Third quarter EPI bests second quarter 2013 and comparable quarter last year. By Gregg Gothreaux

Monday, Dec. 16, 2013

EPI-DashboardThe Lafayette Economic Performance Index, which tracks the strength of the local economy, registered 118 for September 2013, up more than 1 percent compared to September 2012. The index at the end of the third quarter showed a 0.8 percent increase from the second quarter; it’s important to note that the index has not dropped below the 12-month moving average at any time during the last eight months.  

What the index reveals is that Lafayette’s economy has been steadily growing since 2010, increasing 14 percent since hitting a decade low in August 2009. Opportunities created by this economic prosperity have not gone unnoticed. In October, Newpark Resources announced it was investing more than $41 million on a 50,000-square-foot manufacturing expansion and creating 35 new jobs while retaining 55 existing jobs in Carencro. It comes as no surprise that Lafayette was listed as the third best mid-sized city for Manufacturing Employment Leaders in the U.S., according to the Bureau of Labor Statistics.

Like any index, the EPI combines multiple data points into a single score that can be tracked and compared over time. This particular index monitors 15,000 data points and 15 local statistics that together illustrate a unified story about how the Lafayette economy is performing. The index is the most accurate reflection of the economy, because it is seasonally and inflation adjusted, meaning movement is based on actual changes, not those caused by changes in periodic variation or time. The EPI is also retroactively adjusted to allow for a more accurate comparison between present and past performance of the economy. This allows for an “apples to apples” comparison of where we are and where we have been.

Since experiencing a short-lived dip in fourth quarter 2012, the EPI has regained upward momentum, as seen in Figure 1. Currently, the EPI is 2 percent higher than the 12-month moving average, signaling a very strong year-to-date. The index’s position relative to the 12-month moving average — in our case it has been above for 10 of the past 13 months — gives an indication of how the overall economy is fairing.

Analyzing all 15 indicators as a whole shows that they are performing stronger than last year. When all three categories of indicators — leading, current, and lagging — move in the same upward direction, it means that the local economy is on track for continued growth and prosperity. This sustained progress is lagniappe for the local economy, which already had one of the best years ever in 2012.
 
Leading Indicators

Leading indicators are those that change three to six months prior to the overall economy showing signs of adjustment. In September, half of the six leading indicators saw improvements over last year while the other half displayed negligible decreases. This marks another encouraging quarter for the local economy.

Lafayette Average Weekly Initial Unemployment Insurance Claims increased slightly from 80 to 86 from August to September and are up from 81 in September 2012. Since weekly claims this year have averaged lower than any year since 2008, there should be no concern. The overall trend is still declining and gooMovingAveraged news for Lafayette Parish.

The Lafayette Stock Index has continued its upward trend with a score of 238.2 in September. This is 7.4 percent higher than September of last year. After hitting a 10-year low in February 2009, the index has grown 101 percent to achieve a decade-high in September of this year. It will be exciting to see how the fourth quarter index responds to the addition of Frank’s International, which went public in August.

Louisiana Average Manufacturing Weekly Hours has increased slightly to 44.6 hours worked a week in September — a small increase of 0.5 percent since September 2012 and the highest hours worked since November 2008. It should be noted that each month since April 2011 has averaged more than 41 hours per week, and no month after February 2010 has averaged less than 40 hours per week. Anything above 40 hours per week is considered healthy.

Residential building permits in Lafayette and unincorporated areas of the parish saw a dip from 69 permits in September 2012 to 64 in September this year, continuing a moderate performance. Much of the residential growth in the parish has been attributed to home construction in neighboring municipalities, which are not reflected in the index. Given the vitality of the overall economy, local housing conditions should continue to improve for all of Lafayette Parish as a whole.

In September, the Bureau of Safety and Environment Enforcement approved 13 drilling permits in the Gulf of Mexico — more than the 10 permits issued during the same month in 2012. Louisiana drilling permits saw a small decrease from 154 issued in September 2012 to 144 issued this year. Overall, Louisiana drilling permits have been stable for the past two years, despite month-to-month volatility. Gulf of Mexico drilling permits have recently leveled off after three years of steady increases; however, all industry information seems to point to this being very temporary because more activity in the GOM is on the horizon.

