march 2007 cleveland plus quarterly economic review
DESCRIPTION
Overall, the economy remains stable, with a modest gain in regional gross product and generally steady employment levels. Surprising to some, our manufacturing sector is stronger than most believe. Key data and indicators included: unemployment, employment and wages, wage comparison, housing permits & value, as well as manufacturing GRP, employment & wagesTRANSCRIPT
Northeast Ohio Economic Review
March 2007
Welcome to the first edition of Team NEO’s “Quarterly Regional
Economic Review” for Northeast Ohio. The objective of this publication
is to provide key economic data to help paint an accurate picture of the NEO
economy. Our goal is to enable appropriate and timely business
decisions that will assist in our region’s growth.
This publication is unique because the information presented represents all
of Northeast Ohio. This regional information is not readily available
from other sources and, therefore, we hope you find it valuable.
Our sources for this information are a combination of federal, state and
private sector estimates. The private sector estimates are from Moody’s
Economy.com. Moody’s models state and local economies. We are relying
on their models to estimate data for the NEO region. Be aware that these
estimates are often revised and are not always available quarterly.
We are presenting data, where possible, through the end of 2006.
Overall, our economy was stable in 2006, with a modest gain in
regional gross product and generally steady employment levels.
Most surprising, compared with popular perception, is that our
manufacturing sector is stronger than most people believe.
We hope you enjoy this new publication and we welcome your input for
future editions as it is structured to meet your needs.
Together, anything is possible.
Thomas A. Waltermire, chief executive officer, Team NEO
1 , 5 00
1 , 7 00
1 , 9 00
2 , 1 00
2 , 3 00
2 , 5 00
2 , 7 00
2 , 9 00
3 , 1 00
3 , 3 00
Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3
4 00
4 20
4 40
4 60
4 80
5 00
5 20
5 40
5 60
5 80
4-Quarter Moving Average
Num
ber o
f Per
mit
s
Valu
e of
Per
mit
s ($
Mill
ions
)
2003 2004 2005 2006Source: U.S. Census Bureau
Permits and values of permits for all
types of housing (single and multi-
family) have followed the general
U.S. trend of a softer housing market.
4-Quarter Moving Average
1 , 0 0 0
1 , 5 0 0
2 , 0 0 0
2 , 5 0 0
3 , 0 0 0
3 , 5 0 0
Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3
$ 1 0 0
$ 1 1 0
$ 1 2 0
$ 1 3 0
$ 1 4 0
$ 1 5 0
$ 1 6 0
$ 1 7 0
$ 1 8 0
$ 1 9 0
$ 2 0 0
2003 2004 2005 2006
Num
ber o
f Per
mit
s
Valu
e of
Per
mits
($ Th
ousa
nds)
Source: U.S. Censuc Bureau
The average single family permit
value for Northeast Ohio is about
$10,000 higher than the U.S. In
a region with slow population
growth and few immigrants, it
is likely that these homes are
for existing residents and that
they are replacements for their
existing homes. It appears that as
replacement homes, they are more
likely to be on the higher price as
individuals move up the quality
market to “bigger” and/or “better.”
Economy.com estimates the cost of living in NEO’s four
metropolitan areas to be 10% to 16% below the U.S. average.
Shelter costs are an important component within cost of living.
737 Bolivar Road, Suite 2000
Cleveland, Ohio 44115
www.teamneo.org
1.888.NEO.1411This report made possible through the generous
support of Charter One Foundation.
2002 2003 2004 2005 2006
170165160155150145140135
130
Annual Change 1.1%0.9%3.0%
1.9%
Source: Moody’s Economy.com
2006
Dol
lars
(Bi
llion
s)
Gross Regional Product is the sum total of our
economic output. While real dollar growth continues,
annual estimates of NEO GRP growth have been revised
downward for 2005 and 2006. Prior estimates put
regional economic growth at near 2.5%, but revisions
to both income and employment estimates have
lowered the estimated GRP. Revisions to the U.S. GDP
(similar to the region’s GRP), released February 28,
have lowered estimates of 4th quarter annualized
growth to 2.2%. This follows rates of 2.0 in the 3rd
quarter for 2006, 2.6 in Q2 and 5.6 in Q1.
