The North Carolina State Index, a forecast of the economy’s direction four to six months ahead, declined by a modest 0.4% in August, continuing a downward trend that began in mid-2014. However, the reduction in the Index should be characterized as an “easing” rather than a “tumble”, suggesting no near term threat of an recession.
Interestingly, while the national index, jobless claims, and building permits all worsened during the month, both manufacturing indicators (hours and earnings) increased, perhaps meaning the adverse impact of the stronger dollar has been absorbed. So, economic growth in the state should continue, but the pace of improvement may be disappointing.
About the Index: The Index is composed of five components: the Economic Cycle Research Institute (ECRI)’s Weekly Leading Index (http://www.businesscycle.com/resources/), North Carolina initial claims for unemployment benefits, North Carolina building permits, average weekly hours of work of all North Carolina employees in manufacturing, and average weekly earnings of all North Carolina employees in manufacturing.
All data are seasonally-adjusted and modified for differences in prices levels where appropriate. Data are from the U.S. Bureau of Labor Statistics, the U.S. Census Bureau, and ECRI, whose permission to use their Weekly Leading Index is greatly appreciated. All calculations are done by Dr. Michael Walden.
Comments should be directed to Dr. Michael Walden at michael_walden@ncsu.edu.
