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Connecticut Economic Digest: February 2001 issue
State Wholesale Trade Examined | Business Openings and Expansions | Industry Profile: Security and Commodity Brokerages | Industry Clusters | Housing Update

State Wholesale Trade Examined
By Kolie Sun Chang, Senior Research Analyst

Wholesaling is an important sector of the State's economy. The 1997 Economic Census estimated sales in Connecticut of more than $76 billion. More than 60 percent of these sales were of wholesale, nondurable goods. The remaining sales came from wholesale, durable goods. This sector is comprised of establishments engaged in wholesaling merchandise, generally without transformation, and rendering services incidental to the sale of merchandise.

Employment

In the early 1990s, wholesale trade employment in Connecticut declined sharply (10,720 jobs were lost, or 12.5 percent) due to the recession. An upward trend in employment began in 1994 and the sector regained 8,340 jobs. By 1999, wholesale trade had 84,380 jobs, accounting for 5.8 percent of the State's total private employment. This sector has the fifth highest level of employment in Connecticut after services, retail trade, manufacturing and finance, insurance and real estate (FIRE). Within wholesale trade, groceries and related products; industrial machinery and equipment; drugs, proprietaries, and sundries; and computers, peripherals and software are the major industries. Combined, these industries had almost 24 percent of the sector's employment. Nationally, wholesale trade employment rose 13.4 percent from 1990 to 1999. The New England region had a 4.5 percent gain, while Connecticut lost about 1.9 percent of its wholesale trade jobs during the same period.

Establishments

Most of Connecticut's wholesale trade firms are small, with an average of 14 employees. The 1998 County Business Patterns reported there were 5,242 wholesale trade firms in the State. Eighty-five percent of them employed less than twenty employees. Fairfield County boasted the largest number of establishments with 1,758 firms, followed by Hartford County with 1,346, and New Haven County with 1,289. These three counties combined had 84 percent of the wholesale firms in the State.

Gross State Product

In terms of Gross State Product (GSP), which measures the value-added component of the production of goods and services in the economy, Connecticut wholesale trade contributed $9.982 billion to the economy, or 7.2 percent of total GSP in 1999. Compared to the national share of eight percent, the State's wholesale trade sector was slightly smaller. The sector's GSP grew 56 percent from $6.385 billion in 1990 to $9.982 billion in 1999, while the State's total GSP increased 53 percent from $98.337 billion to $150.297 billion during the same period.

Productivity

Generally, Connecticut is known for having one of the most productive work forces in the nation. Productivity is measured by output per worker, and defined as a ratio of total output to total workers. The State's total private industry average output per worker was $72,998 in 1999, which is 23 percent higher than the national average of $59,571. This confirms the opinion that our workforce is more efficient and more productive than the national average.

As the chart on the front page shows, among all industrial sectors, workers in Connecticut's wholesale trade sector ranked second highest in productivity at $111,574, while FIRE ranked first. Wholesale trade also showed 4.8 percent growth in productivity between 1990 and 1999, the third highest growth rate behind FIRE (6.9 percent) and manufacturing (5.4 percent).

Wages

According to the Connecticut Department of Labor, wholesale trade wages were $26,905 in 1990 and went up to $56,836 in 1999, an increase of 111 percent. Workers in the petroleum products, coal and other minerals and ores, and computers, peripherals and software industries are the highest paid within the sector, with annual salaries of $160,088, $125,257 and $100,569 respectively. The lowest average wage of $29,172 was paid to the workers in the used motor vehicles parts industry.

Conclusion

In summary, based on employment, establishments, output, productivity, and earnings data, the wholesale trade sector enjoys the status of a significant contributor to the State's economy. As the second highest ranking industry in terms of productivity, the wholesale trade sector provides a boost to overall statewide productivity. Although the wholesale trade sector may not be the industry that puts Connecticut "on the map," it is nevertheless one that measurably influences other industries that make up today's dynamic Connecticut economy.


