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2nd Quarter 2016
COLUMBUS
Stuart Hoffman
Chief Economist
Gus Faucher
Deputy Chief Economist
THE PNC FINANCIAL SERVICES GROUP |
William Adams
Senior Economist
Kurt Rankin
Economist
Mekael Teshome
Economist
The Tower at PNC Plaza | 300 Fifth Avenue | Pittsburgh, PA 15222-2401
JOB SITUATION
Job growth in Columbus accelerated going into 2016
and the market area remains one of the strongest
performers in Midwest (Chart 1). Manufacturing was
volatile in 2015 but other economic drivers, namely
finance, healthcare, education and professional
services, continue to provide strong support thanks
to rapid population growth. Attesting to the strength
of Columbus’ economy, private sector employment is
now more than 10 percent higher than its prerecession peak, compared with less than 5 percent
nationwide. The local unemployment rate rose to 4
percent in December 2015 from September 2015.
However, this was entirely due to labor force growth
outpacing job growth and can be interpreted as a
sign of confidence in the local labor market. Also
encouraging is that the public sector’s multiyear
attrition paused in the final two quarters of 2015,
giving some support to regional jobs and income.
Chart 1
Job Growth, (% change year ago)
& Unemployment Rate, (%, SA)
6%
PNC fore cast
5%
4%
3%
2%
1%
0%
-1%
14
15
16
17
Unemployment Rate
Total
Manufacturing
Services (ex. Ed. & HC)
Chart sources: Bureau of Labor Statistics; The PNC Financial
Services Group
INCOME
A tighter labor market will help lift wages faster in the
second half of 2016, while the large drop in gasoline
prices over the past year and a half will boost real
disposable incomes through slower consumer price
inflation. Average wages rose at more than twice the
national rate as fast job gains in higher wage services
outpaced gains in low-wage services. The median
income in the area is relatively high for the Midwest
(Chart 2). Finance, business services, education and
healthcare dominate the economy and offer wellpaying and stable jobs. Although manufacturing is a
relatively small portion of the local economy, the jobs
tend to be with better performing firms and have
annual earnings that are higher than state and
national averages. Although per capita income in the
region is close to the U.S. average, living costs are
below average, so purchasing power in the region is
stronger than elsewhere in the U.S. Columbus is an
excellent example of the benefits of industrial
diversification with an emphasis on higher learning—
the end result is high and stable wages.
Chart 2
Median Household Income (Ths. $, SA)
$62K
PNC fore cast
$61K
$60K
$59K
$58K
$57K
$56K
$55K
$54K
$53K
14
15
16
17
Median Household Income
Chart sources: Bureau of Census; Moody’s Analytics; The PNC
Financial Services Group
COLUMBUS
Chart 3
Home Sales (Ths., SAAR)
& Price Growth, (% change year ago)
HOUSING
Columbus’ mature economic expansion and great
demographics will prop up the housing market over
the next couple of years. High affordability, increased
access to credit and continued jobs and income
growth will lift home sales (Chart 3). Even though
mortgage rates will rise, they will remain low by
historic comparisons. The area’s housing supply is
relatively tight because of the low vacancy rate and
strong household formations generating demand for
homes. Also, strong demand for housing from
institutional investors helped reduce the inventory of
foreclosed properties in Central Ohio. Though still at a
low level, single-family starts are perking up.
Multifamily construction will be an important driver of
construction, in part, because of the above-average
share of the population that is between ages 18 and
34. The large presence of colleges and universities
attracts people in this cohort who are more likely to be
renters. Finally, housing remains affordable, despite
the price increases of recent years. House prices will
continue to rise at a moderate pace over the next
couple of years.
6.0%
47.5K
47.0K
5.5%
46.5K
46.0K
5.0%
45.5K
4.5%
45.0K
44.5K
4.0%
44.0K
43.5K
3.5%
43.0K
3.0%
42.5K
14
15
16
Existing Home Sales (R)
17
Case-Shiller Price Index (L)
Chart sources: National Association of Realtors; Fiserv, Inc.; The
PNC Financial Services Group
Chart 4
Demographic Growth, (% change year ago)
& Net Migration, (Ths., SA)
DEMOGRAPHICS
Large, stable employers provide Columbus with
demographic trends that run contrary to usual
Midwestern patterns (Chart 4). A strong job market
attracts a large number of in-migrants and this enables
population growth to routinely outperform the national
pace. The presence of Ohio State University and
national business powerhouses such as JP Morgan
Chase, Nationwide Insurance and OhioHealth is also a
draw for students and young professionals. As a result,
the metro area’s median age is 35.7 years, versus 37.5
years in the U.S., and the share of the population
between ages 18 and 34 is much higher than the
national average. The relative youthfulness of the
population helps Columbus maintain a higher-thanaverage labor force participation rate which is a plus for
its long-term economic potential. The population is
well-educated with 35 percent of adults over age 25
with at least a bachelor’s degree. That rate is 27
percent and 30 percent in Ohio and the U.S.,
respectively. A well-diversified economy and affordable
living costs will maintain the market area’s favorable
demographic trends for the foreseeable future.
