by William W. Hall, Jr., Senior Economist

Center for Business and Economics Services

Cameron School of Business, UNCW

Overall Economic Activity

    Total economic activity in the coastal region of Brunswick, New Hanover, and Pender Counties rose almost 8 percent in 2005 and around 6 percent over 2006.  Activity is forecast to grow 5 percent over 2007 and 4.5-5 percent over 2008.  Several factors have contributed to and are continuing to contribute to this lower growth rate.  Retail sales have shown mixed results over the past year.  Building activity also lags behind the record levels of a few years ago.  Combined, these two sectors account for 30 percent of total area employment and 25 percent of total labor income.  Despite this slower growth, the local economy is forecast to grow more than twice as fast as the state and national economies over 2008.

    Over the period 2002-2006, the annual compound growth rate in the local economy was around 6.3 percent. Were this growth rate to continue indefinitely into the future, the local economy would double in size in around 11 years.

Unemployment

    The 2006 average monthly unemployment rate was 3.4 percent in New Hanover County, 4.2 percent in Brunswick County, 3.9 percent in Pender County, and 4.7 percent in North Carolina.  With the exception of the state rate, these rates were at their lowest levels since the beginning of the decade.

     Area unemployment rates were steady over the first half of 2007.  Both employment and unemployment grew over the first half of the year, with employment growing more than 12 times faster than unemployment.  Thus, the local economy continues to be able to absorb new entrants and re-entrants to the labor force.

    The August 2006 seasonally adjusted unemployment rate in New Hanover County was 3.8 percent, up from 3.6 percent in August 2006.  The rate in Brunswick County was 4.6 percent (4.3 percent in August 2006), and the rate in Pender County was 4.0 percent (3.9 percent in August 2006).  The August 2007 seasonally adjusted rate for the state was 4.7 percent, the same as the August 2006 rate.

Retail Sales Tax Collections

    New Hanover County retail sales tax collections rose 6.9 percent between 2005 and 2006 to $129.4 million.  They rose 8.4 percent in Wilmington to $106.6 million.  Collections rose 7.2 percent in Brunswick County to $40 million and 26.7 percent in Pender County to $11.3 million.  Statewide, collections rose 9 percent to $5.6 billion.

    For the year ending June 2007 (July 2006-June 2007), collections were up 4.1 percent in New Hanover County to $131.2 million.  They were up 6.6 percent in Wilmington to $109.4 million.  Collections were up 8.6 percent in Brunswick County to $41.9 billion and 1.7 percent in Pender County to $10.8 million.  Statewide, collections were up 0.9 percent to $5.5 billion.

Vehicle Registrations

    New vehicle registrations rose 2 percent in New Hanover County between 2005 and 2006 to 11,740.  They rose 8.1 percent in Brunswick County to 5,460 and 4.8 percent in Pender County to 2,160.  Statewide, they rose 0.8 percent to 465,910.

    For the year ending August 2007 (September 2006–August 2007), new vehicle registrations in New Hanover County were down 6.8% percent to 11,080.  They were up 2.4 percent in Brunswick County to 5,330 and 4.4 percent in Pender County at 2,150.  Statewide, new vehicle registrations were up 2 percent to 464,200.

    Trucks outsell cars by a margin of 57 percent in Brunswick County, 24 percent in New Hanover County, and 76 percent in Pender County.  Statewide, the margin is 20 percent.

Air/Port Traffic

     Tonnage through the state port facilities at Wilmington rose 18.6 percent between 2005 and 2006 to 3.67 million short tons.  Growth was especially strong during the first quarter of the year, with tonnage rising nearly 16 percent.  For the year ending August 2007 (September 2006-August 2007), port tonnage was down 3.1 percent to 3.46 million short tons.

    Air passenger traffic at the Wilmington International Airport fell 10 percent between 2005 and 2006 to 631,550.  Passenger boardings fell 11.1 percent to 312,100, and passenger deboardings fell 8.8 percent to 319,450.  Air cargo traffic fell 2 percent to 2,018.9 tons.  Cargo loadings rose 10.8 percent to 801.3 tons, but cargo unloadings fell 8.9 percent to 1,217.6 tons.

    For the year ending August 2007 (September 2006-August 2007), air passenger traffic was up 14.5 percent to 733,030.  Passenger boardings were up 15.8 percent to 367,030, and passenger deboardings were up 13.3 percent to 366,000.  Cargo traffic was up 8.5 percent to 2,221.5 tons.  Cargo loadings were up 14.3 percent to 881.8 tons, and cargo unloadings were up 4.9 percent to 1,339.7 tons.

Construction

    The number of permits issued for new construction in New Hanover County fell 36.8 percent between 2005 and 2006 to 1,672, and the associated value fell 2.3 percent to $738.3 million.  The number of permits issued for new residential construction fell 41.4 percent to 1,328, and the associated value fell 22.1 percent to $422.6 million.  The number of permits issued for new nonresidential construction fell 9.5 percent to 344, but the associated value was up 48.3 percent to $315.7 million.  The number of permits issued for all construction, including repairs and renovations, fell 9 percent to 4,862, but the associated value was up 2.2 percent to $870 million.

    For the year ending September 2007 (October 2006-September 2007), the number of permits issued for new construction was down 23.9 percent to 1,491, and the associated value was down 33.9 percent to $525.4 million.  The number of new residential permits was down 25.8 percent to 1,184, and the associated value was down 2.1 percent to $366.7 million.  The number of new nonresidential permits was down 15.7 percent to 307, and the associated value was down 52.7 percent to $158.7 million.  The number of permits issued for all construction was down 7.4 percent to 4,720, and the associated value was down 26.7 percent to $674.3 million.

    Currently in the county, residential permits account for 79.4 percent of the number of new construction permits issued and 69.8 percent of the associated value.  Single-family permits account for 90.8 percent of all residential permits issued and 73.8 percent of the value.

    Some plans for new residential and non-residential construction have undoubtedly been delayed due to insufficient wastewater treatment capacity.  However, it does not appear that sub-prime mortgage delinquencies and foreclosures are a major issue in the county at the present time.  A recently conducted detailed analysis of single-family permits issued in the county suggests that single-family construction may be testing a cyclical low.  Nationally, the Mortgage Bankers Association predicts that an end to the current housing downturn could come as early as third quarter 2008.  In any event, it is not uncommon for there to be rather dramatic swings in new construction activity at the national, state, and local level.

Tourism

    Tax collections from the first 3 percent room occupancy tax levied in New Hanover County rose 7.9 percent between 2005 and 2006 to $3.7 million.  For the year ending August 2007 (September 2006-August 2007), tax collections were up 10.5 percent to almost $4 million.  This change compares to a 7.2 percent increase for the year ending August 2006 (September 2005-August 2006).

    Tax collections from the second 3 percent room occupancy tax levied in the county rose 8.3 percent between 2005 and 2006 to almost $3.6 million.  For the year ending August 2007 (September 2006- August 2007), tax collections were up 14.6 percent to almost $4 million.  This change compares to a 6.8 percent increase for the year ending August 2006 (September 2005-August 2006).

Summary

     Although the growth rate in local economic activity has slowed recently, the local economy is still growing more rapidly than both the state and national economies.  The major sectors to watch over the near-term future are the retail trade and construction sectors.