VEDP QUARTERLY ECONOMIC UPDATE September 2016 VIRGINIA ECONOMIC DEVELOPMENT PARTNERSHIP YESVIRGINIA.ORG 1
US ECONOMIC OUTLOOK 1 8% - Source: Consensus Forecasts, September 2016 2
US WEEKLY INDICATORS 5% 8/3/2013 8/3/2014 8/3/2015 8/3/2016 Annual Change CPI PCE PI Sources: Johnson Redbook, US BLS, US BEA Weekly Retail Sales Weekly Mortgage Applications 400 350 300 250 200 150 100 50 0 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Purchase Index Target Source: Mortgage Bankers Association, VEDP analysis 500,000 400,000 300,000 200,000 100,000 New Weekly Jobless Claims 0 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 New Claims Target Source: U.S. Department of Labor, VEDP analysis trillions Weekly Value of the Russell 3000 $7 $6 $5 $4 $3 $2 $1 $0 1/6/2012 1/6/2013 1/6/2014 1/6/2015 1/6/2016 Russell 3000 Target Sources: Russell Investments, VEDP analysis 3
US ECONOMIC INDICATORS GDP Personal Consumption 2. 1.7% 2. 2. 2.9% 3. 1.5% 1.5% Business Investment Corporate Profits 1 8% - 9. 6. 3.5% 2. 1 1 8% - - 10. 5.9% 1.7% -3. Source: Consensus Forecasts, September 2016 4
US ECONOMIC INDICATORS Industrial Production Consumer Price Index - - 2.8% 2.9% 1.9% 0. 2. 1.5% 1. 0. Employment Cost Index Producer Price Index 1.9% 1.9% 2. 2. 1.9% 1. 1.9% - - - - -3. Source: Consensus Forecasts, September 2016 5
US ECONOMIC INDICATORS 9% 8% 7% 5% Unemployment Rate 8. 7. 6. 5. millions 20 18 16 14 12 10 8 6 4 2 0 New Car and Light Truck Sales 17.4 16.4 15.5 14.4 Housing Starts Federal Budget Balance 1.4 $0.0 millions 1.2 1.0 0.8 0.6 0.4 0.2 0.78 0.93 1.00 1.11 trillions -$0.5 -$1.0 -$1.09 -$0.68 -$0.49 -$0.44 0.0 -$1.5 Source: Consensus Forecasts, September 2016 6
US CAPACITY UTILIZATION RATES 100 90 Rates above 85% suggest a need for additional capacity 80 70 60 50 40 30 20 10 0 Aug-11 Aug-12 Aug-13 Aug-14 Aug-15 Aug-16 Source: Federal Reserve 7
US INDUSTRY TRENDS 12 10 New Vehicle Sales Source: AutoData $6 $5 Metalworking Machinery Orders (USMTO) millions, SAAR 8 6 4 billions $4 $3 $2 2 $1 0 Light Trucks Autos Aug-11 Aug-12 Aug-13 Aug-14 Aug-15 Aug-16 $0 Jul-2011 Jan-11 Jul-2012 Jan-12 Jul-2013 Jan-13 Jul-2014 Jan-14 Jul-2015 Jan-15 Jul-2016 Jan-16 12-month cumulative value Source: AMT 2 15% 1 5% E-Commerce Sales Source: USDOC % of All Retail Growth Rate 2011 Q2 2012 Q2 2013 Q2 2014 Q2 2015 Q2 2016 Q2 annual change on 12-month total 25% 2 15% 1 5% -5% -1-15% Construction Spending Private - Residential Private - Nonresidential Source: USDOC Public Jul-11 Jul-12 Jul-13 Jul-14 Jul-15 Jul-16 8
VIRGINIA EMPLOYMENT TRENDS Virginia Blacksburg Bristol Charlottesville Hampton Roads Harrisonburg Lynchburg Northern Virginia Richmond Roanoke Staunton-Waynesboro Winchester Employment Growth By MSA -1.2-0.8-0.2 0.4 0.6 1.1 1.5-2 0 2 4 6 Percent (%) Percentage Change from Previous Year Source: Bureau of Labor Statistics (CES), non-seasonally adjusted 1.9 1.9 3.8 3.7 4.6 Virginia Blacksburg Bristol Charlottesville Hampton Roads Harrisonburg Lynchburg Northern Virginia Richmond Roanoke Staunton-Waynesboro Winchester Unemployment Rate By MSA 3.6 4.0 3.3 4.1 3.9 3.7 3.5 0 1 2 3 4 5 Percent (%) Source: Bureau of Labor Statistics (LAUS), non-seasonally adjusted 4.4 4.6 4.6 4.7 4.8 Percent (%) -6.0-4.0-2.0 0.0 2.0 4.0 US Recession Nonagricultural Employment Growth Virginia and the Nation Virginia Recession Total Nonagriculture Nat. Res. & Mining Construction Manufacturing Trade, Trans. & Util. Information Financial Activities Prof. & Bus. Services Educ. & Health Services Leisure & Hospitality Government Virginia Employment Growth By Major Sector -9.9-1.3-0.4 0.0 0.3 1.1 1.0 0.5 0.4 1.3 1.9 1.8 2.7 1.9 1.7 2.3 2.2 2.6 3.6 3.7 6.1 10.9 Jan1999 Jan2003 Jan2007 Jan2011 Jan2015 Jan2001 Jan2005 Jan2009 Jan2013-10 -5 0 5 10 Percent (%) US Actual VA Actual Actual 12 Month Forecast Percentage Change from Previous Year Sources: Bureau of Labor Statistics (CES), QCEW Percentage Change from Previous Year Sources: Bureau of Labor Statistics, Moody's Analytics Actual data are through August 2016 and the forecast data are through August 2017. 9