Northeast Ohio Gross Regional Product
Single Family Housing Permits and Mean Value
Permits U.S. NEO
NEO Total Housing Permits and Value
4-Qtr Avg Total Permits (left) 4-Qtr Avg Total Value (right)
Team NEO uses a number of data sources for the Regional Economic Review. One of the primary sources is Moody’s Economy.com
www.economy.com) regional modeling system. This firm is a leading independent provider of economic, financial, and industry
research and data that specialize in national and metropolitan economic growth forecasts. Moody’s Economy.com county level
output, employment, and payroll historical data are estimated from several publicly available sources and are summarized into the
Team NEO regional footprint. It is important to understand that data provided by Economy.com are estimates of economic activity.
Team NEO also uses data from federal and state sources as part of the report. As with Economy.com, the information for the
Team NEO footprint are derived from data reported at either the county or metropolitan level. We rely heavily on data from
the U.S. Bureau of Labor Statistics (www.bls.gov) and Ohio’s Labor Market Information (lmi.state.oh.us) for information on
wages, unemployment and both general and industry-specific employment. In addition, Team NEO uses data from the Census
(www.census.gov) to track housing-related activity including the number of single and multi-family permits, as well as their values.
Data Sources
Northeast Ohio Economic Review
March 2007
Welcome to the first edition of Team NEO’s “Quarterly Regional
Economic Review” for Northeast Ohio. The objective of this publication
is to provide key economic data to help paint an accurate picture of the NEO
economy. Our goal is to enable appropriate and timely business
decisions that will assist in our region’s growth.
This publication is unique because the information presented represents all
of Northeast Ohio. This regional information is not readily available
from other sources and, therefore, we hope you find it valuable.
Our sources for this information are a combination of federal, state and
private sector estimates. The private sector estimates are from Moody’s
Economy.com. Moody’s models state and local economies. We are relying
on their models to estimate data for the NEO region. Be aware that these
estimates are often revised and are not always available quarterly.
We are presenting data, where possible, through the end of 2006.
Overall, our economy was stable in 2006, with a modest gain in
regional gross product and generally steady employment levels.
Most surprising, compared with popular perception, is that our
manufacturing sector is stronger than most people believe.
We hope you enjoy this new publication and we welcome your input for
future editions as it is structured to meet your needs.
Together, anything is possible.
Thomas A. Waltermire, chief executive officer, Team NEO
1 , 5 00
1 , 7 00
1 , 9 00
2 , 1 00
2 , 3 00
2 , 5 00
2 , 7 00
2 , 9 00
3 , 1 00
3 , 3 00
Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3
4 00
4 20
4 40
4 60
4 80
5 00
5 20
5 40
5 60
5 80
4-Quarter Moving AverageNu
mbe
r of P
erm
its
Valu
e of
Per
mit
s ($
Mill
ions
)
2003 2004 2005 2006Source: U.S. Census Bureau
Permits and values of permits for all
types of housing (single and multi-
family) have followed the general
U.S. trend of a softer housing market.
4-Quarter Moving Average
1 , 0 0 0
1 , 5 0 0
2 , 0 0 0
2 , 5 0 0
3 , 0 0 0
3 , 5 0 0
Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3
$ 1 0 0
$ 1 1 0
$ 1 2 0
$ 1 3 0
$ 1 4 0
$ 1 5 0
$ 1 6 0
$ 1 7 0
$ 1 8 0
$ 1 9 0
$ 2 0 0
2003 2004 2005 2006
Num
ber o
f Per
mit
s
Valu
e of
Per
mits
($ Th
ousa
nds)
Source: U.S. Censuc Bureau
The average single family permit
value for Northeast Ohio is about
$10,000 higher than the U.S. In
a region with slow population
growth and few immigrants, it
is likely that these homes are
for existing residents and that
they are replacements for their
existing homes. It appears that as
replacement homes, they are more
likely to be on the higher price as
individuals move up the quality
market to “bigger” and/or “better.”
Economy.com estimates the cost of living in NEO’s four
metropolitan areas to be 10% to 16% below the U.S. average.
Shelter costs are an important component within cost of living.
737 Bolivar Road, Suite 2000
Cleveland, Ohio 44115
www.teamneo.org
1.888.NEO.1411This report made possible through the generous
support of Charter One Foundation.
