm Payroll Employment and Resident Employment (Labor Force)

State of Maryland

Payroll Resident


According to the labor force data, the State’s resident employment increased 0.2 percent

from 3.091 million during the second quarter of 2017 to 3.098 million in the second quarter of


8

this year. The State’s unemployment rate increased from 4.0 percent in the second quarter of

2016 to 4.1 percent in the second quarter of this year. On a fiscal year basis, employment

increased 0.9 percent and the unemployment rate declined from 4.3 percent in FY2017 to 4.2

percent in FY2018.

5.8%

7.5% 7.4% 7.1% 6.9%6.2%

5.5%4.7% 4.3% 4.2%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Uem

plo

ym

en

t R

ate

Fiscal Year

Unemployment Rate State of Maryland


Monthly payroll employment for the Silver Spring-Frederick-Rockville (SSFR) metropolitan

division averaged 600,900 during the second quarter and was above the average employment

level in the second quarter of 2017 (↑1.0%). The rate of growth was also above the second

quarter growth rate for the State (↑0.5%). On a fiscal year basis, payroll employment increased

0.8 percent over FY2017 to 594,300. Resident employment, as measured by the household

survey, averaged over 667,900 during the second quarter – an increase of 0.6 percent over the

second quarter of 2017. On a fiscal year basis, resident employment was over 667,800 in

FY2018 – an increase of 1.1 percent.


9

0.0

100.0

200.0

300.0

400.0

500.0

600.0

700.0

800.0

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Em

plo

ymen

t

Fiscal Year

NonFarm Employment and Resident Employment (Labor Force)

Silver Spring-Frederick-Rockville Metropolitan Division

Payroll Resident

SOURCES: Bureau of Labor Statistics, U.S. Department of LaborSOURCES: Bureau of Labor Statistics, U.S. Department of Labor

The unemployment rate for the division is either the lowest or one of the lowest among the

34 national metropolitan divisions and the monthly average was 3.4 percent during the second

quarter of 2018 – slightly above the rate during the second quarter of 2017 (3.3%). For fiscal

year 2018, the unemployment rate was 3.4 percent compared to 3.5 percent in fiscal year 2017.

Both the unemployment rates for the second quarter and the fiscal year were below the State’s

unemployment rates.

4.5%

5.9% 5.6% 5.4% 5.3%4.7%

4.3%3.7% 3.5% 3.4%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Une

mpl

oym

ent

Rat

es

Fiscal Year

Unemployment Rates Silver Spring-Frederick-Rockville Metropolitan Division


The resale housing market across the region experienced growth in prices, on a year-over-

year basis, between May 2017 and May of this calendar year. Based on the S&P/Case-Shiller®

Home Price Index for the Washington region, prices in May increased 3.1 percent over the

twelve-month period.


10

-30.0%

-20.0%

-10.0%

0.0%

10.0%

20.0%

30.0%

Jan-

05A

pr-0

5Ju

l-05

Oct

-05

Jan-

06A

pr-0

6Ju

l-06

Oct

-06

Jan-

07A

pr-0

7Ju

l-07

Oct

-07

Jan-

08A

pr-0

8Ju

l-08

Oct

-08

Jan-

09A

pr-0

9Ju

l-09

Oct

-09

Jan-

10A

pr-1

0Ju

l-10

Oct

-10

Jan-

11A

pr-1

1Ju

l-11

Oct

-11

Jan-

12A

pr-1

2Ju

l-12

Oct

-12

Jan-

13A

pr-1

3Ju

l-13

Oct

-13

Jan-

14A

pr-1

4Ju

l-14

Oct

-14

Jan-

15A

pr-1

5Ju

l-15

Oct

-15

Jan-

16A

pr-1

6Ju

l-16

Oct

-16

Jan-

17A

pr-1

7Ju

l-17

Oct

-17

Jan-

18A

pr-1

8

Y-o

-Y P

ct. C

hg.

