Beige Book: Slight growth in business activity
Aggregate business activity has edged back to a slight pace of growth, according to the January 2020 Beige Book, published by the Federal Reserve Bank of Philadelphia.
Employment continued to grow slightly during the current Beige Book period, with about two-thirds of the nonmanufacturing firms and four-fifths of the manufacturers reporting no change in staff. The report said a “lack of available labor has constrained production and expansion plans … [and] staffing firms reported continued demand for new job placements from clients but an insufficient supply of qualified labor to fill the orders. Turnover rates are rising, and nonstandard shifts are most difficult to fill.”
Among the sector reports, financial firms reported modest growth in overall loan volumes (excluding credit cards) on a year-over-year basis and credit-card lending also edged back to a modest pace. Homebuilders reported a pickup to modest growth in contract signings, noting ongoing strength in 55-plus communities and renewed interest in the luxury market. Apartment and condo construction has helped offset the difficulty of building affordable single-family units. And existing home sales continued to decline moderately on a year-over-year basis across most local markets.
Meanwhile, in Delaware …
Delaware’s seasonally adjusted unemployment rate increased by one-tenth of a percentage point to 3.9% in December, the first time since April 2018 that it’s risen to that level. According to the Delaware Department of Labor’s Monthly Labor Review.
Delaware’s unemployment rate has been rising since June when the rate was 3.2%, although the state’s average unemployment rate of 3.5% is the lowest average annual unemployment rate since 2007.
Delaware’s total non-farm jobs showed a net gain in 2019 of 6,100, a rise of 1.3%. The Education and Health industry had the largest employment increase with 2,200 jobs, an increase of 2.7%. This was followed by Leisure and Hospitality, with an increase of 1,800 jobs, up 3.7%. The Professional and Business Services sector lost 1,600 jobs in 2019.
Hotel occupancy rates improve in 2019
Delaware saw a 2% increase in occupancy rates in 2019 over 2018, with Sussex County leading the way with 3.9% growth and Kent County at 2.9%, according to data provided by the Delaware Hotel-Lodging Association. That compares with no growth nationally and a 0.4% decrease in the South Atlantic region.
That said, all three Delaware counties reported occupancy rates below 65% in 2019, a figure the association told the DBT in December is normally the break-even points for hotels.
Revenue per Available Room (RevPAR) increased 3.2% across the state in 2019 to $75.02, with Sussex County showing the most growth at 4.6%. December numbers, however, showed a 6.4% decrease across the state, with New Castle County taking the biggest hit at 8%. Average RevPAR levels in Delaware in 2019 ranged from $62.75 in Kent County to $81.62 in Sussex.
Average daily rates increased 1.2% across the state in 2019, with prices ranging from $111.71 in Kent County to $141.70 in Sussex. New Castle saw the biggest growth at 1.7% to $119.13.
The hotel association said 89 of 140 Delaware hotels participated in the survey.
An outsider’s view of Delaware
Delaware’s real GDP growth rate by industry reveals “an anemic long-term trend,” according to the Mercatus Center at George Mason University.
“While a comparison between Q1 2018 and Q2 2019 shows an overall 3.4% real GDP growth rate (including 5.2% growth in manufacturing, 9.9% growth in wholesale trade, and 4.3% growth in finance and insurance), a comparison between Q1 2019 and Q1 2007 shows a much more modest 0.4% average annual real GDP growth, with -2.5%, -1.2%, and -2.3% average annual growth rates in manufacturing, construction, and whole trade, respectively,” the authors said.
They added that a review of Delaware’s numbers reveal an interesting divide.
“Delaware does extremely well in measurements of globalization and the knowledge economy (number of IT jobs, manufacturing value added, high-wage traded services, foreign direct investment, industry research and development and patent ownership),” they said. “However, for a state so high in the total rankings, it does shockingly poorly in measurements of dynamism and invention (non-industry research and development, patent production, IPOs, and venture capital. The lack of major well-known universities or university-based research centers might explain some of this, but the low level of dynamism also challenges the common conception of Delaware as a business-friendly state.”
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