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Connecticut Economic Digest: June 1997 issue
Housing Permits Reviewed | Job Outlook Improving for New Haven Area | Housing Update | The Twin Peaks of the Current Recovery

Housing Permits Reviewed
By Kolie Sun Chang, Associate Research Analyst

The Department of Economic and Community Development (DECD), the lead agency in matters related to housing, economic development and community development in Connecticut, monitors housing growth, analyzes trends, and collects data concerning the public and private sectors of the housing market. DECD annually publishes statistics on housing production in the State and distributes a monthly update to all interested parties.

Beginning in 1996, the Bureau of the Census changed the reporting forms. Towns no longer report on permits for demolitions, additions, and alterations or distinguish between privatelyowned and publicly-owned units. As a consequence, this information will not be included in the analysis. In some cases, however, towns did report demolitions and the information is included.

Total Housing Production

In 1996, a total of 7,817 housing units were authorized to be added to the housing unit inventory in Connecticut. Compared with 1995 production, 557 fewer units were authorized in 1996, which represents a 6.7% decrease from the previous year. The first five months of 1996 showed consistent increases in permits issued, peaking in May, when 902 new units were authorized. The permit activity stabilized from June to October and showed decreases for the remainder of the year.


A comparison of counties showed that Hartford county towns issued 1,809 permits for new residential construction, the highest number for any county in 1996. Fairfield and New Haven counties followed with 1,747 and 1,479 permits issued respectively. Litchfield, New London and Tolland counties showed an increase in permit activity in 1996 compared to 1995.


Stamford led the state in net gain during 1996 with an increase of 286 housing units. This figure is down 50 percent from the town's 1995 total of 575 units. Newtown ranked second in 1996, issuing permits for a net gain of 199 units. This was a decrease of 4.8 percent from the municipality's 1995 number of 209. Southington finished third in 1996, issuing permits for a net gain of 179 units. This figure represented a 64.2 percent increase from last year. There are four Connecticut municipalities that recorded a net loss in housing units. The largest decline occurred in Bridgeport with a net loss of 129 units, followed by Mansfield (-15 units), Hartford (-9 units), and New Britain (-8 units).

Net Gain

Connecticut's inventory of residential units was estimated to be 1,366,410 at the end of 1996. This estimate was based on a net gain of 45,560 housing units authorized from January of 1991 through December of 1996, added to the base of 1,320,850 housing units reported in the 1990 census.

Construction Value

The estimated value of total residential activity in 1996 was $901 million, down 32 percent from the 1995 level of $1.32 billion. The estimated value of authorized one-family detached construction in 1996 was $826 million, or an average of $127,171 per house. The total value was down 2.7 percent from the $849 million value in 1995. The average showed an increase during 1996, up 0.14 percent from the $126,991 per house in 1995.

Average Annual Growth Rate

Average annual growth rates (AAGR), which show the percentage change from year to year, are calculated for the U.S., its regions, and the State of Connecticut in the table below. From 1980 to 1996, only the Midwest had a positive growth of 0.65 percent. The U.S. experienced a less than one percent decline of 0.38 percent. The Northeast region experienced a 0.97 percent decline. However, Connecticut housing permits fell 2.11 percent on an average annual basis.

Connecticut vs. U.S. Housing Production

While Connecticut's 1996 total housing permits decreased 6.7 percent from 8,374 to 7,817 units, U. S. total housing permits increased 7.6 percent from 1.31 to 1.41 million units in 1996. Connecticut and U. S. historical housing permit patterns can be compared using an index based on 1980 (1980 = 1.00) shown in the figure on the front page.

Connecticut annual permits peaked in 1986 at 30,163 units when the index stood at 2.74. This coincided with the U.S. peak since 1980 when U.S. annual permits stood at 1.76 million units in 1986. The 1980s were a period of rapid housing stock expansion for Connecticut. As the index clearly shows, the Connecticut housing permit index far outpaced the U.S. permit index after the mid-80s. Since then, the index has leveled off.

Current housing permit activity as measured by the 1980 = 1.00 index, contrary to popular perception, does not diverge much from U.S. housing permit activity. Although the Connecticut 1996 index level is still below the national index level, there is a much closer alignment of the Connecticut and U.S. indices after 1990 than is commonly believed. The dramatic decline since the 1989-92 "great recession" has not been reversed.


In summary, the DECD's latest annual report published in May 1997 finalized the annual data for 1996. This report showed total housing production of 7,817 units. This was a revision of the 7,714 annual total reported in the February Economic Digest for 1996. Furthermore, the DECD began to report on a monthly basis the same data that is verified and released by the Census Bureau beginning with the March data in the May issue of the Digest. The full 1996 Annual Housing Production and Permit Authorized Construction report is available upon request by calling (860)566-1887.

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Job Outlook Improving for New Haven Area
By J. Charles Joo, Research Analyst

A fter dropping almost 10 percent from its peak employment level during the recession years, the New Haven Labor Market Area's economy has been improving since 1992, having added 7,400 jobs by the end of 1996. During the past four years of economic recovery, the area's employment gains have made up 13 percent of the State's total new jobs. During the eighties, the New Haven LMA outperformed the State in terms of job growth, but was struck more severely during the last recession, trailing the State as a whole during five of the six years between 1990 and 1995.

The major industry groups that contributed to the New Haven LMA's employment increase since 1992 were services, retail trade and construction. The services industry created 10,400 jobs between 1992 and 1996, a growth of 14.0 percent, while jobs statewide grew by 13.8 percent. Most of the employment gain in the area occurred in the business services (such as software and internet services) and health services (skilled nursing and home health care) sectors.