Month.Year

Year-over-Year Percent Change in

S&P/Case-Shiller® Home Price Index

Washington MSA

NOTE: S&P/Case-Shiller price index is a registered trademark of Standard and Poor's.

As measured by the Consumer Price Index for All Urban Consumers (CPI-U), inflation in the

Washington Metropolitan Statistical Area (MSA) increased an estimated 2.5 percent on a year-

over-year basis in June of this year over June 2017. Consumer prices excluding food and energy

purchases (Core CPI) were up 2.4 percent in the area (on the same year-over-year basis).

-0.50%

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

2,01

3.01

2,01

3.03

2,01

3.05

2,01

3.07

2,01

3.09

2,01

3.11

2,01

4.01

2,01

4.03

2,01

4.05

2,01

4.07

2,01

4.09

2,01

4.11

2,01

5.01

2,01

5.03

2,01

5.05

2,01

5.07

2,01

5.09

2,01

5.11

2,01

6.01

2,01

6.03

2,01

6.05

2,01

6.07

2,01

6.09

2,01

6.11

2,01

7.01

2,01

7.03

2,01

7.05

2,01

7.07

2,01

7.09

2,01

7.11

2,01

8.01

2,01

8.03

2,01

8.05

Y-o

-Y P

ct.

Chg

.

Year-over-Year Percent Change in Consumer Price Index

Washington MSA

All Items

SOURCE: Bureau of Labor Statistics, U.S. Department of Labor

According to the Stephen S. Fuller Institute (Institute) in its July report, “the May 2018

performance of the Washington region’s Coincident and Leading Indices, while continuing their

respective positive trends from 2017, appear to have stabilized at a somewhat more moderate

growth rate than registered over the previous year. The economy’s current performance, as

measured by the Coincident Index, while still growing has not grown as rapidly during the


11

second quarter as it has during the past three quarters. The Leading Index’s positive trajectory

points to the region’s economic growth continuing into the fourth quarter of 2018.”

The Washington Coincident Index, which represents the current state of the metropolitan

area economy, increased 1.46 percent from April to May and three of the four components of the

index increased on a month-to-month basis. Total wage and salary employment, domestic

airport passenger volume, and purchases of nondurable goods increased from their April levels

while consumer confidence declined (↓11.5%).

80.0

85.0

90.0

95.0

100.0

105.0

110.0

Jan-

01

Jul-0

1

Jan-

02

Jul-0

2

Jan-

03

Jul-0

3

Jan-

04

Jul-0

4

Jan-

05

Jul-0

5

Jan-

06

Jul-0

6

Jan-

07

Jul-0

7

Jan-

08

Jul-0

8

Jan-

09

Jul-0

9

Jan-

10

Jul-1

0

Jan-

11

Jul-1

1

Jan-

12

Jul-1

2

Jan-

13

Jul-1

3

Jan-

14

Jul-1

4

Jan-

15

Jul-1

5

Jan-

16

Jul-1

6

Jan-

17

Jul-1

7

Jan-

18

Inde

x

Month-Year

Washington MSA Monthly Coincident Economic Indicator and Six-Month Moving Average

Coincident Six_Month

SOURCE: Center for Regional Analysis(CRA), George Mason UniversityNOTE: Coincident indicator respresents the current state of the economy and includes total wage and salary employment, consumer confidence, domestic airport passengers,

and purchases of nondurable goods.

According to the Institute, “the Washington Leading Index, which is designed to forecast the

performance of the metropolitan area economy six to eight months in advance, registered a small

increase for the second consecutive month, increasing 0.36 percent from May 2017 after

increasing 0.5 percent in April. For both months, their performances were dampened by double-

digit declines in residential building permits. In spite of this volatility in residential permits, the

Index’s positive long-term performance continues pointing to the region’s expansion extending

into at least the fourth quarter of 2018.”