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Business Openings and Expansions
By Joseph Slepski, Research Analyst

Connecticut welcomed many new businesses and saw the expansion of other enterprises during the past year. Business openings and expansions, as well as layoffs and shutdowns, that are published in various news media are compiled monthly by the Connecticut Department of Labor's Office of Research (e.g. the cover of the December 2000 issue is shown below). Particularly notable in "Business and Employment Changes Announced in the News Media" was the expansion of retail chains in the State. One of these retailers was McDonald's, which opened a new restaurant in Plainville. Wal-Mart opened stores in Norwalk and Rocky Hill and will open new ones shortly in Bristol, Southington and Newington. Applebee's, a nationwide chain of restaurants, moved into Connecticut with locations in Waterford, Torrington, and Plainville.

Old Navy, a clothing store, opened in Plainville and Waterford. Raymour and Flanigan opened a furniture store in North Haven. The Hops restaurant chain opened at locations in Newington, Manchester and Waterbury during the past year. Craft stores were represented as Michael's and A.C. Moore opened stores in Stamford and New London. A new Home Depot opened in Derby on the site formerly occupied by the Farrel Corporation. Two retail giants finally made it to Connecticut in 2000 as Kohl's has opened or will be opening stores in Norwalk, New Haven, Wallingford and Plainville. Target opened stores this past year in Manchester, New Britain and Waterford.

Some may argue that too much attention is being paid to a relatively small segment of the economy. This, however, is not necessarily the case. Some of the large retail chains previously mentioned employ upwards of 300 people. This means that thousands of jobs have come into Connecticut in the past year alone.

Other companies in other industries have also opened up or expanded in the last year. The former Baskin-Robbins plant in Southbury is now the home of Kan-Pac, a manufacturer of frozen desserts. A former warehouse in Groton is now a maintenance facility for Amtrak. FCT Electronic, which manufactures electronic connectors, has opened their first United States plant in Bristol. Increased business has led Southwest Airlines to expand their staff in Windsor Locks. New financing has led to an expansion at Sirrocco Systems in Wallingford, a maker of communication equipment. Achillion Pharmaceuticals, a new biotechnology firm has opened in New Haven. A decision to sell insurance in Connecticut has led to many new jobs at State Farm Insurance. Permasteelia Group, a European company that makes building exteriors, has opened their first United States location in Windsor. Kenetec, a developer of data systems, has expanded their operations in Naugatuck. The entertainment sector shared in the expansion as the Crown Theater chain opened a seventeen-screen complex in Hartford.

These are only a few of the business openings and expansions that occurred during the past year. These events more than offset the closing of Bradlees stores and the layoffs at the Pratt & Whitney and Hamilton Sunstrand manufacturers, contributing to the growth of more than 16,000 jobs in the State during 2000.

Business and Employment Changes Announced in the News Media, published monthly, is available on the Internet at http://www.ctdol.state.ct.us/lmi/publctn.htm. To request a copy or to be placed on the mailing list, please call the Office of Research at (860) 263-6275.

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INDUSTRY PROFILE: SECURITY AND COMMODITY BROKERAGES
By Jungmin Charles Joo, Associate Research Analyst

Introduction

Employment and wages in the security and commodity brokerage industry have increased considerably during the last decade in Connecticut. Despite its relatively small share of employment, the impact of this industry on the State's economy is significant. Its average yearly wage ($204,500 in 1999) is the highest of all the industries in the State.

Description

The security and commodity brokerage industry includes establishments engaged in the underwriting, purchase, sale, or brokerage of securities and other financial contracts on their own account or for the account of others. It also includes exchanges, exchange clearinghouses, and other services allied with the exchange of securities and commodities.

Establishments

While the number of total private sector businesses increased seven percent from 1989 to 1999, the number of firms in the security and commodity brokerage industry more than doubled, from 624 in 1989 to 1,360 in 1999 (See table). Particularly, the number of investment advice establishments tripled since 1989.

Employment

Total private industry employment in 1999 was still slightly lower than ten years earlier. However, the security and commodity brokerage industry added over 7,000 jobs (+120%) between 1989 and 1999. Except for 1991, employment in this industry grew every year during the nineties (See chart), fueled by low interest rates and the dramatically rising number of retirement investments in the stock market by many baby boomers. Security brokers and dealers account for over half the industry jobs, but the fastest growth was seen in the investment advice sector. Most of the security and commodity brokerage firms (60%) and jobs (70%) are located in Fairfield County, followed by Hartford County.

