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Connecticut Economic Digest: November 1998 issue
Employment And Wages: Peak To Trough To Present | The Danielson Area: On A Fast Recovery Track | Industry Clusters | Housing Update | Is The Connecticut Economy Teetering On The Brink?

Employment And Wages: Peak To Trough To Present (Nov 98 Article)
By J. Charles Joo, Research Analysts

This article briefly highlights the changes in the State's annual average covered employment and wages (from the ES-202 report, a compilation of employment and wages data from employers subject to State unemployment insurance laws) by major industry division between the peak (1988), trough (1992), and present (1997) years. The complete data by two-digit Standard Industry Classification (SIC) is downloadable in Excel format


Despite the past recession, services sector jobs grew nearly three percent, as Connecticut's employment dropped almost ten percent from 1988 to 1992. Then from 1992 to 1997, this rapidly expanding industry's employment rose an impressive 23 percent and now makes up almost one third of the total payroll jobs in the State. The largest services industry to help fuel this explosive job growth was business services, which added over 30,000 workers during the recovery. As far as wages are concerned, the services industry remained as the second lowest-paid industry at $654 per week last year.

Transportation & Public Utilities (TPU):

This industry division declined during the recession, but then expanded during the recovery and is now surpassing its 1988 employment level. The Communications sector contributed much of the job losses between 1988 and 1992. Gains in the local passenger transit and air transportation industries helped the sector to get back on course.


The construction industry also declined during the recessionary years and then rose, but did not quite return to its peak employment level of 1988. As of 1997, jobs in the industry were still 31 percent lower than ten years earlier. Special trade contractors have made the strongest comeback, adding 23 percent more jobs to the industry's payrolls since 1992.

Retail Trade:

This industry also declined since 1992, losing close to 20,000 jobs, or seven percent. The heaviest job losses were reported in general merchandise stores, auto dealers & service stations, and apparel & accessory stores. The retail industry group had the lowest wage rate of major industry divisions at $356 a week in 1997.


Despite local governments hiring over 5,000 new workers since 1992, the significant drops in federal and state> government workforces halted any meaningful rebound in overall government employment.


The manufacturing sector, which made up 23 percent of all employment in 1988, fell to a 17 percent share, losing close to 100,000 jobs by 1997. Most of the decline came from transportation equipment, industrial machinery & computer equipment, and electronic equipment manufacturers. Moreover, transportation equipment manufacturing firms shed more jobs during the recovery than during the recessionary period.

Finance, Insurance, & Real Estate (FIRE):

This sector also suffered an enormous job loss, over 20,000 since 1988. The industry realignment and restructuring of many banks and insurance carriers contributed to a 14 percent drop in the FIRE employment level. Despite this, a great increase in demand for investment services spurred a hiring and opening frenzy of security & commodity brokers and holding & other investment offices throughout the State. The FIRE industry as a whole had the highest average weekly wage, at $1,254, of all of the major industry groups.

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The Danielson Area: On A Fast Recovery Track (Nov 98 article)
By Noreen Passardi, Economist

After losing more than seven percent of the jobs during the last recession, the Danielson Labor Market Area is now on a fast recovery track, its employment growing by 13 percent, or 2,300 new jobs from 1992 to 1997. As the chart below shows, this job growth rate was much higher than the statewide average of six percent. The Area's unemployment rate also dropped from a high of 9.3 percent in 1992 to 6.9 percent in 1997.

Nestled in the upper most northeast corner of Connecticut, Danielson is the State's second smallest Labor Market Area, ranked by number of jobs. It encompasses twelve quiet rural towns within which nearly two percent of the State's labor force resides, and nearly 1.3 percent (20,700 in September 1998) of the State nonfarm jobs are located.

Looking at annual averages, during Connecticut's recession years (1989-1992) the Danielson area lost 1,400 jobs (-7.3%), with employment dropping to 17,800. The manufacturing industry shed 1,000 of these jobs. Then from 1992 to 1997, the region regained 2,300 jobs, a 13 percent increase. Manufacturing, retail trade, and services each added 700, 700, and 500 jobs, respectively. By 1997 the LMA had surpassed its pre-recession employment level by 900 jobs.

Currently, jobs in the Area have grown by nearly two percent (+400) over the past year (see page 16). These gains have been registered in the construction, manufacturing, services, and government sectors.

The future looks promising for the region with the expected arrival of Automatic Rolls of New England; a bun baker for McDonalds', which is moving into Killingly early in 1999 with an employment need of 130 people. This should help the town whose unemployment rate last year was the highest in the Area at 9.6 percent. Improvements to Route 6 would open the region up to further possibilities.