Current Indicators

Current indicators — those that change at the same time that the overall economy shows signs of adjustment — continue to show strength in the second quarter.

Retail Sales is one of the top economic indicators because it indicates the amount of consumer spending and confidence present in a community. September saw slightly less than $510 million in sales; and three-fourths of the way through the year, Lafayette retailers had more than $4.4 billion in sales. This is a 5.2 percent increase over the third quarter of 2012. In fact, Lafayette has a better chance of reaching $6 billion in total sales this year than it ever has before. This would be the first time in the city’s history that this has happened. Seasonally adjusted sales for each month since November 2012 have been above the 12-month moving average, signaling the continued upward trend in retail sales along with a healthy consumer confidence. Lafayette Parish Hotel/Motel Receipts also continue to outperform 2012 numbers. September receipts totaled $6.2 million, besting 2012 by 2.3 percent. Year-to-date, Hotel/Motel Receipts are 1.6 percent higher than the previous year. The performance of Retail Sales and Hotel/Motel Receipts indicates how strong the Lafayette hospitality market truly is, especially since these numbers are adjusted for inflation and seasonality.

LaggingCurrentLeadingNon-Farm Employment in the Lafayette MSA is among the strongest indicators with more than 159,000 jobs. Nearly 15,000 jobs have been added since the end of the recession. Lafayette has increased jobs by 10.4 percent, while the national economy has added jobs at a slower rate of 7.2 percent since the recession. The third quarter saw the highest employment level ever in the Lafayette MSA. As long as the indicators keep improving, look for local businesses to continue adding jobs.

Other current indicators such as Lafayette Regional Airport Enplanements and Average Home Sale Prices continue to show positive momentum. Second quarter enplanements marked the highest quarter ever. Monthly enplanements in the third quarter kept the momentum going and posted the second best quarter on record. That is great news for the airport and the planned passenger terminal expansion.

The Average Home Sale Price of single family homes in Lafayette is also performing well, reflecting strong performances by other indicators. Not only did prices beat the 12-month moving average for the entire quarter, but August saw the largest average sales price since November 2010 at $201,143. Despite some month-to-month volatility, the average sales price has been creeping up since the beginning of 2012, and the 12-month moving average has been climbing since late 2012, reinforcing the upward trend.

Lagging Indicators

The third quarter saw the lagging indicators — those changing three to six months after the overall economy adjusts — continuing to align themselves with the healthy leading and current indicators.TotalRetailSales

Lafayette’s Non-Seasonally Adjusted Unemployment rate in September was 4.6 percent, one of the lowest in the state. Historically, September’s unemployment rate decreases from the summer’s higher rates, which are the result of the nine-month payroll of many education institutions. Not only is the unemployment rate in Lafayette Parish one of the lowest in the state (and among the lowest in the country), those individuals who are unemployed are unemployed for shorter lengths of time. The average duration of unemployment for the third quarter in Louisiana is 15 weeks — as opposed to 17 weeks in third quarter 2012. This marks the shortest duration of unemployment in more than 4.5 years.

In addition to the positive employment indicators, the state of bankruptcies in the Western District of Louisiana has continued to improve with only 895 bankruptcies in September. Year-to-date bankruptcies (7,871) are slightly lower than this same time last year (7,874).

Louisiana Rig Counts are the only lagging indicator that has not shown considerable improvement in the past two years. There were 111 rigs on and offshore this September, which is up from the 103 rigs in July this year—  the lowest count since we started collecting the data in 1997. The bleak number of rigs, impacted by the decrease in onshore rigs in the Haynesville Shale area, is the result of falling natural gas prices and the lack of desirable wet gas in the play. On a positive note, natural gas prices through the first three quarters of this year have averaged 41 percent higher than the first three quarters of last year with an average price of $3.69/MMBtu. The higher natural gas prices could positively affect rig counts further down the line, but in the meantime this indicator continues to look murky. It would mean a lot if the price of natural gas could get above what the Wall Street Journal calls the “psychologically key mark” of $4/MMBtu and stay there.