12

85.0

90.0

95.0

100.0

105.0

110.0Ja

n-0

1

Jul-0

1

Jan

-02

Jul-0

2

Jan

-03

Jul-0

3

Jan

-04

Jul-0

4

Jan

-05

Jul-0

5

Jan

-06

Jul-0

6

Jan

-07

Jul-0

7

Jan

-08

Jul-0

8

Jan

-09

Jul-0

9

Jan

-10

Jul-1

0

Jan

-11

Jul-1

1

Jan

-12

Jul-1

2

Jan

-13

Jul-1

3

Jan

-14

Jul-1

4

Jan

-15

Jul-1

5

Jan

-16

Jul-1

6

Jan

-17

Jul-1

7

Jan

-18

Ind

ex

Month-Year

Washington MSA Monthly Leading Economic Indicator and Six-Month Moving Average

Leading Six_Month

SOURCE: Center for Regional Analysis(CRA), George Mason UniversityNOTE: Leading indicator is designed to forecast economic performance six to eight months in advance and includes residential building permits, consumer expectations, help wanted index, initial claims for unemployment insurance, and purchases of durable goods.

MONTGOMERY COUNTY

ECONOMIC INDICATORS

Montgomery County’s economy experienced a mixed economic performance during the

second quarter of this year. The reasons for a mixed performance include an increase in resident

employment, a slight increase in the unemployment rate, a decrease in existing home sales, and

an increase in median prices for an existing home. Residential construction experienced an

increase in single-family homes (↑12.4%) and a significant increase in multi-family units

(↑200.0%). Construction in the number of non-residential projects increased (↑53.0%) and the

value of added non-residential increased to nearly 110.1%.

Employment Situation

Based on data from the Maryland Department of Labor, Licensing and Regulation (DLLR),

the Bureau of Labor Statistics, U.S. Department of Labor, the County’s resident employment for

the second quarter increased by nearly 3,800 from the second quarter of 2017 (↑0.7%). On a

fiscal year basis, resident employment was slightly over 541,000 in fiscal year 2018 compared to

nearly 534,700 during the previous fiscal year – an increase of 1.2 percent.


13

497,446 496,971

506,665509,912

514,946518,424

524,935 527,795534,694

541,040

470,000

480,000

490,000

500,000

510,000

520,000

530,000

540,000

550,000

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Em

ploy

men

t

Fiscal Year

Resident Employment (Labor Force) Montgomery County


The County’s average monthly unemployment rate during the second quarter was 3.3 percent

and slightly above the rate during the second quarter of 2017 (3.2%). The rate was the same in

fiscal year 2018 compared to fiscal year 2017 (3.4%). Throughout fiscal year 2018, the County’s

unemployment rate remained one of the lowest in the State.

4.3%

5.7% 5.4% 5.2% 5.1%4.6%

4.2%3.6% 3.4% 3.4%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Un

emp

loym

ent

Rat

es

Fiscal Year

Unemployment Rates Montgomery County


Construction Activity

After experiencing a weak second quarter performance in 2017, construction of residential

units experienced a strong performance during the second quarter of 2018. Construction of

single-family homes increased 12.4 percent and construction of multi-family units increased over

200 percent. Residential construction starts added a total value of $385.8 million during the

second quarter compared to $157.3 million during the second quarter of last year (↑145.3%).


14

However, on a fiscal year basis, the number of new residential construction starts decreased 11.7

percent in fiscal year 2018 largely attributed to the decline in multi-family units (↓21.2%)

although the total value added was $874.2 million which was 10.1 percent above FY2017 and

largely attributed to the total value added by single-family homes (↑26.6%).

1,159 1,056

2,2752,825

3,9954,553

4,9415,230

4,3943,881

$0

$200,000,000

$400,000,000

$600,000,000

$800,000,000

$1,000,000,000

$1,200,000,000

0

1,000

2,000

3,000

4,000

5,000

6,000

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Val

ue

($00

0)

Un

its

Fiscal Year

New Residential Construction Starts: Units and Value (Montgomery County)

Units Value

SOURCES: McGraw-Hill ConstructionMontgomery County Department of Finance

During the second quarter of 2018, the number of non-residential starts (projects) increased

nearly 53 percent from the second quarter of 2017. The total value increased from $175.5

million to $368.6 million (↑110.1%). On a fiscal year basis, the number of non-residential

projects increased 88.2 percent and the total added value increased from $1,055.4 million to

$1,154.2 million from fiscal year 2017 to fiscal year 2018 – an increase of 9.4 percent.