2002 2003 2004 2005 2006
170165160155150145140135
130
Annual Change 1.1%0.9%3.0%
1.9%
Source: Moody’s Economy.com
2006
Dol
lars
(Bi
llion
s)
Gross Regional Product is the sum total of our
economic output. While real dollar growth continues,
annual estimates of NEO GRP growth have been revised
downward for 2005 and 2006. Prior estimates put
regional economic growth at near 2.5%, but revisions
to both income and employment estimates have
lowered the estimated GRP. Revisions to the U.S. GDP
(similar to the region’s GRP), released February 28,
have lowered estimates of 4th quarter annualized
growth to 2.2%. This follows rates of 2.0 in the 3rd
quarter for 2006, 2.6 in Q2 and 5.6 in Q1.
Northeast Ohio Gross Regional Product
Single Family Housing Permits and Mean Value
Permits U.S. NEO
NEO Total Housing Permits and Value
4-Qtr Avg Total Permits (left) 4-Qtr Avg Total Value (right)
Team NEO uses a number of data sources for the Regional Economic Review. One of the primary sources is Moody’s Economy.com
www.economy.com) regional modeling system. This firm is a leading independent provider of economic, financial, and industry
research and data that specialize in national and metropolitan economic growth forecasts. Moody’s Economy.com county level
output, employment, and payroll historical data are estimated from several publicly available sources and are summarized into the
Team NEO regional footprint. It is important to understand that data provided by Economy.com are estimates of economic activity.
Team NEO also uses data from federal and state sources as part of the report. As with Economy.com, the information for the
Team NEO footprint are derived from data reported at either the county or metropolitan level. We rely heavily on data from
the U.S. Bureau of Labor Statistics (www.bls.gov) and Ohio’s Labor Market Information (lmi.state.oh.us) for information on
wages, unemployment and both general and industry-specific employment. In addition, Team NEO uses data from the Census
(www.census.gov) to track housing-related activity including the number of single and multi-family permits, as well as their values.
Data Sources
NEO Mfg GRP Mfg as % of GRP
4 . 0
4 . 5
5 . 0
5 . 5
6 . 0
6 . 5
7 . 0
7 . 5
Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4
2003
Per
cent
age
Rate
s
2004 2005 2006Source: Ohio Labor Market Information
While the region mirrored U.S.
unemployment rates and behavior
in 2003, NEO’s unemployment rate
in 2004 was relatively flat, while the
U.S. showed improvement. Since
then, NEO unemployment has been
improving in step with the U.S. and,
in 2006, the regional rate approached
5%. Unemployment at 4 to 5% is
generally considered at or near
full employment. Unemployment is
defined as the proportion of people
in the workforce who are not working
but are actively looking for work or
awaiting recall.
Annualized 4-Quarter Moving Average
$ 3 7 ,0 0 0
$ 3 8 ,0 0 0
$ 3 9 ,0 0 0
$ 4 0 ,0 0 0
$ 4 1 ,0 0 0
$ 4 2 ,0 0 0
$ 4 3 ,0 0 0
Q 4 Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4 Q 1 Q 2
2006
Dol
lars
2001 2002 2003 2004 2005 2006Source: U.S. Bureau of Labor Statistics
Northeast Ohio’s real average per capita
salary/wage continues to grow, but lags the
U.S. by about 7%. In 2002 and 2003, NEO
wage growth slightly exceeded the U.S. In
the last year and a half, U.S. wages have
rebounded while Northeast Ohio’s average
wage change has been relatively flat. It is
important to note that after adjusting for
inflation, real wages in the region have
been increasing.
1 . 7 5
1 . 7 7
1 . 7 9
1 . 8 1
1 . 8 3
1 . 8 5
1 . 8 7
1 . 8 9
Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4 Q 1 Q 2
1 7
1 7 . 2
1 7 . 4
1 7 . 6
1 7 . 8
1 8
1 8 . 2
1 8 . 4
1 8 . 6
1 8 . 8
1 9
Wor
kers
(M
illio
ns)
2006
Dol
lars
(Bi
llion
s)
2002 2003 2004 2005 2006Source: U.S. Bureau of Labor Statistics
In early 2002, the region had employment
of 1.87 million workers. During the
nationwide slowdown in manufacturing,
the region saw an erosion of employment
through the second quarter of 2004,
bottoming out at total employment of
1.83 million workers. Since that time, the
regional economy has picked up, adding
approximately 8,500 net jobs.
During the decline in workers, the region’s
total real wages remained stable and
improved as employment began to expand.
When the trend in wages is better than
the trend in employment, it suggests that
worker productivity is rising.