In September, the offshore rig count increased to 52, up from the low of 14 in 2010. Though offshore and North Louisiana rig counts are sending mixed signals, the offshore rig counts are optimistic. With the price per barrel of crude oil holding strong, companies can hopefully feel comfortable with more investment and exploration. Even one rig represents thousands of jobs and hundreds of millions of dollars in capital investment, which is good news to Louisiana and, particularly, Lafayette Parish.


 

To post a comment, please log into your IND account. If you do not have an account, click the "register" button to create one. Facebook comments can be used as an alternative to creating an account at theIND.com.

feed-image RSS Feed
Loading
Chart
ABiz Stock Watch
o Home Bancorp 22.70 ▼0.06 (-0.26%)
o Frank's International 17.26 ▲0.18 (1.05%)
o IberiaBank Corp 64.05 ▲1.23 (1.96%)
o LHC Group 23.76 ▲0.01 (0.06%)
o MidSouth Bancorp 18.98 ▼0.02 (-0.11%)
o Petroquest Energy 4.35 ▲0.09 (2.11%)
o PHI Inc. 39.60 ▼1.40 (-3.41%)
o Superior Energy 25.37 ▲0.56 (2.26%)
o Stone Energy 26.04 ▲0.59 (2.32%)
o Facebook Inc. 78.65 ▲1.70 (2.21%)
o Twitter Inc. 51.48 ▲0.78 (1.54%)
o Gannett 30.37 ▲1.29 (4.44%)
NYSE:HBCP

Home Bancorp

Company ID [NYSE:HBCP] Last trade:22.70 Trade time:2:16PM EDT Value change:▼0.06 (-0.26%)
NYSE:FI

Frank's International

Company ID [NYSE:FI] Last trade:17.26 Trade time:2:33PM EDT Value change:▲0.18 (1.05%)
NYSE:IBKC

IberiaBank Corp

Company ID [NYSE:IBKC] Last trade:64.05 Trade time:2:36PM EDT Value change:▲1.23 (1.96%)
NYSE:LHCG

LHC Group

Company ID [NYSE:LHCG] Last trade:23.76 Trade time:2:22PM EDT Value change:▲0.01 (0.06%)
NYSE:MSL

MidSouth Bancorp

Company ID [NYSE:MSL] Last trade:18.98 Trade time:2:33PM EDT Value change:▼0.02 (-0.11%)
NYSE:PQ

Petroquest Energy

Company ID [NYSE:PQ] Last trade:4.35 Trade time:2:36PM EDT Value change:▲0.09 (2.11%)
NYSE:PHII

PHI Inc.

Company ID [NYSE:PHII] Last trade:39.60 Trade time:10:13AM EDT Value change:▼1.40 (-3.41%)
NYSE:SPN

Superior Energy

Company ID [NYSE:SPN] Last trade:25.37 Trade time:2:36PM EDT Value change:▲0.56 (2.26%)
NYSE:SGY

Stone Energy

Company ID [NYSE:SGY] Last trade:26.04 Trade time:2:36PM EDT Value change:▲0.59 (2.32%)
NYSE:FB

Facebook Inc.

Company ID [NYSE:FB] Last trade:78.65 Trade time:2:36PM EDT Value change:▲1.70 (2.21%)
NYSE:TWTR

Twitter Inc.

Company ID [NYSE:TWTR] Last trade:51.48 Trade time:2:36PM EDT Value change:▲0.78 (1.54%)
NYSE:GCI

Gannett

Company ID [NYSE:GCI] Last trade:30.37 Trade time:2:35PM EDT Value change:▲1.29 (4.44%)
Advertisement

Read the Flipping Paper!

Click Here for the Entire Print Version of
ABiz
 
Advertisement
Advertisement