Local Economic Report

Transcription

1 Local Economic Report Fall SONOMA COUNTY

2 Fall 21 Local Economic Report November 21 The Sonoma County Economic Development Board (EDB), in partnership with the Sonoma County Workforce Investment Board (WIB), is pleased to present the Fall 21 Local Economic Report. Our research partner, Moody s Analytics, provided most of the research for this report. Highlights from this Local Economic Report include: Technology will be the major driver for the county s recovery. Medical device firms make up a significant portion of the technology industry, and are benefitting from the high demand from overseas markets and an influx of venture capital. The projected smaller wine grape harvest this year will help prevent a repeat of last year s accumulation of unsold inventories of grapes and wines amid slumping demand. Additionally, a new label standard requires Sonoma County to be included on all wine labels produced in the county, this has the potential to strengthen the long-term outlook for the wine industry in the county. Net migration, which has been positive for the past two years, is expected to remain positive in the next five years. Sonoma County s recovery will slow in the second half of 21 before strengthening in 211. Outside of the technology industry, the labor markets will not improve significantly in the short-term and the unemployment rate will remain above 1% through mid-211. Thank you for your interest in the Economic Development Board s research. For additional information, questions, comments, or suggestions please contact us at (77) or visit. Sincerely, Ben Stone Executive Director 21 Sonoma County Economic Development Board. The Economic Development Board (EDB) believes all data contained within this report to be accurate and the most current available, but does not guarantee its accuracy or completeness. Use of data from an outside source does not represent an endorsement of any product or service by the EDB, its members or affiliates. This publication can be made available in alternative formats such as Braille, large print, audiotape, or computer disk. Please direct requests to (77) and allow 72 hours for your request to be processed. This report was prepared by Sarah C. Deming.

3 SONOMA COUNTY RELATIVE EMPLOYMENT PERFORMANCE (1995=1) EMPLOYMENT VITALITY 13 GROWTH RANK RELATIVE RANK % =1% Best=1 Worst=384 5th quintile RELATIVE COSTS 15 LIVING BUSINESS th quintile 127% 12% F 11F 12F 13F 14F Best=1, Worst=392 =1% LIFE CYCLE PHASE Growth/Mature SON INDICATORS Gross metro product (C$B) % change Total employment () % change Unemployment rate Personal income growth Population () ,53 1,342 1,598 1, Single-family permits ,27 1,155 1, , Multifamily permits Existing-home price ($ths) ,77 11,619 12,695 1,41 7,541 5,441 6,938 Mortgage originations ($mil) 5,19 2,928 3,278 4,252 5, Net migration () ,3 1,267 1, ,53 2,17 Personal bankruptcies 2,547 3,1 3,337 2,93 2,697 STRENGTHS & WEAKNESSES STRENGTHS Emerging technologies are adding to SON s core medical devices and network clusters. Household wealth supports relative credit quality strength. WEAKNESSES Rising mortgage delinquencies are increasing the pipeline of bank and distress sales. SON s high-cost wineries are losing market share because of customers flight to value. CURRENT EMPLOYMENT TRENDS JULY 21 % change yr ago, 3-mo MA Total -2.4 Construction Manufacturing -1.8 Trade -2.3 Trans/Utilities -2.5 Information Financial Activities.2 Prof & Business Svcs. -.6 Edu & Health Svcs. 1.1 Leisure & Hospitality -1. Other Services 4.8 Government -4. SHORT TERM W FORECAST RISKS LONG TERM X RISK-ADJUSTED RETURN, % UPSIDE Developing Asia provides growing markets for SON s IT-producing industries. Healthcare law adds customers for SON-built medical devices. DOWNSIDE Rising office vacancies delay construction of new buildings. Still-rising long-term mortgage delinquencies drive house prices down. Recent Performance. Sonoma County s recovery has slowed as private businesses have resumed are illuminated by the closure of a county-based is also a drag on the labor market. Tech is one of the few areas of strength with both production and employment rising. Housing is also encouraging as prices are still rising after the expiration of federal homebuyer tax credits. past few months but remains north of 1% and almost a full percentage point above the national rate. Tech. Tech will be the major driver for the county s recovery. Demand remains strong, particularly from Asia for networking and electronic measurement equipment designed, or manufactured in the domestic sales and increased competition. Medtronic received regulatory approval from the European Union for its newest heart stent designed locally boosting the potential for future sales. County bodes well for tech. Investments nearly doubled in the second quarter from a year earlier, according to Dow Jones VentureSource. Investments include emerging technologies such as clean energy as well as the county s core networking and to push industrial vacancy rates in the second quarter below 15% according to Keegan & Coppin as companies sought space to accommodate future growth in output and employment. Wine. Expectations for a smaller wine grape harvest will help to soften the challenging environment statewide wine grape harvest is projected to decline 6% this year, according to the California Department ANALYSIS would help prevent a repeat of last year s accumulation of unsold inventories of grapes and wines amid slumping demand. Smaller inventories of 21 wines should help reduce the glut of high priced wines which continues to prompt local wineries to cut prices. A recently approved labeling requirement has the potential to strengthen the long-term outlook for the wine industry. Beginning in 215, wines produced in the county must include Sonoma County along with their regional appellations on their labels. Proponents of the measure cite the prospects of increased tourism and awareness of the county as a premiere wine growing area. Similar labeling Finance. Ongoing problems in commercial real over the next few quarters. In August, the FDIC delinquent construction and commercial real estate using employment will cool demand of for com cial services in 211 and subsequent years. Sonoma County s recovery will slow in the second half of 21 before strengthening in 211 and led by tech. Improvements in the labor market outside of tech will lag with the unemployment rate remaining above 1% through midof life and desirability for high-skilled workers. However, high housing costs will keep the county from being more than an average performer over the extended forecast horizon. Eduardo J. Martinez September 21 2