$32.0
$32.5
$33.0
$33.5
$34.0
$34.5
$35.0
2002 2003 2004 2005 2006
18.0%
19.0%
20.0%
21.0%
22.0%
23.0%
2006
Dol
lars
($B
illio
ns)
Source: Moody’s Economy.com
Contrary to popular opinion, manufacturing
output has improved from the trough of 2002
and 2003 and remains relatively stable. The
proportion of NEO’s GRP that comes from
manufacturing also has remained relatively
stable. Much publicized declines in auto-related
products are being offset in other industries.
For the U.S., the share of GRP that comes from
manufacturing is about 14%, compared with 21%
in NEO. We continue to be a place where things
are made. Manufacturing as a percent of the
national economy also has been stable the last
five years.
Also contrary to general beliefs,
manufacturing employment is off only
by about 15,000 jobs the last four years.
Following the decline during 2003,
manufacturing jobs have been quite steady,
hovering between 270,000 and 275,000.
Average weekly hours have fluctuated
between 40 and 42 hours. While the last
three quarters of 2006 have shown a slight
decline in total industry employment, the
average weekly hours have been increasing.
If the trend to increase average hours
continues, it is likely that additional workers
will be hired.
A strong region is made of strong communities.
The Manufacturing Employment
Index indicates the relative
change in employment since the
base period of the last quarter
of 2002. Since that time,
the decline in manufacturing
employment for both Ohio and
the region has been larger than
the U.S. Ohio’s concentration in
traditional automotive industries
is a key factor in this comparison
to the more diversified U.S.
manufacturing base.
9 0
9 1
9 2
9 3
9 4
9 5
9 6
9 7
9 8
9 9
1 0 0
Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4
2003 2004 2005 2006
Inde
x (1
00=Q
4 20
02)
Source: Ohio Labor Market Information
Quarterly Manufacturing Employment Indexx
U.S. Ohio NEO
Quarterly Employment & Average Weekly Hours
Wor
kers
(Th
ousa
nds)
Avg
Wee
kly
Hou
rs
2003 2004 2005 2006
Source: Ohio Labor Market Information
Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4
Quarterly Unemployment Rates
U.S. Ohio NEO
NEO Manufacturing Employment and Wages
Mfg Employment (left axis) Avg Weekly Hrs (right axis)
NEO Manufacturing GRP
Wage Comparison
NEO Total Employment and Total Real Wages
Avg Employment (4-Qtr Avg) Wages (4-Qtr Avg)
U.S. Ohio NEO
NEO Mfg GRP Mfg as % of GRP
4 . 0
4 . 5
5 . 0
5 . 5
6 . 0
6 . 5
7 . 0
7 . 5
Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4
2003
Per
cent
age
Rate
s
2004 2005 2006Source: Ohio Labor Market Information
While the region mirrored U.S.
unemployment rates and behavior
in 2003, NEO’s unemployment rate
in 2004 was relatively flat, while the
U.S. showed improvement. Since
then, NEO unemployment has been
improving in step with the U.S. and,
in 2006, the regional rate approached
5%. Unemployment at 4 to 5% is
generally considered at or near
full employment. Unemployment is
defined as the proportion of people
in the workforce who are not working
but are actively looking for work or
awaiting recall.
Annualized 4-Quarter Moving Average
$ 3 7 ,0 0 0
$ 3 8 ,0 0 0
$ 3 9 ,0 0 0
$ 4 0 ,0 0 0
$ 4 1 ,0 0 0
$ 4 2 ,0 0 0
$ 4 3 ,0 0 0
Q 4 Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4 Q 1 Q 2
2006
Dol
lars
2001 2002 2003 2004 2005 2006Source: U.S. Bureau of Labor Statistics
Northeast Ohio’s real average per capita
salary/wage continues to grow, but lags the
U.S. by about 7%. In 2002 and 2003, NEO
wage growth slightly exceeded the U.S. In
the last year and a half, U.S. wages have
rebounded while Northeast Ohio’s average
wage change has been relatively flat. It is
important to note that after adjusting for
inflation, real wages in the region have
been increasing.
1 . 7 5
1 . 7 7
1 . 7 9
1 . 8 1
1 . 8 3
1 . 8 5
1 . 8 7
1 . 8 9
Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4 Q 1 Q 2
1 7
1 7 . 2
1 7 . 4
1 7 . 6
1 7 . 8
1 8
1 8 . 2
1 8 . 4
1 8 . 6
1 8 . 8
1 9
Wor
kers
(M
illio
ns)
2006
Dol
lars
(Bi
llion
s)
2002 2003 2004 2005 2006Source: U.S. Bureau of Labor Statistics
In early 2002, the region had employment
of 1.87 million workers. During the
nationwide slowdown in manufacturing,
the region saw an erosion of employment
through the second quarter of 2004,
bottoming out at total employment of
1.83 million workers. Since that time, the
regional economy has picked up, adding
approximately 8,500 net jobs.
