County Trends Examined
By J. Charles Joo, Research Analyst

The federal-state cooperative ES-202 program compiles data from employers whose workers are covered by unemployment insurance (UI) laws. One report compiled quarterly is of business establishments, employees and wages by industry for each of Connecticut's eight counties. This article examines 1997 and 1998 annual average county data.

In 1998, Fairfield County experienced the largest job gain and averaged the highest wages, while having the largest number of establishments of all the counties in the State. Fairfield County, the home of almost one third of all businesses in the State, added 10,473 jobs over the year, or nearly a third of the total statewide job gains.

Among the eight counties in Connecticut, Litchfield County had the largest percentage increase in employment from 1997 to 1998, at 2.9 percent. The 2.6 percent employment gain in Fairfield County was also above the statewide increase of 2.3 percent.

Only Fairfield County's overall average annual wage, which grew by 6.5 percent to $53,176, was higher than the statewide average of $40,925 last year. Tolland County experienced the highest change in average annual wage among the counties, up 7.5 percent from 1997 to 1998. Average wages in these two counties increased more than the statewide average wage, which grew by 5.1 percent.

Below are brief county highlights. A table of county data by major industry division is on page 4.

Fairfield County

Fairfield County experienced the fastest growth in business establishments, at 3.6 percent in 1998. The largest share of establishments belonged to the services sector, which also added the largest number of new businesses from 1997 to 1998.

One out of every four jobs in Connecticut was located in Fairfield County. Most of the jobs were concentrated in the services sector, which also added the largest number of jobs, 5,674, an increase of 4.3 percent. The finance, insurance, and real estate (FIRE) sector added 2,666 jobs, a 7.4 percent growth. The manufacturing and wholesale trade sectors, however, experienced job losses from a year earlier.

In terms of wages, the FIRE sector's annual average wage per job was the highest at $114,126, and also grew the fastest at 10.6 percent from 1997 to 1998. In fact, Fairfield County had the highest wage rates of all the counties in all industries except government, for which Hartford County had the highest rate.

Hartford County

The number of establishments in Hartford County increased 2.2 percent last year. The largest number of new establishments was in the services and FIRE sectors. The largest share of the State's employment was in Hartford County, at almost a third of the total jobs in the State in 1998. The FIRE sector added the largest number of jobs from 1997, followed by services. The FIRE sector also commanded the highest annual wage rate of $56,660. Job losing industries over the year were wholesale trade, transportation, public utilities (TPU), and government.

Litchfield County

Litchfield County added 3.2 percent more business establishments last year. Its employment growth was the fastest of all the counties at 2.9 percent, mainly from the surge in the construction sector, with a 12.5 percent increase. All but the government sector experienced employment growth. The County's overall average wages, however, grew the slowest at 2.4 percent, mainly from the declines in the services sector by 1.1 percent.

Middlesex County

Even as the manufacturing sector lost some firms, Middlesex County gained 2.3 percent additional businesses between 1997 and 1998. Employment grew the slowest of all counties at 0.8 percent in 1998, dragged down mainly by the declines in FIRE and retail trade. Overall wages rose by 3.5 percent though, boosted by big pay hikes in the construction sector.

New Haven County

The number of establishments in New Haven County increased 2.9 percent, while employment rose 2.2 percent over the year. Services and retail trade were major contributing industries to the job growth. The TPU sector's wages climbed the fastest at 16.4 percent to $47,495 last year.

New London County

This county experienced the slowest growth in the number of new business establishments at 1.7 percent. Employment grew even slower at 1.1 percent over the year, with declines in the FIRE and retail trade sectors. The manufacturing sector's $54,277 was the highest annual wage of all sectors in New London County last year.

Tolland County

The number of establishments declined in the TPU and FIRE sectors, but rose 3.1 percent overall in the County. A rapid 12.5 percent employment increase occurred in construction, while retail trade suffered job losses of 5.4 percent. Tolland County's total average wage grew the fastest in the State at 7.5 percent last year, with a 13.5 percent increase in the retail trade sector.

Windham County

The number of establishments in this county rose 3.5 percent, while the job counts increased by 1.9 percent over the year. Wholesale trade jobs grew 24.3 percent, as the FIRE sector shed jobs by 2.7 percent. Annual pay grew by 2.5 percent, with the biggest increase of 5.6 percent in the TPU sector.

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Industry Clusters
Meeting Local Demand

Among the four competitive strengths of the "inner city" according to Harvard Business School Professor Michael Porter is "unmet local demand." Porter explains: "The consumer market of inner-city residents represents the most immediate opportunity for inner-city-based entrepreneurs and businesses. Despite low average incomes, high population density translates into a large local market with substantial purchasing power."