4 EMPLOYMENT & INDUSTRY TOP EMPLOYERS INDUSTRIAL DIVERSITY Kaiser Permanente 2,4 St. Joseph Health System 1,781 Agilent Technologies 1,35 Medtronic CardioVascular 1,2 Sutter Medical Center of Santa Rosa 1,97 Safeway, Inc. 1,82 Amy s Kitchen 9 River Rock Casino 66 Wal-Mart Stores, Inc. 65 Kendall-Jackson Wine Estates 64 AT&T 597 Mary s Pizza Shack 575 Washington Mutual 56 Lucky Wells Fargo & Company 492 State Farm Insurance Company 475 Hansel Auto Group 472 JDS Uniphase Corporation 433 Korbel 426 Source: North Bay Business Journal: Book of Lists, January 21 PUBLIC Federal 1,667 State 5,62 Local 23, % 8% 6% 4% 2% % Not due to Most Diverse () Least Diverse EMPLOYMENT VOLATILITY Relative to 9% Due to COMPARATIVE EMPLOYMENT AND INCOME Sector % of Total Employment Average Annual Earnings SON CA SON CA Mining.1%.2%.5% $42,413 $9,949 $95,714 Construction 5.7% 4.4% 4.6% $64,718 $63,791 $5,9 Manufacturing 11.7% 9.1% 9.1% $68,294 $82,541 $7,41 Durable 46.8% 62.3% 61.5% nd $91,244 $71,594 Nondurable 53.2% 37.7% 38.5% nd $68,59 $68,393 Transportation/Utilities 2.3% 3.4% 3.7% $57,532 $62,251 $57,767 Wholesale Trade 3.9% 4.6% 4.3% $69,196 $77,587 $74,146 Retail Trade 12.4% 1.8% 11.1% $34,867 $36,735 $3,217 Information 1.5% 3.2% 2.1% $57,483 $15,861 $86,949 Financial Activities 4.5% 5.7% 5.9% $31,75 $48,436 $48,585 Prof. and Bus. Services 11.4% 14.6% 12.7% $46,67 $63,626 $57,552 Educ. and Health Services 14.% 12.4% 14.7% $52,55 $53,19 $46,922 Leisure and Hosp. Services 11.6% 1.6% 1.% $22,762 $28,97 $23,447 Other Services 3.6% 3.4% 4.1% $4,48 $37,12 $33,191 Government 17.5% 17.7% 17.2% $63,73 $73,23 $62, SON 1 MIGRATION FLOWS INTO SONOMA COUNTY NUMBER OF MIGRANTS San Francisco, CA 2,599 Oakland, CA 1,26 Sacramento, CA 711 Los Angeles, CA 462 Vallejo, CA 445 Napa, CA 42 San Jose, CA 363 San Diego, CA 311 Riverside, CA 278 Santa Ana, CA 235 Total In-migration 13,499 FROM SONOMA COUNTY San Francisco, CA 1,92 Oakland, CA 976 Sacramento, CA 964 Napa, CA 395 Los Angeles, CA 39 Vallejo, CA 352 San Jose, CA 339 San Diego, CA 336 Portland, OR 249 Riverside, CA 27 Total Out-migration 13,386 Net Migration 113 4, 3, 2, 1, -1, -2, -3, -4, Net Migration, SON Domestic,7-2,73 1,384 1,855 Foreign 1,747 1,555 1,522 1,523 Total -3, ,96 3,378 Sources: Percent of total employment Moody s Analytics & BLS, 29; Average annual earnings BEA, 28 Sources: IRS (top), 28; Census Bureau, MOODY S RATING HOUSE PRICES SON Source: FHFA, 1996Q1=1, NSA CREDIT QUALITY Aa1 COUNTY LEADING INDUSTRIES NAICS INDUSTRY EMPLOYEES () GVSL State & Local Government Full-Service Restaurants Beverage Manufacturing General Medical and Surgical Hospitals Grocery Stores Limited-Service Eating Places 5.3 FR Farms Traveler Accommodation 3.3 PH Private Household Workers Account., Tax Prep., Bkkeep. & Payroll Srvcs Services to Buildings and Dwellings Department Stores Employment Services Building Equipment Contractors 2.1 High-tech employment 8.8 As % of total employment 4.8 Sources: BLS, Moody s Analytics, 29 3 PER CAPITA INCOME 47,755 43,852 4,166 SON CA Source: Bureau of Economic Analysis, 28