During the decline in workers, the region’s
total real wages remained stable and
improved as employment began to expand.
When the trend in wages is better than
the trend in employment, it suggests that
worker productivity is rising.
$32.0
$32.5
$33.0
$33.5
$34.0
$34.5
$35.0
2002 2003 2004 2005 2006
18.0%
19.0%
20.0%
21.0%
22.0%
23.0%
2006
Dol
lars
($B
illio
ns)
Source: Moody’s Economy.com
Contrary to popular opinion, manufacturing
output has improved from the trough of 2002
and 2003 and remains relatively stable. The
proportion of NEO’s GRP that comes from
manufacturing also has remained relatively
stable. Much publicized declines in auto-related
products are being offset in other industries.
For the U.S., the share of GRP that comes from
manufacturing is about 14%, compared with 21%
in NEO. We continue to be a place where things
are made. Manufacturing as a percent of the
national economy also has been stable the last
five years.
Also contrary to general beliefs,
manufacturing employment is off only
by about 15,000 jobs the last four years.
Following the decline during 2003,
manufacturing jobs have been quite steady,
hovering between 270,000 and 275,000.
Average weekly hours have fluctuated
between 40 and 42 hours. While the last
three quarters of 2006 have shown a slight
decline in total industry employment, the
average weekly hours have been increasing.
If the trend to increase average hours
continues, it is likely that additional workers
will be hired.
A strong region is made of strong communities.
The Manufacturing Employment
Index indicates the relative
change in employment since the
base period of the last quarter
of 2002. Since that time,
the decline in manufacturing
employment for both Ohio and
the region has been larger than
the U.S. Ohio’s concentration in
traditional automotive industries
is a key factor in this comparison
to the more diversified U.S.
manufacturing base.
9 0
9 1
9 2
9 3
9 4
9 5
9 6
9 7
9 8
9 9
1 0 0
Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4
2003 2004 2005 2006
Inde
x (1
00=Q
4 20
02)
Source: Ohio Labor Market Information
Quarterly Manufacturing Employment Indexx
U.S. Ohio NEO
Quarterly Employment & Average Weekly Hours
Wor
kers
(Th
ousa
nds)
Avg
Wee
kly
Hou
rs
2003 2004 2005 2006
Source: Ohio Labor Market Information
Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4
Quarterly Unemployment Rates
U.S. Ohio NEO
NEO Manufacturing Employment and Wages
Mfg Employment (left axis) Avg Weekly Hrs (right axis)
NEO Manufacturing GRP
Wage Comparison
NEO Total Employment and Total Real Wages
Avg Employment (4-Qtr Avg) Wages (4-Qtr Avg)
U.S. Ohio NEO
NEO Mfg GRP Mfg as % of GRP
4 . 0
4 . 5
5 . 0
5 . 5
6 . 0
6 . 5
7 . 0
7 . 5
Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4
2003
Per
cent
age
Rate
s
2004 2005 2006Source: Ohio Labor Market Information
While the region mirrored U.S.
unemployment rates and behavior
in 2003, NEO’s unemployment rate
in 2004 was relatively flat, while the
U.S. showed improvement. Since
then, NEO unemployment has been
improving in step with the U.S. and,
in 2006, the regional rate approached
5%. Unemployment at 4 to 5% is
generally considered at or near
full employment. Unemployment is
defined as the proportion of people
in the workforce who are not working
but are actively looking for work or
awaiting recall.
Annualized 4-Quarter Moving Average
$ 3 7 ,0 0 0
$ 3 8 ,0 0 0
$ 3 9 ,0 0 0
$ 4 0 ,0 0 0
$ 4 1 ,0 0 0
$ 4 2 ,0 0 0
$ 4 3 ,0 0 0
Q 4 Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4 Q 1 Q 2
2006
Dol
lars
2001 2002 2003 2004 2005 2006Source: U.S. Bureau of Labor Statistics
Northeast Ohio’s real average per capita
salary/wage continues to grow, but lags the
U.S. by about 7%. In 2002 and 2003, NEO
wage growth slightly exceeded the U.S. In
the last year and a half, U.S. wages have
rebounded while Northeast Ohio’s average
wage change has been relatively flat. It is
important to note that after adjusting for
inflation, real wages in the region have
been increasing.