Residential Real Estate

During the second quarter of this calendar year, existing home sales decreased 0.5 percent on

a year-over-year basis following a decrease of 2.5 percent during the second quarter of 2017.

However, median sales prices for existing homes increased 5.8 percent during the second quarter

2018 following an increase of 3.9 percent during the second quarter of 2017. On a fiscal year

basis, sales of existing homes decreased 3.3 percent but median prices increased 3.7 percent.


15

8,437

11,0809,457 9,206

10,255 10,81711,150

12,315 12,644 12,227

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018

Sal

es

Fiscal Year

Sales of Existing Homes

Montgomery County

SOURCES: Metropolitan Regional Information System, Inc.

Montgomery County Department of Finance

Retail Sales

Using sales tax receipts as a measure of retail sales activity in the County, retail sales

decreased 1.6 percent in fiscal year 2018. In FY2018, purchases of nondurable goods, which

include food and beverage, apparel, general merchandise, and utilities and transportation,

decreased 2.5 percent during this period and sales of durable goods were down 0.1 percent. The

decrease in nondurable goods purchases was largely attributed to the decrease in purchases of

general merchandise (↓6.0%) and utilities/transportation (↓11.5%), while the decrease in

purchases of durable goods was largely attributed to a decrease in furniture and appliances

(↓6.6%) possibly reflecting weaker existing home sales.


16

$416,162$402,752

$416,843

$436,289 $431,411 $435,303$453,520 $457,864

$468,996$461,387

$300,000

$320,000

$340,000

$360,000

$380,000

$400,000

$420,000

$440,000

$460,000

$480,000

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Sa

les

Ta

x R

ec

eip

ts ('0

00

$)

Fiscal Year

Total Sales Tax Receipts Montgomery County

SOURCES: Maryland State ComptrollerMontgomery County Department of Finance

CONCLUSION

The major economic indicators confirm that the County’s economy experienced mixed

economic performance during the second quarter of this year compared to the same period in

2017. Employment measured by the survey of households increased 0.7 percent, but the

unemployment rate at 3.3 percent was a slight increase from the second quarter of 2017.

Residential construction increased for both single-family and multi-family homes. Sales of

existing homes declined 0.5 percent but median prices were up 5.8 percent during the second

quarter compared to the second quarter of last year.

While data for the second quarter suggests a mixed performance in the County’s economy

during this period, data on a fiscal year basis suggest that the economy experienced growth in the

period July 2017 to June 2018 particularly in employment, the total value of new construction for

both residential and non-residential properties, and median sales prices for existing homes.


17

SELECTED ECONOMIC INDICATORS Reporting Current Prior Year's Year To-Date Annual

Period Period Period 2018 2017 2017

Leading Indicators

National (1) June '18 1.4% 1.5% 1.5% 1.5%

Maryland (1) June '18 0.9% 0.6% 2.2% 1.5%

Washington MSA (2) May '18 0.6% 1.6% 1.6% 1.8%

Coincident Indicators

National (1) June '18 0.1% 2.8% 2.8% 2.8%

Maryland (1) June '18 0.1% 2.1% 3.4% 3.6%

Washington MSA (2) May '18 1.5% 2.2% 2.7% 2.7%

Consumer Confidence Index

National July '18 0.2% 7.7% 23.6% 20.7%

South Atlantic Region July '18 -11.5% 8.2% 24.5% 21.1%

Consumer Sentiment (University of Michigan) July '18 -0.3% 2.3% 5.0% 5.4%

Consumer Price Index

All Items (nsa)