Examples of inner-city retail opportunity are numerous. Baltimore, Boston, Los Angeles, Atlanta, and Houston, as well as the Bronx and Harlem are all cited as examples. These are places where inner city retail benefits from high density, proximity to customers, and recognition of and adaptation to the fact that inner cities are distinct markets that demand uniquely tailored product configurations. Supermarkets, facing saturation in the suburbs, are launching successful new openings in many under-served inner cities. Even banks are increasingly making new investments in inner cities.

Porter's subsidiary - Initiative for a Competitive Inner City (ICIC) - is working collaboratively with research teams and State and local officials to define and identify inner city opportunities in Bridgeport, Hartford, New Britain, New Haven, and Waterbury. Connecticut is the first in the nation to simultaneously study the economic development potential of five cities statewide.

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Housing Update
June Housing Permits Up 2.2%

Commissioner James F. Abromaitis of the Connecticut Department of Economic and Community Development announced that Connecticut communities authorized 1,230 new housing units in June 1999, a 2.2 percent increase compared to June of 1998 when 1,203 were authorized.

The Department further indicated that the 1,230 units permitted in June 1999 represent an increase of 38.8 percent from the 886 units permitted in May 1999. The year-to-date permits are up 3.8 percent, from 5,313 through June 1998, to 5,514 through June 1999.

"The 1999 permit figures continue to point to a robust housing market," Commissioner Abromaitis said. "What is most impressive is the fact that, half way through 1999, year-to-date totals are solidly ahead of 1998 - the strongest year of the decade."

Reports from municipal officials throughout the state indicate that New Haven County with 78.8 percent showed the greatest percentage increase in June compared to the same month a year ago. Litchfield County followed with a 70.0 percent increase.

New Haven County documented the largest number of new, authorized units in June with 320. Hartford County followed with 269 units and Fairfield County had 218 units. North Haven led all Connecticut communities with 102 units, followed by Hamden with 73 and Avon with 61.

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Connecticut Economy Outlook Adrift in Summer Doldrums

The Connecticut leading and coincident employment indexes have marked time throughout 1999, drifting with no obvious trend. The Connecticut coincident index dropped slightly with the release of the (preliminary) May data and currently lies just above its December 1998 level. The Connecticut leading index also fell slightly with the release of the May data but lies just below its December 1998 level.

The coincident index, a gauge of current employment activity, did rise at a significant pace from early 1996 through late 1998, after lackluster growth in the early part of the current expansion. Whether the current breather is to be followed by future advances or declines only time will tell. Recent movements in the leading index, however, do not provide much of a clue about this issue.

The leading index, a barometer of future employment activity, has bounced around considerably during the last few years. On several occasions, this column posed the question of whether the leading index had begun to head south, signaling the future pullback of the Connecticut economy. So far, the movement in the leading index has only raised concerns about the future of the Connecticut economy. But, it has not yet given the dramatic changes necessary to call a reversal in the economy's most recent upward trend, which would signal a future retrenchment.

Just what factors will limit further increases in the coincident index? The insured and total unemployment rates may have difficulty falling much below their current 2.05 and 3.4 percent values, although they were somewhat lower at the last peak (i.e., 1.30 and 3.0 percent in early 1989). Thus, nonfarm jobs and total employment represent the possible sources of further increases in the coincident index. But as noted in this column before, the sluggish growth of the labor force may restrain upward movements in nonfarm jobs and total employment.

In summary, the coincident employment index rose from 95.7 in May 1998 to 99.2 in May 1999. Two components of the index point in a positive direction on a yearover- year basis with higher nonfarm employment and higher total employment. One component points in a negative direction on a year-over-year basis with a higher insured unemployment rate. Finally, the fourth component, the total unemployment rate, remains unchanged on a year-over-year basis.

The leading employment index fell from 92.0 in May 1998 to 89.9 in May 1999. All five index components sent negative signals on a year-over-year basis with a lower average work week of manufacturing production workers, higher initial claims for unemployment insurance, lower Hartford help wanted advertising, a higher shortduration (less than 15 weeks) unemployment rate, and lower total housing permits.

SOURCE: Connecticut Center for or Economic Analysis, University of Connecticut. Developed by Pami Dua [Economic Cycle Research Institute; NY,NY] and Stephen M. Miller [(860) 486-3853, Storrs Campus]. Kathryn E. Parr and Hulya Varol [(860) 486-0485, Storrs Campus] provided research support.

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