1 . 7 5
1 . 7 7
1 . 7 9
1 . 8 1
1 . 8 3
1 . 8 5
1 . 8 7
1 . 8 9
Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4 Q 1 Q 2
1 7
1 7 . 2
1 7 . 4
1 7 . 6
1 7 . 8
1 8
1 8 . 2
1 8 . 4
1 8 . 6
1 8 . 8
1 9
Wor
kers
(M
illio
ns)
2006
Dol
lars
(Bi
llion
s)
2002 2003 2004 2005 2006Source: U.S. Bureau of Labor Statistics
In early 2002, the region had employment
of 1.87 million workers. During the
nationwide slowdown in manufacturing,
the region saw an erosion of employment
through the second quarter of 2004,
bottoming out at total employment of
1.83 million workers. Since that time, the
regional economy has picked up, adding
approximately 8,500 net jobs.
During the decline in workers, the region’s
total real wages remained stable and
improved as employment began to expand.
When the trend in wages is better than
the trend in employment, it suggests that
worker productivity is rising.
$32.0
$32.5
$33.0
$33.5
$34.0
$34.5
$35.0
2002 2003 2004 2005 2006
18.0%
19.0%
20.0%
21.0%
22.0%
23.0%
2006
Dol
lars
($B
illio
ns)
Source: Moody’s Economy.com
Contrary to popular opinion, manufacturing
output has improved from the trough of 2002
and 2003 and remains relatively stable. The
proportion of NEO’s GRP that comes from
manufacturing also has remained relatively
stable. Much publicized declines in auto-related
products are being offset in other industries.
For the U.S., the share of GRP that comes from
manufacturing is about 14%, compared with 21%
in NEO. We continue to be a place where things
are made. Manufacturing as a percent of the
national economy also has been stable the last
five years.
Also contrary to general beliefs,
manufacturing employment is off only
by about 15,000 jobs the last four years.
Following the decline during 2003,
manufacturing jobs have been quite steady,
hovering between 270,000 and 275,000.
Average weekly hours have fluctuated
between 40 and 42 hours. While the last
three quarters of 2006 have shown a slight
decline in total industry employment, the
average weekly hours have been increasing.
If the trend to increase average hours
continues, it is likely that additional workers
will be hired.
A strong region is made of strong communities.
The Manufacturing Employment
Index indicates the relative
change in employment since the
base period of the last quarter
of 2002. Since that time,
the decline in manufacturing
employment for both Ohio and
the region has been larger than
the U.S. Ohio’s concentration in
traditional automotive industries
is a key factor in this comparison
to the more diversified U.S.
manufacturing base.
9 0
9 1
9 2
9 3
9 4
9 5
9 6
9 7
9 8
9 9
1 0 0
Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4
2003 2004 2005 2006
Inde
x (1
00=Q
4 20
02)
Source: Ohio Labor Market Information
Quarterly Manufacturing Employment Indexx
U.S. Ohio NEO
Quarterly Employment & Average Weekly Hours
Wor
kers
(Th
ousa
nds)
Avg
Wee
kly
Hou
rs2003 2004 2005 2006
Source: Ohio Labor Market Information
Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4
Quarterly Unemployment Rates
U.S. Ohio NEO
NEO Manufacturing Employment and Wages
Mfg Employment (left axis) Avg Weekly Hrs (right axis)
NEO Manufacturing GRP
Wage Comparison
NEO Total Employment and Total Real Wages
Avg Employment (4-Qtr Avg) Wages (4-Qtr Avg)
U.S. Ohio NEO
Northeast Ohio Economic Review
March 2007
Welcome to the first edition of Team NEO’s “Quarterly Regional
Economic Review” for Northeast Ohio. The objective of this publication
is to provide key economic data to help paint an accurate picture of the NEO
economy. Our goal is to enable appropriate and timely business
decisions that will assist in our region’s growth.
This publication is unique because the information presented represents all
of Northeast Ohio. This regional information is not readily available
from other sources and, therefore, we hope you find it valuable.
Our sources for this information are a combination of federal, state and
private sector estimates. The private sector estimates are from Moody’s
Economy.com. Moody’s models state and local economies. We are relying
on their models to estimate data for the NEO region. Be aware that these
estimates are often revised and are not always available quarterly.