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Industry Clusters
CURE Leads Bioscience

Connecticut United for Research Excellence, Inc.(CURE) formally forged a partnership with the Department of Economic and Community Development to stimulate the growth of the State's emerging bioscience industry cluster. The partnership will define long-term factors affecting the biotechnology industry, including workforce development, and publicizing and promoting the industry. The partnership was announced in the annual CURE meeting October 7, 1998. The State's $150,000 in start-up funds is being matched by $350,000 through CURE.

Last year employment among Connecticut-based biotechnology companies grew by more than 40% topping 9,000, with a 37% increase in research and development spending alone. R&D expenditures now exceed $1.8 billion. In 1990, CURE was founded as a not-for-profit coalition of education and research institutions; healthrelated corporations; health care systems; professional societies, businesses and other voluntary health care organizations. CURE membership totals more than 80.

According to CURE, more than 1,100 jobs last year were created at pharmaceutical, academic and biotechnology companies and institutions in Connecticut. CURE claims that for every new job created in biomedical research, 2.5 jobs are added in the general economy. The total impact on the Connecticut economy is nearly 3,000 indirect jobs that were supported due to the growth of the biomedical research sector.

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Housing Update
September Housing Permits Up 22.1%

Commissioner James F. Abromaitis of the Connecticut Department of Economic and Community Development announced that Connecticut communities authorized 984 new housing units in September 1998, a 33 percent increase compared to September of 1997 when 740 were authorized.

The Department further indicated that the 984 units permitted in September 1998 represent an increase of 0.1 percent from the 976 units permitted in August 1998. The year-to-date permits are up 22.1 percent, from 7,019 through September 1997, to 8,570 through September 1998.

"Housing permits continue to show remarkable growth through three quarters," Commissioner Abromaitis said. "It is also significant that housing starts continue to increase in most of Connecticut's major cities, including Bridgeport, Hartford, New Haven, and Stamford compared with the same period last year."

Reports from municipal officials throughout the state indicate that New London County with 83.6 percent showed the greatest percentage increase in September compared to the same month a year ago. New Haven County followed with a 50.8 percent increase.

Hartford County documented the largest number of new, authorized units in September with 225. New Haven County followed with 196 units and Fairfield County had 194 units. East Lyme led all Connecticut communities with 65 units, followed by Wallingford with 42 and Glastonbury with 41.

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Is The Connecticut Economy Teetering On The Brink?

The Connecticut coincident employment index continues to depict a rosy picture of the Connecticut economy. The coincident index has experienced significant upward movement for about three years, after growing more slowly during the initial phase of the current expansion. The Connecticut leading employment index also has been on an upward trend, albeit with less strength and with more ups and downs. This index, however, has most recently begun to paint a darker, less-rosy vision of the future.

The leading index, a barometer of future employment activity, dropped for the third consecutive month with the release of (preliminary) August data. The June decrease in the leading index was largely a result of the higher initial claims for unemployment insurance. The July fall emerged as a result of lower Hartford helpwanted advertising and a higher short-duration unemployment rate. The most recent August drop reflected higher initial claims for unemployment insurance, although still fewer in number than in June, and lower housing permits.

A reversal in the direction of movement of the leading index for three consecutive months generally precedes a change in the direction of the economy by six-totwelve months. As a consequence, the August data must cause one to reflect on the sustainability of the current expansion. Although three consecutive downward movements in the leading index do not always precede a downturn in the economy, they frequently do. So we shall carefully follow future movements of the leading index in this column.

The coincident index, a barometer of current employment activity, on the other hand, reached another new peak, suggesting current economic conditions remain strong. The month-bymonth increase in the coincident index resulted from increase in both nonfarm and total employment. The unemployment rate was unchanged while the insured unemployment rate rose by a small amount on a month-overmonth basis.

In summary, the coincident employment index rose from 90.0 in August 1997 to 96.5 in August 1998. All four index components, once again, 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 fell slightly from 89.9 in August 1997 to 89.4 in August 1998. Three of the five index components sent positive signals on a yearover- year basis with a lower shortduration (less than 15 weeks) unemployment rate, higher Hartford help-wanted advertising, and a longer average work week of manufacturing production workers. The other two components sent negative signals on a yearover- year basis with higher initial claims for unemployment insurance 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]. Campus]. Kathryn E. Parr and Hulya Varol [(860) 486-3022, Storrs Campus] provided research support.

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Last Updated: October 15, 2002