DEPARTMENT OF FINANCE AND ADMINISTRATION Office of Budget Development & Monitoring Economic Brief Ryan McLean, Sr. Budget Analyst CITY OF BOISE Volume 6 Quarter 3 (CY) 2014 (July 1 September 30) Quarterly Summary Employment Construction Boise s unemployment rate fell to 3.3 and remains relatively low when measured against comparable cities, Idaho, and the United States. Construction permit revenue increased by 29.4 over last year, which was due, in large part, to an apartment complex permitting that had a total valuation of $18M. Housing Home prices for the Boise MSA have increased by 9.2 when compared to last year. High home prices are fueling an increase in existing housing inventory. Special Points of Interest Sales Tax Sales tax receipts increased 3.5 over last year, which is a good result, but is a less dramatic increase than in the previous 2 quarters. Boise s unemployment rate is down to 3.3 Airport Traffic airport traffic increased by 7.3 over the prior year, which is partly due to the recently added flights. Multi-family construction permits increased substantially Inside this issue: Quarterly Summary 1 Employment Data 1-4 Construction Activity 5-6 Housing Trends 7 State Sales Tax 7 Airport Data 8 CY = Calendar Year Q = Quarter YOY= Year-Over-Year MSA= Metropolitan Statistical Area NOTE: Signs indicate a general economic outlook compared to the previous quarter and/or year. Employment Data When compared with the prior year, the unemployment rate for Boise in the third quarter dropped 190 basis points, from 5.2 to 3.3. When compared to the prior quarter, the unemployment rate for Boise dropped 80 basis points, from 4.1. Boise s unemployment rate in September was 20 basis points below the Boise MSA, 20 basis points below Idaho, and 240 basis points below the United States. Relative to comparable sized cities in the western United States, Boise continues to post some of the lowest unemployment rates. employment in the third quarter increased by 2,779 jobs, or 2,6, compared to last year. Compared to the prior quarter, total employment decreased by 994 jobs, or 0.9. The decrease can be explained by stronger than usual employment numbers through the summer months; total employment numbers during the third quarter were similar to numbers from the spring, which is a typical seasonal trend. The increasing total employment and flat labor force numbers (except for the summer months) are caused by several factors. As an example, the Idaho Department of Financial Management suggests that stagnant labor force numbers are due to a combination of a lower number of new entrants to the labor force and an increase in retirements. Another important factor to keep in mind is that the labor force number does not include the individuals that have given up on searching for employment. NOTE: This quarterly brief is based on the calendar year, not the fiscal year, unless otherwise stated Basis point is a function of a percent (100 BP = 1)
Employment (continued) Page 2 Jul '14 (Revised) Jul '13 (Actual) Area Boise City 115,041 110,317 4,724 4.1 112,201 106,110 6,091 5.4 Ada County 213,672 205,002 8,670 4.1 208,230 197,184 11,046 5.3 Boise MSA 318,157 304,021 14,136 4.4 310,451 292,426 18,025 5.8 Idaho 789,598 754,332 35,266 4.5 784,929 738,865 46,064 5.9 United States 6.5 7.7 Aug '14 (Revised) Aug '13 (Actual) Area Boise City 113,887 109,264 4,623 4.1 111,761 105,695 6,066 5.4 Ada County 211,667 203,045 8,622 4.1 207,310 196,413 10,897 5.3 Boise MSA 314,992 301,118 13,874 4.4 308,721 291,282 17,439 5.6 Idaho 782,397 747,882 34,515 4.4 778,797 733,290 45,507 5.8 United States 6.3 7.3 Sep '14 (Revised) Sep '13 (Actual) Area Boise City 112,471 108,771 3,700 3.3 111,813 105,992 5,821 5.2 Ada County 209,049 202,129 6,920 3.3 207,541 196,964 10,577 5.1 Boise MSA 310,790 299,759 11,031 3.5 308,528 292,100 16,428 5.3 Idaho 772,909 745,565 27,344 3.5 776,313 734,762 41,551 5.4 United States 5.7 7.0 Q3 '14 Average Q3 '13 Average Area Boise City 113,800 109,451 4,349 3.8 111,925 105,932 5,993 5.3 Ada County 211,463 203,392 8,071 3.8 207,694 196,854 10,840 5.2 Boise MSA 314,646 301,633 13,014 4.1 309,233 291,936 17,297 5.6 Idaho 781,635 749,260 32,375 4.1 780,013 735,639 44,374 5.7 United States 6.2 7.3 Source: U.S. Bureau of Statistics, data through September (not seasonally adjusted)
Employment (continued) Employment Page 3 September Unemployment Rate September Unemployment Rate - Comparative Cities Source: U.S. Bureau of Statistics, data through September (not seasonally adjusted)
Employment (continued) Boise MSA Non-Farm Employment Sector Information The Boise MSA has 54 different employment sectors that respond differently to current economic conditions. The following table highlights the 4 best and worst performing industries compared to both last quarter and last year. During the third quarter, Leisure & Hospitality had the largest YOY percentage increase of jobs, at 12.0. Both the Leisure & Hospitality and the Accomodation & Food Services industries made much more dramatic gains this quarter than is usual, which is partially due to seasonality of the summer months; however, the increases in these industries show demand for services that caters to business and personal discretionary income spending. Services to Buildings & Dwellings had the largest YOY percentage decrease in jobs (13.9), which is a slowdown