We are presenting data, where possible, through the end of 2006.
Overall, our economy was stable in 2006, with a modest gain in
regional gross product and generally steady employment levels.
Most surprising, compared with popular perception, is that our
manufacturing sector is stronger than most people believe.
We hope you enjoy this new publication and we welcome your input for
future editions as it is structured to meet your needs.
Together, anything is possible.
Thomas A. Waltermire, chief executive officer, Team NEO
1 , 5 00
1 , 7 00
1 , 9 00
2 , 1 00
2 , 3 00
2 , 5 00
2 , 7 00
2 , 9 00
3 , 1 00
3 , 3 00
Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3
4 00
4 20
4 40
4 60
4 80
5 00
5 20
5 40
5 60
5 80
4-Quarter Moving Average
Num
ber o
f Per
mit
s
Valu
e of
Per
mit
s ($
Mill
ions
)
2003 2004 2005 2006Source: U.S. Census Bureau
Permits and values of permits for all
types of housing (single and multi-
family) have followed the general
U.S. trend of a softer housing market.
4-Quarter Moving Average
1 , 0 0 0
1 , 5 0 0
2 , 0 0 0
2 , 5 0 0
3 , 0 0 0
3 , 5 0 0
Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3
$ 1 0 0
$ 1 1 0
$ 1 2 0
$ 1 3 0
$ 1 4 0
$ 1 5 0
$ 1 6 0
$ 1 7 0
$ 1 8 0
$ 1 9 0
$ 2 0 0
2003 2004 2005 2006
Num
ber o
f Per
mit
s
Valu
e of
Per
mits
($ Th
ousa
nds)
Source: U.S. Censuc Bureau
The average single family permit
value for Northeast Ohio is about
$10,000 higher than the U.S. In
a region with slow population
growth and few immigrants, it
is likely that these homes are
for existing residents and that
they are replacements for their
existing homes. It appears that as
replacement homes, they are more
likely to be on the higher price as
individuals move up the quality
market to “bigger” and/or “better.”
Economy.com estimates the cost of living in NEO’s four
metropolitan areas to be 10% to 16% below the U.S. average.
Shelter costs are an important component within cost of living.
737 Bolivar Road, Suite 2000
Cleveland, Ohio 44115
www.teamneo.org
1.888.NEO.1411This report made possible through the generous
support of Charter One Foundation.
2002 2003 2004 2005 2006
170165160155150145140135
130
Annual Change 1.1%0.9%3.0%
1.9%
Source: Moody’s Economy.com
2006
Dol
lars
(Bi
llion
s)
Gross Regional Product is the sum total of our
economic output. While real dollar growth continues,
annual estimates of NEO GRP growth have been revised
downward for 2005 and 2006. Prior estimates put
regional economic growth at near 2.5%, but revisions
to both income and employment estimates have
lowered the estimated GRP. Revisions to the U.S. GDP
(similar to the region’s GRP), released February 28,
have lowered estimates of 4th quarter annualized
growth to 2.2%. This follows rates of 2.0 in the 3rd
quarter for 2006, 2.6 in Q2 and 5.6 in Q1.
Northeast Ohio Gross Regional Product
Single Family Housing Permits and Mean Value
Permits U.S. NEO
NEO Total Housing Permits and Value
4-Qtr Avg Total Permits (left) 4-Qtr Avg Total Value (right)
Team NEO uses a number of data sources for the Regional Economic Review. One of the primary sources is Moody’s Economy.com
www.economy.com) regional modeling system. This firm is a leading independent provider of economic, financial, and industry
research and data that specialize in national and metropolitan economic growth forecasts. Moody’s Economy.com county level
output, employment, and payroll historical data are estimated from several publicly available sources and are summarized into the
Team NEO regional footprint. It is important to understand that data provided by Economy.com are estimates of economic activity.
Team NEO also uses data from federal and state sources as part of the report. As with Economy.com, the information for the
Team NEO footprint are derived from data reported at either the county or metropolitan level. We rely heavily on data from
the U.S. Bureau of Labor Statistics (www.bls.gov) and Ohio’s Labor Market Information (lmi.state.oh.us) for information on
wages, unemployment and both general and industry-specific employment. In addition, Team NEO uses data from the Census
(www.census.gov) to track housing-related activity including the number of single and multi-family permits, as well as their values.
Data Sources