VIRGINIA EXPORT TRENDS Virginia Merchandise Exports by Commodity: January June 2016 (YTD) Rank HS Code Description Export Value %Δ 16/15 Top 3 Export Destinations Total All Virginia Exports $ 8,392,243,750 10. Canada China Mexico 1 84 Industrial Machinery $ 1,172,711,063 0. Canada Germany Mexico 2 85 Electrical Machinery $ 962,620,513 9.8% Taiwan Singapore Algeria 3 87 Vehicles, Other Than Railway $ 580,468,147 19. Canada Australia Egypt 4 39 Plastics $ 570,800,132 0.5% Canada China UK 5 90 Optical, Medical & Surgical Instruments $ 344,981,362 5.7% Netherlands Germany UK 6 48 Paper & Paperboard $ 343,557,900 10. Canada China Japan 7 27 Mineral Fuels & Oils $ 342,133,073 46. Brazil Canada Germany 8 88 Aircraft & Spacecraft $ 315,688,272 22. Thailand Germany Canada 9 12 Oil Seeds & Misc. Grains $ 272,043,810 17. China Russia Tunisia 10 02 Meats $ 255,116,705 30.8% China Mexico Japan 11 44 Wood & Articles Of Wood $ 210,719,625 2. UK China Canada 12 30 Pharmaceutical Products $ 164,543,361 29.7% Netherlands China UK 13 55 Manmade Staple Fibers $ 161,943,555 20. Belgium Indonesia China 14 98 Special Classification Provisions $ 157,169,899 50.8% Germany Bahrain Dominican Rep. 15 56 Wadding, Felt & Nonwovens $ 152,382,425 19.7% Belgium Canada China Source: Global Trade Atlas 10
VIRGINIA EXPORT TRENDS Virginia Exports by Country: January June, 2016 (YTD) Rank Country Export Value %Δ 16/15 World $ 8,392,243,750 10. 1 Canada $ 1,493,930,718 20.5% 2 China $ 776,694,940 7. 3 Mexico $ 527,412,990 18.8% 4 United Kingdom $ 499,111,870 18. 5 Germany $ 452,910,137 18. 6 Belgium $ 301,049,193 1.9% 7 Taiwan $ 281,306,169 1.7% 8 Netherlands $ 280,071,311 1. 9 Japan $ 236,355,357 20. 10 Korea, South $ 198,380,105 25.5% 11 Singapore $ 156,865,290 18. 12 Saudi Arabia $ 155,673,982 9.9% 13 Brazil $ 155,411,691 26. 14 Italy $ 127,796,682 10. 15 Switzerland $ 120,127,898 45.8% 16 Thailand $ 119,258,357 89.8% 17 Australia $ 115,974,566 21.8% 18 India $ 113,207,200 0. 19 France $ 111,480,518 39.7% 20 Algeria $ 111,003,342 1199. 21 Hong Kong $ 105,428,892 10.5% 22 Indonesia $ 91,428,702 28. 23 Egypt $ 90,385,592 182.8% 24 Malaysia $ 81,431,152 43.8% 25 Colombia $ 79,833,638 26. Source: Global Trade Atlas 11
GLOBAL GDP OUTLOOK 8% - - US China Japan Germany UK France Italy India Canada South Korea Latin America Eastern Europe Source: Consensus Forecasts, September 2016 12
GLOBAL ECONOMIC OUTLOOK Germany France - - - United Kingdom Italy 8% - - - - - -8% -1 Source: Consensus Forecasts, September 2016 13
GLOBAL ECONOMIC OUTLOOK 1 Spain 8% Sweden 5% -5% -1 - Canada Japan - - - - -8% - Source: Consensus Forecasts, September 2016 14
GLOBAL ECONOMIC OUTLOOK China India 25% 1 2 8% 15% 1 5% South Korea Australia 5% - 2 15% 1 5% -5% -1-15% Source: Consensus Forecasts, September 2016 15
FDI TRENDS BY SOURCE COUNTRY ANNOUNCED EMPLOYMENT United States Virginia Japan Germany UK France China Canada Italy Switzerland India Spain Australia Sweden South Korea Netherlands Mexico Israel Ireland Austria Denmark UAE Other 0 15,000 30,000 45,000 60,000 China UK Germany India France Sweden Italy Japan Spain Canada Switzerland Netherlands South Korea Ireland UAE Luxembourg Australia Brazil Kenya Other 0 500 1,000 1,500 2,000 2,500 3,000 2014 2015 2016 2014 2015 2016 2016 data cover January to March. Source: fdi Markets 16
FDI TRENDS BY INDUSTRY ANNOUNCED EMPLOYMENT Textiles Consumer Products Software & IT services Automotive Components Real Estate Business Services Food & Tobacco Industrial Machinery Automotive OEM Financial Services Communications Plastics Metals Pharmaceuticals Leisure & Entertainment Transportation Paper, Printing & Packaging Chemicals Electronic Components Hotels & Tourism Other United States 0 15,000 30,000 45,000 60,000 2014 2015 2016 Business Services Paper, Printing & Packaging Financial Services Automotive Components Food & Tobacco Pharmaceuticals Communications Electronic Components Consumer Products Industrial Machinery Automotive OEM Textiles Metals Chemicals Aerospace Rubber Transportation Wood Products Alternative/Renewable energy Ceramics & Glass Other Virginia 0 500 1,000 1,500 2,000 2,500 2014 2015 2016 2016 data cover January to March. Source: fdi Markets 17