The second largest job increase came in retail trade, with 1,700 new positions. This was almost in line with the State's 4.8 percent growth. The opening of the Factory Outlets in Clinton played a major role in retail's rapid job growth. The construction industry added 900 more jobs over the four year period, expanding almost twice as fast as in the State as a whole.

On the flip side, the region lost 3,300 manufacturing jobs between 1992 and 1996. The largest loss came from manufacturers of transportation equipment (such as United Technologies Corporation), trimming 800 of their local workforce. Still, manufacturing employment in the New Haven LMA was not as greatly affected as it was in the State overall. Some sectors, such as electronic component manufacturers have actually increased the number of their employees by 20.5 percent. Plus, there is other good news related to manufacturing in the area. For example, Allied Signal (electronics navigation equipment) is expected to relocate to Cheshire from Norwood, Massachusetts, creating 300 engineering, administrative, and manufacturing jobs some time this year. FireLite Alarms/Notifier of North Branford will be expanding, which will create opportunities for 100 to 200 more workers. When it comes to earnings, however, real manufacturing wages in the area have been declining since 1993, and workers have been paid at a lower rate than statewide.

Another major industry group that faced a shrinking payroll was Finance, Insurance, and Real Estate (FIRE). From 1992 to 1996 FIRE employers laid off 1,500 workers, affecting the New Haven area more harshly than in the State as a whole. Employment in the Transportation and Public Utilities sector, which includes Southern New England Telephone in the region, has been flat, while the State experienced 7.5 percent job growth. Government sector employment decreased by 2.8 percent during the same period in the New Haven LMA, but the State's rose 7.8 percent. (However, Indian tribal government employment is included in the State figure. Without it, statewide government employment would have risen nominally at best.)

Although the New Haven Labor Market Area's employment growth has been slower than the State's in recent years, the prospect for the region is promising. By September this year, Omni Hotel is expected to operate the former Park Plaza in New Haven after it undergoes a $23 million renovation which will add 250 jobs. Moreover, Williams Specialty Steel Inc., a new stainless steel plant, is to be built in New Haven, which will lift the manufacturing industry. Over the next two years, 3,000 construction jobs will be created to build the 250,000 square foot plant that will eventually add 350 permanent blue-collar jobs that pay $40,000 or more annually. This will also stimulate nearly 1,000 additional "multiplier" jobs in the region to serve the plant and its employees. Plus, if the Marketplace at Long Wharf Mall opens up in New Haven by year 2000, it would create thousands of new construction, retail, and services jobs in the process. All this will help the economy of the New Haven Labor Market Area to prosper into the next millennium.

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Housing Update
April: housing permits increase

The Connecticut Department of Economic and Community Development announced that Connecticut communities authorized 1,036 new housing units in April 1997, a 57% increase compared to April 1996 when 660 were authorized.

The Department further indicated that the 1,036 units permitted in April 1997 represent an increase of 14% from the 909 units permitted in March 1997, and that the year-to-date permits are up 49%, from 1,942 through April 1996, to 2,894 through April 1997.

Reports from municipal officials throughout the state indicate that Hartford County showed the greatest percentage increase in April compared to the same month a year ago: 150.6%, followed by Litchfield County with a 67.5% increase.

Hartford County documented the largest number of new, authorized units in April with 386. Fairfield County followed with 208 units and New Haven County had 163 units.

Manchester led all Connecticut communities with 194 units, followed by Farmington with 44, and Stamford with 34.

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The Twin Peaks of the Current Recovery

Both the Connecticut coincident and leading employment indexes, barometers of current and future employment activity, climbed to their respective peaks in the current expansion with the release of (preliminary) March data. The first quarter movements in the coincident index experienced a more rapid growth rate than has been the norm during the current expansion, increasing by 3.6 percent in these three months (or just over 15 percent on an annual basis). This acceleration in the movement of the coincident index, which we mentioned in last month's report, mirrors a similar pattern in this index last year at about this time.

Connecticut's leading employment index rose in both January and March, but remained unchanged in February. As such, the leading index continues to bounce around, as we have reported in this space in previous months. The leading index has still not moved in the same direction, either up or down, for more than two consecutive months since December 1994. It currently, however, has climbed to its peak in the current expansion.

The coincident and leading employment indexes continue to send signals consistent with a continuation of the current expansion. Except for the continuing lack of a clear upward movement in the leading index, no signs have appeared on the horizon indicating that the expansion may be in its final phase. Of course, Connecticut's economic vitality relies critically on the continued recovery of the national economy. Concerns about the Federal Reserve's recent attempts to head off inflationary pressures by applying the monetary brakes raise serious questions about the future of the national recovery. Connecticut's expansion will not likely continue for long after the national expansion heads south. But, as we noted in last month's story, our next recession may be much less severe than the last because of the restructuring and downsizing that Connecticut experienced during the late 1980s and early 1990s.

In summary, the coincident employment index rose from 83.2 in March 1996 to 89.2 in March 1997. All four index components continue to point in a positive direction on a year-over-year basis with higher nonfarm employment, higher total employment, a lower insured unemployment rate, and a lower total unemployment rate.

The leading employment index rose from 89.0 in March 1996 to 89.9 in March 1997. Three index components sent positive signals on a year-over-year basis with a lower short-duration (less than 15 weeks) unemployment rate, higher total housing permits, and lower initial claims for unemployment insurance. Hartford helpwanted advertising remained unchanged on a year-over-year basis while the lone negative signal came from a shorter average work week of manufacturing production workers.

Source: Connecticut Center for Economic Analysis, University of Connecticut. Developed by Pami Dua [(203) 461-6644, Stamford Campus (on leave)] and Stephen M. Miller [(860) 486-3853, Storrs Campus]. Kathryn E. Parr [(860) 486-3022, Storrs Campus] provided research support.

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Published by the Connecticut Department of Labor, Office of Research
Last Updated: October 15, 2002