5 Graphical Analysis Labor Market Are Slowly Improving Employment, % change yr ago, 3-mo MA Sonoma County California Source: BLS Housing and Labor Weigh on Wealth Sonoma County per capita income indexed to California Source: BEA Except for Expanding Tech Industries Sonoma County employment, % change yr ago, - 3-mo MA 15 Computer system design and 1 scientific research and development Other E 11F 12F 13F Sources: BLS, Moody s Analytics Foreclosures Are Still a Concern for Housing REO foreclosures per 1, households, 3-mo MA, SA California Sonoma County Source: Realtytrac Commercial Loan Losses Are Drag for Lenders 1.6 Sonoma County finance and insurance employment % change yr ago (R) 1 commercial and 1.4 Industrial loans, $ E 11F 12F 13F 14F Sources: BLS, FDIC, Moody s Analytics Although Price Declines Will Be Moderate Case-Shiller Home Price Index, % change, 21Q1 to 211Q Sonoma Napa California Solano Alameda Sources: Fiserv, Moody's Analytics 4

6 5-Year Forecasts for Sonoma County Gross Metro Product, Percent Growth Personal Income, Percent Growth 6% 1% 5% 4% 3% 8% 6% 2% 1% % -1% 4% 2% % -2% -3% -4% % '3 '4 '5 '6 '7 '8 '9 '1F '11F '12F '13F '14F -2% -4% -6% '3 '4 '5 '6 '7 '8 '9 '1F '11F '12F '13F '14F 4% 3% Total Employment, Percent Growth $2, Mortgage Originations ($ Millions) 2% 1% % $15, -1% -2% -3% $1, -4% % -6% $5, -7% -8% '3 '4 '5 '6 '7 '8 '9 '1F '11F '12F '13F '14F $ '3 '4 '5 '6 '7 '8 '9 '1F '11F '12F '13F '14F 4 Net Migration (Thousands) 35 Personal Bankruptcies '3 '4 '5 '6 '7 '8 '9 '1F '11F '12F '13F '14F '3 '4 '5 '6 '7 '8 '9 '1F '11F '12F '13F '14F Source All: Moody s Analytics 5

7 CALIFORNIA With acknowledgement and appreciation to local key businesses supporting Sonoma County Economic Development: Director Executive Sponsors SONOMA COUNTY REPUBLIC Economic Development Board 41 College Avenue, Suite D Santa Rosa, CA 9541 (77) AGRICULTURE INDUSTRY RECREATION County of Sonoma General Services, Real Estate Division County of Sonoma Board of Supervisors Sonoma County Health Services Sonoma County Transportation & Public Works