Indicators point to mixed economy

Real gross domestic product growth should be strong but not stellar; interest rates will likely rise but slowly; and job growth should continue but at an average pace, according to local and national economic experts.

All of that suits Nancy K. Cribbs just fine. The general manager for Integrated Solutions Group's Springfield location, 3555 South Ave., said she's very optimistic about 2006.

She's forecasting 10 percent growth in her Salina, Kan.-based company's $40 million annual revenues and said Integrated Solutions, a business-to-business information technology company, plans to add a location in northwest Arkansas and at least two employees in Springfield.

Cribbs' optimism is offset, though, by lukewarm survey responses from the National Federation of Independent Business and Manpower Inc.

In a November NFIB survey, 60.3 percent of Missouri small-business respondents said the state's business conditions were stable while 21.4 percent said conditions were improving at varying rates and 16.3 percent said conditions were deteriorating at varying rates.

According to Manpower Inc.'s latest Manpower Employment Outlook Survey, which has been conducted quarterly for 40 years in 470 U.S. markets, Springfield employers will hire at a slower pace in the first quarter of 2006. Survey results indicate 10 percent of Springfield employers will reduce their payrolls in the quarter while 10 percent will increase them.

“The Springfield area employment outlook is significantly softer than the fourth-quarter (2005) forecast when 27 percent of the companies interviewed predicted an increase in hiring activity,” Manpower spokesperson Sharon Walker said in a release.

Local employers in nondurable goods manufacturing say they plan to reduce their staffs while wholesale/retail and services respondents voiced mixed hiring outlooks. Hiring in construction, durable goods manufacturing, transportation, public utilities, finance, insurance, real estate, education and public administration should remain unchanged.

The national picture is better, according to the survey, with 23 percent of respondents planning to increase their staffs.

The indicators

The “significantly softer” local hiring expectations may not be as bad as they seem at first glance, though.

Springfield's even-keel economy - based on health care and education - already boasts a lower unemployment rate than the rest of the country or state. In November, Springfield's unemployment rate was 4.3 percent while Missouri's rate was 5.3 percent and the U.S. rate was 4.8 percent, according to the Missouri Department of Economic Development.

“We don't feel like things are great; most people don't … but then you look and see the unemployment rate's 5 percent,” said Missouri State University economics professor Tom Wyrick. “That says, 'You know, really we're doing better than we realize.'”

National job growth has rebounded from the 2001 recession by adding 4.5 million jobs since May 2003, according to E.R. Anderson, acting deputy under secretary for economic affairs for the U.S. Commerce Department. Anderson said the country added more than 2 million jobs in 2005.

Missouri gained 20,900 jobs in 2005 to reach 2.7 million employed, according to the Missouri DED. The Federal Deposit Insurance Corp. pegged Missouri's employment gains even higher, at 33,000 through the first nine months of 2005.

However, it's uncertain whether that trend will continue in 2006. A proven job-creation barometer - hours per week that production workers spend on the job - remained unchanged from 2004's level of 33.7 hours per week. More than 40 hours a week, Wyrick said, signals new hires are on the way.

Positive GDP

Job growth isn't the only big economic indicator. Gross domestic product - the sum of all goods and services produced within U.S. borders - plays an important role, too, Wyrick said.

GDP grew at a 4.1 percent clip in the third quarter of 2005, up from a 3.3 percent gain in the second quarter and a 3.6 percent gain over the last four quarters, according to the Commerce Department.

“When we start seeing … 4 percent or better growth then that is pretty solid,” Wyrick said. “You have to kind of thank your lucky stars every time you get a number that's more than 3 (percent) or 3.5 percent.”

The Commerce Department's Anderson said GDP has grown at least 3 percent in 10 consecutive quarters and may receive an even larger boost when rebuilding ramps up along the hurricane-ravaged Gulf Coast.

“The economy has been strong enough thus far to weather some of the obstacles or headwinds that we had in 2005 like the hurricanes or the spike in energy prices,” she said.

While Missouri's 2005 gross state product numbers won't be available until June, 2004 GSP grew 2.4 percent to $203.29 billion, according to Commerce Department economist Clifford Woodruff.

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