KNOXVILLE, Tenn. — Tennessee’s index of leading economic indicators, a barometer of things to come, paints a bright picture, University of Tennessee economists reported Thursday.
“The index has improved five straight months, and that’s very good news,” said UT-Knoxville economist Matt Murray. “Three consecutive months in one direction is considered a trend.”
After many months of ups and downs, the index leveled off the last two months of 1995 and continues in a positive direction, Murray said.
“The evidence continues to pour in. We’re in a modest and sustainable growth pattern that is unlikely to change much in the foreseeable future. It appears the Tennessee economy will continue to grow modestly through most of 1996 and probably into 1997,” Murray said.
“Our quarterly economic report to the governor last week dealt with the state as a whole. This latest index also looks at the major metropolitan areas and confirms a positive outlook for the rest of this year.”
Led by Memphis with eight consecutive months in a positive direction, the state’s five metropolitan indexes improved.
The index is a yardstick of economic activity six to nine months into the future. Three of its five components were positive in the latest index, the one for March.
Taxable sales and mortgages and the U.S. index improved. The negative components were a rise in initial claims for unemployment benefits and a sizable drop in construction contracts.
But Murray discounted the sharp drop in building contracts on grounds construction is a volatile industry, subject to extreme ups and downs.
The labor picture in Tennessee is encouraging, Murray said. The unemployment rate remains in the full-employment range, roughly 5 percent, and the state’s employers continue to create jobs. The only weak spot is the textiles and apparel sector, Murray said.
Non-agricultural employment for the index month rose 14.2 percent.
Consumers seem to have confidence in the economy and in their ability to earn enough money to keep buying, Murray said.
Contact: Matt Murray (423-974-2225)