Worcester Economy Turns In Weak Second Quarter
The greater Worcester economy decreased at a 0.9 percent annualized rate during the second quarter of 2019 according to the latest update of the Worcester Economic Index (WEI). The WEI, which is included in the Worcester Economic Indicators report released each quarter by Assumption University Professor of Economics Thomas White, Ph.D., is an estimate of local economic activity based on recent Worcester area employment and unemployment data. The decline during the second quarter continues a slow contraction that began at the end of the first quarter.
“While the local unemployment rate hasn’t changed much over the past few months, there has been a decrease in the number of people with jobs. We usually see an increase in employment at the start of the summer due to seasonal hiring, but this year the household survey estimate of employment fell during the second quarter,” said Prof. White. “And after adjusting for seasonal variation both the household and payroll estimates were down, causing the drop in the Worcester Economic Index.”
In addition to updating the Worcester Economic Index, each issue of Worcester Economic Indicators provides a six-month forecast for the WEI based on four national leading indicators, recent WEI estimates, as well as its long-run trend. According to the June forecast, the Worcester Economic Index is expected to grow at a 1.5 percent annualized rate over the second half of 2019.
“The leading indicators used in the WEI forecast are currently offering conflicting signals. Financial market measures like the Conference Board’s Leading Credit Index, as well as the recent performance of the stock market are contributing to an above trend forecast,” said Prof. White. “While the interest rate spread is offsetting some of that, the Federal Reserve’s recent announcement of a cut in its target rate may reduce some of the drag that the interest rate spread is capturing.”
In addition, the report discusses two local leading indicators. Second quarter new business incorporations in the greater Worcester area increased about 4.9 percent since the second quarter of 2018, a positive signal. Statewide initial unemployment claims increased 3.1 percent from a year ago, which is a negative signal for the economy.
The next Worcester Economic Indicators report will be issued in November 2019. The full report is available here.