The first edition in 2008 of our quarterly Northeast Ohio Economic Review begins by comparing our mix of industries with the U.S. as a whole, and then focuses on projections for the next 10 years. While noting that Manufacturing and Headquarters Industry Sectors in the Cleveland Plus™ Region Have Higher Share Than U.S, this report also finds that finance, insurance, and health care comprise a larger portion of the Northeast Ohio economy than they do nationally. Also, projections indicate that higher paying jobs will grow faster, meaning that Northeast Ohio's workforce is expected to continue to gain more talent and skills.
March 2008 Cleveland Plus Quarterly Economic Review
1. Our partners include:
Greater Cleveland Partnership
Greater Akron Chamber
Stark Development Board
Team Lorain County
Youngstown-Warren Regional Chamber
Medina County Economic Development Corporation
Northeast
Ohio
Economic
Review
March 2008
High-skill industries
and jobs fuel
continued growth
in Northeast Ohio.
2. The first edition in 2008 of our quarterly Northeast Ohio Economic Review begins by
comparing our mix of industries with the U.S. as a whole, and then focuses on projections
for the next 10 years.
Manufacturing and Headquarters Industry Sectors in the
Cleveland Plus™ Region Have Higher Share Than U.S.
This chart depicts total output for the U.S. and the 16-county Cleveland Plus™ region. The first six bars represent industries in which
Northeast Ohio has a higher share of output than the national average. The final five represent those industries in which NEO’s
output is less than the U.S. Output in Northeast Ohio continues to be driven by manufacturing, accounting for nearly 23% of total
output. Though employment has declined in manufacturing, it remains a productive and essential component of the economy.
Finance and insurance, as well as health care and social assistance, comprise a larger portion of the Northeast Ohio economy
than they do nationally. This reflects the significant concentration of internationally recognized companies and institutions in
this field. The Cleveland Plus region is also the headquarters for 10 Fortune 500 firms and many others. This strong corporate
presence is reflected in the larger than national share of “management of companies and enterprises.”
U.S. and Northeast Ohio 2007 Share of Output
Manufacturing
Finance & Insurance
Health Care & Soc Asst
Retail Trade
Wholesale Trade
Mgmt of Companies/Entps
All Other Industries
Real Estate / Rental & Leasing
Public Administration
Prof, Sci, & Tech Services
Information
0% 5% 10% 15% 20%
% of Total 2007 Gross Regional Product U.S. NEO
Source: Moody’s Economy.com
KEY:
Finance, insurance, (applies to both graph #1 & #2)
For simplicity, we use “Output” to mean the same as “Gross
and health care Regional Product.” This is the total value of economic output
less the value of raw material inputs. It is the total value-added
component of production derived from a combination of land,
comprise a larger labor and capital.
portion of the Northeast The designation of “All Other Industries” used in the graphs
above refers to a combination of six aggregated industries.
Ohio economy than These industries include utilities; educational services;
construction; agriculture, forestry, fishing and hunting; other
they do nationally. services; and mining.
3. The information sector is
expected to grow 34%
over the next 10 years.
High-Tech Industries to Grow the Fastest; Manufacturing
Still Strong
This chart ranks NEO industries based on Economy.com’s 10-year growth projections. The information industry is expected to grow
the fastest, a total of 34%. Other faster-growing sectors include manufacturing; professional and technical services; and finance
and insurance. Despite current perceptions, manufacturing output is projected to continue growing and will remain the largest sector
in terms of GRP. Nearly all sectors are expected to grow. One surprising aspect of the Economy.com forecast is the slow growth
projected for the health care industry, at both the national and NEO regional level. This is contrary to other national forecasts that
show a general continuation of current growth trends in this sector. The regional forecast reflects expectations for the sectoral growth
in the state and the U.S. However, local conditions, such as significant capital investments by health care providers in the region,
are not factored into the forecast.
Northeast Ohio Projected Output Growth: 2007–2017
Billions (2006 Dollars)
$0 $5 $10 $15 $20 $25 $30 $35 $40 $45 $50
Information 34%
Real Estate/Rental & Leasing 25%
Prof, Sci, & Tech Services 22%
Manufacturing 22%
Finance & Insurance 17%
Retail T
rade 17%
All Other Industries 9%
Mgmt of Companies/Entps 6%
Public Administration 3%
Health Care & Soc Asst 2%
Wholesale Trade (-4%)
2017 2007
Source: Moody’s Economy.com
KEY:
(applies to both graph #2 & #3)
Moody’s Economy.com is the world-renowned source in economic data and forecasting. Their methodological approach to analysis
of the U.S. economy models national and regional variables, allowing a richer set of data for long-term projections, such as the
forecasts included in this report.
4. Projections Indicate Higher Paying
Jobs Will Grow Faster NEO workforce
expected to
Economy.com predictions show strong growth trends in higher paying occupations.
In our last report, we found that over the last 15 years, jobs with above average
pay had grown 50% faster than jobs with below average pay. Economy.com’s
become more
projections for the next ten years show jobs with above average pay in total
growing 7.5%, while below average pay jobs in the aggregate show no growth
skilled.
over this period. Thus, the historical trend is expected to be even more pronounced
in the future. Higher paying occupations account for all the expected growth in
employment, indicating that education will become even more valuable in the future.