from the previous job gains this industry made earlier this year. Page 4 Quarter over quarter Jobs Change Year over year Jobs Change Gains Gains Specialty Trade Contractors 4,100 13.2 Leisure and Hospitality 9,600 12.0 Mining, Logging, and Construction 4,600 9.6 Ambulatory Health Care 4,800 11.6 Foundation, Structure, and Bldg Contractors 500 7.7 Accommodation and Food Services 7,100 10.6 Leisure and Hospitality 4,300 5.0 Specialty Trade Contractors 3,200 10.0 Losses Losses Government (8,400) -6.1 Employment Svcs (2,500) -11.5 State Government Education (1,200) -8.4 Admin and Support Svcs (8,400) -12.4 Local Government (7,900) -10.2 Admin, Support, and Waste Mgmt Svcs (8,800) -12.6 Local Government Education (8,500) -17.6 Svcs to Buildings and Dwellings (2,200) -13.9 Boise Non-farm Employment Sector YOY Changes - Quarter 3
Construction Activity Page 5 permit revenue in the third quarter increased by $508.2k, or 29.4, compared to last year. Compared to the prior quarter, total permit revenue increased by $570.8k, or 34.3. permit value increased by $20.4M, or 19.7 over last year. Compared to the prior quarter, total permit value decreased by $25.2M, or 16.9. permit volume increased by 137 permits, or 2.8, over last year. Compared to the prior quarter, total permit volume increased by 77 permits, or 1.6. permits for the dwellings category (including single, duplex, and multiple family units) increased by 93 permits, or 34.6. The growth in this category is driven primarily by multiple family units, which increased by 133 permits, or 116.7, compared to last year. The large increase in multiple family permits is due to the permitting of an apartment complex off of Royal Boulevard and condos off of Grove Street. Single-family unit permits actually decreased by 28 permits, or 19.9, compared to last year. In the dwellings category, 68.2 of the dwelling permits were multiple family units, 31.2 of the dwelling permits were single family units, and the remaining 0.6 of the dwelling permits were duplexes. The dwellings other category (including remodels, additions, and garages) increased by 93 permits, or 17.6, which shows that major home renovation continues to be very popular among homeowners. Boise Construction - Quarter 3 Type of Permits Jul '13 Jul '14 Aug '13 Aug '14 Sep '13 Sep '14 Dwellings Q3 '13 Q3 '14 Single Family 41 36 71 44 29 33 141 113 Duplex 2 0 10 2 2 0 14 2 Multiple 114 32 0 32 0 183 114 247 Dwellings 157 68 81 78 31 216 269 362 Dwellings Other 136 142 116 131 101 142 353 415 Commercial Construction 116 103 95 103 93 134 304 340 Trade Permits 1,424 1,516 1,304 1,290 1,265 1,264 3,993 4,070 Source: http://pds.cityofboise.org/building/docs/constreports/
Page 6 Construction Activity (continued) Permit Revenue - Quarterly Permit Value - Quarterly Permit Volume - Quarterly Source: http://pds.cityofboise.org/building/docs/constreports/
Page 7 Housing Trends (latest available data) During the third quarter, total existing housing inventory made another jump forward and foreclosure inventory remained low, according to the latest data point from Trulia. Home inventory levels are the highest they have been since the summer of 2011. Since foreclosure inventory remains low, foreclosures are putting much less downward pressure on home prices than since before the recession. According to the Federal Housing Finance Agency (FHFA) home price index (HPI) report for the third quarter, home prices for the Boise MSA increased by 9.2 over last year and 1.2 over last quarter. The consistent increase in existing home prices is encouraging people to list their homes for sale: home price expectations by homeowners are being met by the market. Monetary policy decisions by the Federal Reserve could affect mortgage affordability for many people; watch for changes that could potentially impact mortgage interest rates. Housing Trends Source: www.trulia.com and fhfa.gov * Trulia housing data is unavailable for August 2013, September 2013, July 2014, and September 2014 State Sales Tax The City shares sales tax revenue with the State and receives its portion on a quarterly basis. The chart below reflects the gross sales tax collected by the State. Gross sales tax collected in the third quarter increased by $12.9M, or 3.5, when compared to last year. Compared to the prior quarter, gross sales tax increased by $31.5M, or 9.1. State sales tax collection remained consistently high in the third quarter during all three months; however, sales tax collection dipped slightly at the end of the quarter during September. Gross Sales Tax - Quarterly Source: Idaho State Tax Commission
Airport Passenger Traffic Page 8 The number of air passengers can be a strong indicator of the global and local economic environment. During the third quarter, total passenger traffic increased by 50,083 passengers, or 7.3, compared to last year. Compared to the prior quarter, total passenger traffic increased by 53,818, or 7.9. passenger traffic remained high through July and August and decreased in September, which is a normal seasonal trend. The recent additions of nonstop flights to locations throughout the United States, as well as the continually improving economy, appear to factor into strong YOY gains in total passenger traffic volume. Passenger Traffic - Quarterly Passenger Traffic - Monthly Source: Airport Department, City of Boise