PNC fore cast
4.4K
PNC fore cast
4.0K
3.6K
2.5%
2.0%
3.2K
2.8K
1.5%
2.4K
2.0K
1.0%
1.6K
1.2K
0.5%
0.8K
0.4K
0.0K
0.0%
14
15
Net Migration (L)
16
17
Population Growth (R)
Households Growth (R)
Chart sources: Bureau of Census; Bureau of Economic Analysis
Moody’s Analytics; The PNC Financial Services
Group
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COLUMBUS
OUTLOOK SUMMARY
Columbus’ economy is at cruising speed and is set for another year of strong job growth. Finance, professional
services, education and healthcare are likely to be the primary growth drivers in the near term. Stronger
consumption spending nationwide will boost the region’s manufacturers, especially its auto-related producers.
The unemployment rate will likely range between 3.5 and 4 percent for the rest of this year as moderate labor
force growth partially offsets job creation. The tighter labor market will fuel wage growth at faster rate than the
national average. Gasoline prices that are about two dollars per gallon cheaper than their recent peak in 2014
will free up a considerable amount of money for consumers to either save or spend and will boost purchasing
power through slower consumer price inflation. Columbus will remain among the growth leaders in the Midwest,
even as the region’s economy settles into its long-term growth rate.
One of Columbus’ advantages is that economic growth is generally stable—neither overheating so as to open
the economy up to sharp economic collapse, nor sinking drastically during downturns. This implies that even if it
bested the U.S. during the economic recovery, Columbus’ pace of job growth will likely approximate the nation’s
as the macro-economy transitions into an above-average growth phase. Longer term, a diverse industrial base,
healthy population growth, a young and educated workforce, and low living and business costs will underpin the
market area’s economic potential. Regional transportation and processing offer Columbus opportunities to
exceed expectations. The market area is the geographic center of Ohio and easily links the East Coast to
Chicago, Indianapolis and St. Louis.
FORECAST TABLE
Employment Growth, (% change)
Unemployment Rate, (%)
Median Household Income, (Ths. $)
House Prices**, (% change)
Single-Family Permits* (% change)
Multifamily Permits* (% change)
2015
2.1
5.3
53.7
4.6
10.2
11.6
U.S.
2016F
1.7
4.8
55.2
5.1
8.2
0.4
2017F
1.3
4.7
56.4
3.4
4.4
1.3
2015
2.4
4.0
58.1
4.2
-1.5
-2.5
Columbus
2016F
2.1
3.6
59.3
4.3
15.3
11.5
2017F
1.6
3.6
60.7
4.1
3.8
2.0
*U.S. starts, F = PNC forecast, **Case-Shiller House Price Index
Employment Growth, (% change)
Unemployment Rate, (%)
Median Household Income, (Ths. $)
House Prices**, (% change)
Single-Family Permits* (% change)
Multifamily Permits* (% change)
U.S.
2007-2012†
2012-2017†
-0.6
1.7
7.7
6.1
50.8
54.4
-4.8
0.7
-12.3
8.4
-4.2
10.2
Columbus
2007-2012†
2012-2017†
0.1
2.2
7.2
4.8
51.7
56.9
-1.3
4.5
-7.6
7.0
13.4
0.1
*U.S. starts, †per annum, **Case-Shiller House Price Index
Table sources: Bureau of Census; Bureau of Labor Statistics; Bureau of Economic Analysis; National Association of Realtors;
National Association of Home Builders; FHFA; Moody's Analytics; The PNC Financial Services Group
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COLUMBUS
LONG-RUN EMPLOYMENT TRENDS
Chart 5
Total Employment, (% change year ago)
PNC fore cast
4%
3%
2%
1%
0%
-1%
-2%
-3%
-4%
-5%
-6%
02
03
04
05
06
07
08
09
10
11
Columbus
12
13
14
15
16
4%
3%
2%
1%
0%
-1%
-2%
-3%
-4%
-5%
-6%
17
U.S.
Chart sources: Bureau of Labor Statistics; The PNC Financial Services Group
LONG-RUN DEMOGRAPHIC TRENDS
Chart 6
Population, (% change year ago)
PNC fore cast
1.6%
1.2%
0.8%
0.4%
0.0%
02
03
04
05
06
07
08
09
10
Columbus
11
12
13
14
15
16
17
U.S.
Chart sources: Bureau of Census; Moody’s Analytics; The PNC Financial Services Group
LONG-RUN HOUSE-PRICE TRENDS
Chart 7
Case-Shiller House Price Index, (% change year ago)
PNC fore cast
20%
20%
15%
15%
10%
10%
5%
5%
0%
0%
-5%
-5%
-10%
-10%
-15%
-15%
-20%
-20%
02
03
04
05
06
07
08
09
Columbus
10
11
12
13
14
15
16
17
U.S.
Chart source: National Association of Realtors; Fiserv, Inc.; The PNC Financial Services Group
Visit http://www.pnc.com/economicreports to view the full listing of economic reports published by PNC’s economists.
Disclaimer: The material presented is of a general nature and does not constitute the provision of investment or economic advice to any person,
or a recommendation to buy or sell any security or adopt any investment strategy. Opinions and forecasts expressed herein are subject to change
without notice. Relevant information was obtained from sources deemed reliable. Such information is not guaranteed as to its accuracy. You
should seek the advice of an investment professional to tailor a financial plan to your particular needs.
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