Northeast Ohio Projected Occupational Employment Change:
2007–2017
$100,000
Mgmt
$80,000 Legal Hlth Care Cmptr
Pract & Tech
Average Annual Wage
& Math
Sciences
Arch
$60,000 Install & & Eng
Bus
Repair
Construct & Finc
Edu,Trng
Art, Dsgn
Office & Admin
Production & Lib
& Ent
$40,000 Com &
Soc Serv
Sales
Hlth Care
Bldg/Grnds
Spprt
$20,000 Clng/Mnt
Food Prep
Trans &
& Serving
Mtrl Mvg Pers Care
Farm, Fish Protect
& Serv
& Forest Serv
$0
-10% -5% 0% 5% 10% 15% 20%
Percent Change
Source: Moody’s Economy.com
KEY:
The size of the bubbles in the chart correlates to the size of employment within the occupational group. The colors are only for ease of
readability. The vertical scale shows the average annual wage for the occupation, depicting the Northeast Ohio average annual wage for
2006 (most current data available) of $37,800 with a gold bar. The horizontal scale shows anticipated estimated employment change
over the next ten years.
5. 2007 has the highest average annual
employment in the last six years.
Fourth Quarter Quarterly Unemployment Rate
Unemployment 7.5%
Rate Shows 7.0%
Modest 6.5%
Improvement
6.0%
5.5%
The regional unemployment rate has been 5.0%
following the pattern of both the U.S. and
Ohio. The trends for all three have been 4.5%
similar, although the NEO rate more closely
4.0%
follows that of Ohio than the U.S. The
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
slowing economy over the last year has
2002 2003 2004 2005 2006 2007
led to a leveling of the improvement trend
at all levels.
NEO 16 Ohio U.S.
Source: Ohio Labor Market Information (LAUS Data)
Total Employment Is the Highest in the Last Six Years
This chart shows the total jobs in
Northeast Ohio Total Employment Northeast Ohio without seasonal
adjustment. Looking at the history for
each quarter makes it easier to see
2.08
year-to-year comparisons. The overall
2.06 trend also illustrates the seasonal
pattern in employment. Total jobs
2.04
usually are highest in Q3 and
2.02
(Millions)
lowest in Q1.
2.00
For all of 2007, the employment
1.98
levels for each quarter have been
1.96
above or generally equal to the same
1.94 quarters in 2006. The full year of 2007
2002
2003
2004
2005
2006
2007
2002
2003
2004
2005
2006
2007
2002
2003
2004
2005
2006
2007
2002
2003
2004
2005
2006
2007
outpaced 2006 as the highest annual
employment in the last six years.
Q1 Q2 Q3 Q4
The seasonal decrease in total
employment from Q3 to Q4 2007 was
Source: Ohio Labor Market Information (LAUS Data)
the smallest in recent years, a good
sign for the resilience of the Northeast
Ohio economy.
6. Modest Growth Expected Northeast Ohio: Real GRP
Billions (2006 Dollars)
to Continue in 2008 $180
1.0%
0.3%
0.7%
Northeast Ohio is seeing its sixth consecutive year of 2.6% 1.1%
$170
1.8%
growth and has grown in 14 of the last 15 years. The 1.2% 0.3%(-1.9)% 1.2%
2.6%
$160
anticipated real GRP for 2008 has been added to the 4.8%
chart, and at the time of this printing, we expect modest 3.0%
$150
3.8%
growth to continue. 5.1%
$140
0.3%
The 2007 number was adjusted down as was 2006. $130
This data comes from Moody’s Economy.com, which $120
continues to revise its estimates. Even now, 2007 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
remains an estimated number. It comes as no surprise Real GRP Average Annual Growth = 1.9%
2007 was adjusted down, as we know the economy
weakened at the end of the year. The gap between the Source: Moody’s Economy.com
Average Annual Growth trend line and the 2007 bar is
representative of softness in both the national and local economies.
About Team NEO
Ashtabula
Lake
Team NEO markets Northeast Ohio to attract business investment in targeted
industry clusters. The organization is a joint venture of the largest metro chambers,
Cleveland Geauga
representing 16 counties and their 4 million people. Team NEO serves as a central
Cuyahoga
resource, informing and serving those considering investment in Northeast Ohio
Trumbull
Lorain
and is a co-founder of the Cleveland Plus™ Marketing Alliance, a coalition to drive
strategic, long-term marketing for Northeast Ohio. For more information, Summit Portage
Youngstown
visit www.teamneo.org. Medina Akron
Mahoning
Ashland
Data Sources: Team Northeast Ohio uses a number of data sources for the Regional Economic Review.
Wayne Columbiana
Canton
One of the primary sources is the Moody’s Economy.com (www.economy.com) regional modeling system.
Richland Stark
This firm is the leading independent provider of economic, financial and industry research and data that
specializes 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 Carroll
and are summarized into the Team NEO regional footprint. It is important to understand data provided by
Cleveland Plus 16-County Region
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 is 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 (www.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 multifamily permits, as well as their values.
737 Bolivar Road, Suite 2000, Cleveland, Ohio 44115 This report made possible through the generous support of
888.NEO.1411 • www.teamneo.org • www.clevelandplusbusiness.com Charter One Foundation.