Wages

Over the 1989-1999 period, the average annual wage per worker in the security and commodity brokerage industry grew 150 percent, while the overall private sector's rose by 58 percent. With the exception of declines in 1991 and 1994, wages climbed steadily, with the biggest growth experienced in 1992. The investment advice sector commanded the highest annual pay of $269,380 in 1999, which also grew the most from 1989, by 204 percent. Employees of security and commodity brokerages working in Fairfield County earned an average of $241,000 in 1999, the only county to far exceed the statewide average wage.

Outlook

Barring any drastic changes, funds flowing into the stock market and the demand for security and brokerage services are expected to lead to continued growth of this industry in the State. The Connecticut Department of Labor projects that the industry employment will increase to 18,538 by 2008.

For further information on the security and commodity brokerage industry or other industry, visit http://www.ctdol.state.ct.us/lmi/lmidata.htm, or contact the Connecticut Department of Labor's labor market information unit at (860) 263-6275 for a copy of free publications.


Connecticut Security and Commodity Brokerage Industry Covered Establishments, Employment, and Wages 1989 and 1999, Annual Averages

Establishments

Employment

Wages

Industry Code. Description

1989

1999

89-99
%Chg

1989

1999

No.

89-99 Chg%

1989

1999

89-99% Chg

Total Private Industries

97,168

103,512

6.5

1,455,638

1,444,230

-11,408

-0.8

$27,373

$43,195

57.8

62. Security & Commodity Broker

624

1,360

117.9

6,240

13,694

7,454

119.5

$82,105

$204,564

149.1

6211. Security Brokers & Dealers

302

515

70.5

4,170

8,710

4,540

108.9

$72,769

$184,445

153.5

6221. Commodity Brokers & Dealers

25

41

64.0

799

586

-213

-26.7

$125,984

$232,239

84.3

6231. Security & Commodity Exchanges

n

n

n

n

n

n

n

n

n

n

6282. Investment Advice

259

784

202.7

1,164

3,703

2,539

218.1

$88,628

$269,380

203.9

6289. Security & Commodity Serv. NEC

21

16

-23.8

108

211

103

95.4

$47,595

$121,637

155.6

n = nondisclosable


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Industry Clusters
Software/IT Success

Year 2000 saw numerous successes in the Software/Information Technology cluster. The Greenwich to Meriden corridor along the Merritt and Wilbur Cross parkways was dubbed "Silicon Parkway" after an explosion in technology companies there in the State. Not to be outdone, the arrival of eCharity.com in Hartford triggered similar attention in the "Insurance" capital. 

The State was ranked fifth on a measure of its high-speed Internet access. There are high-speed service subscribers in more than 80 percent of Connecticut zip codes, placing Connecticut in a tie with Massachusetts and ahead of California, New York and Texas. 

According to the same joint study of states by the American Electronics Association and the NASDAQ Stock Market, the State also ranked fifth highest in wages for technology workers and 11th in the percentage of residents working in the high-tech field. 

Finally, the annual survey by the Connecticut Business and Industry Association (CBIA) found that 54 percent of small and mid-sized companies are using the Internet, while another 15 percent plan to launch a Web site in 2001. The same survey determined that 72 percent of companies are confident that Connecticut is a good place to do business; that's up from 42 percent in 1994. 

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Housing Update
December 2000 Housing Permit Activity

Commissioner James F. Abromaitis of the Connecticut Department of Economic and Community Development today announced that Connecticut communities authorized 598 new housing units in December 2000, a 7.7 percent decrease compared to December of 1999 when 648 units were authorized.

The Department further indicated that the 598 units permitted in December 2000 represent a decrease of 30.7 percent from the 863 units permitted in November 2000. The year-to-date permits are down 13.7 percent, from 10,794 through December 1999, to 9,311 through December 2000.

"The 13.7 percent drop in permits for 2000 reflects the overall slowdown of the economy," said DECD Commissioner Abromaitis. "While lower than the preceding three years, the 9,311 total is substantially higher than those recorded during the recessionary period of the early '90s."

Nine out of ten labor market areas demonstrated decline in new housing authorization compared to a year ago. Only the Stamford Labor Market Area showed a gain in 2000. At year-end, Stamford led all Connecticut communities with 571 units, followed by Danbury with 346 and Hamden with 262.

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Published by the Connecticut Department of Labor, Office of Research
Last Updated: October 30, 2002