National June '18 2.9% 2.5% 2.2% 2.1%

Washington - MSA (3) May '18 2.5% 2.1% 0.9% 1.1%

Core CPI (nsa)

National June '18 2.3% 2.1% 2.0% 1.8%

Washington - MSA (3) May '18 2.3% 2.1% 0.3% 0.6%

Retail Trade

National (sales - nsa) June '18 6.3% 5.3% 3.9% 4.2%

Maryland (sales tax)(1) June '18 4.2% 3.2% 1.8% 1.4%

Montgomery County (sales tax)(4) June '18 -2.4% -0.4% 2.2% -0.4%

Employment

Maryland (labor force data - nsa) June '18 3,117,386 3,108,200 3,084,163 3,071,897 3,086,246

- Percent Change 0.3% 0.4% 1.6%

Silver Spring-Frederick-Rockville (labor force data - nsa) June '18 673,072 669,919 667,413 663,047 665,637


Montgomery County (labor force data - nsa) June '18 545,143 542,303 540,525 536,710 539,132


Montgomery County (QCEW)(5) Dec. '17 474,542 472,358 469,126 463,967 463,967


Unemployment Rates

Maryland (nsa) June '18 4.5% 4.3% 4.3% 4.3% 4.1%

Silver Spring-Frederick-Rockville (nsa) June '18 3.8% 3.6% 3.6% 3.4% 3.3%

Montgomery County (nsa) June '18 3.8% 3.6% 3.5% 3.3% 3.3%

Construction

Construction Starts - Montgomery County

Total ($ thousands) June '18 $128,207 $50,407 $1,067,843 $708,009 $1,545,328

- Percent Change 154.3% 50.8% -13.0%

Residential ($ thousands) June '18 $78,768 $21,916 $513,934 $439,369 $669,002

- Percent Change 259.4% 17.0% -4.3%

Non-Residential ($ thousands) June '18 $49,439 $28,491 $553,909 $268,640 $876,326

- Percent Change 73.5% 106.2% -18.7%

Building Permits (Residential)

Maryland June '18 1,334 1,565 8,713 8,496 16,008

- Percent Change -14.8% 2.6% -5.4%

Montgomery County (units) June '18 99 110 788 953 1,637

- Percent Change -10.0% -17.3% -24.6%

Building Permits (Non-Residential)

Montgomery County June '18 170 195 1,006 942 2,024

- Percent Change -12.8% 6.8% -4.0%

Construction Cost Index July '18 8,773.50 8,273.40 8,580.37 7,544.60 7,841.41

Baltimore 6.0% 13.7% 9.1%

Real Estate

Case-Shiller Home Price Index®(nsa) May '18 227.49 220.74 223.68 217.61 220.14

3.1% 2.8% 3.1%

Maryland

Sales June '18 8,745 9,291 39,956 40,901 82,624

- Percent Change -5.9% -2.3% 3.2%

Average Price June '18 $356,494 $346,353 $330,535 $320,293 $325,781


Montgomery County

Sales June '18 1,414 1,519 6,093 6,300 12,434

- Percent Change -6.9% -3.3% -0.3%

Average Price June '18 $575,509 $545,893 $538,720 $524,221 $520,318


Median Price June '18 $477,750 $440,000 $441,042 $418,567 $417,371


Months of Inventory June '18 1.8 1.8 2.0 2.2 2.3

NOTES:

(nsa): not seasonally adjusted

(1) Philadelphia FRB

(2) Stephen Fuller Institute

(3) Bureau of Labor Statistics, U.S. Department of Labor, established a new data series starting in January 2018

(4): Data include miscellaneous and assessment collections.

(QCEW): Quarterly Census of Employment and Wages

(5) SOURCE: Bureau of Labor Statistics, U.S. Department of Labor: Year to Date through fourth quarter for 2016 and 2017, annual data for 2017

Montgomery County Quarterly Economic Indicators July 2018...Montgomery County economic indicators...

Documents

Transcript of Montgomery County Quarterly Economic Indicators July 2018...Montgomery County economic indicators...