KNOXVILLE, Tenn. — Tennessee’s economy, which has been slowing in recent months, “could return to a bit stronger growth,” University of Tennessee economist Matt Murray said Wednesday.
“I don’t want to over-state the potential for renewed growth, but I think the turnaround in manufacturing that we witnessed in August is quite notable.”
Manufacturing employment in August surged 9.3 percent after a 9.4 percent plunge the previous month.
If the Christmas buying season is as good as it appears, “that’s going to be a real impetus for retailers and wholesalers around the nation to replenish their shelves, and that’s going to do a world of good for Tennessee’s manufacturing sector,” Murray said.
Meanwhile, Tennessee’s economy is performing about like UT’s index of leading indicators suggested it would — growing but at a progressively slower pace.
The latest index, based on August data and issued Wednesday, declined slightly — marking the fourth month of up and down movement.
“Tennessee’s economy reached such a high level of performance earlier this year that it could not be expected to maintain that pace of growth,” Murray said.
“While the rate of growth in the state’s economy is gradually slowing, we do not see that as an indication of a recession on the way,” he said.
The Tennessee index improved seven consecutive months through last May, declined in June, rose sharply in July, then slipped in August. Economists say three consecutive months in one direction represent a trend and a reasonably solid basis for forecasting economic strength or weakness six months ahead of time.
“We caution against putting undue emphasis on any single month of data,” Murray said.
The August index slipped because of sharp declines in sales and mortgages, more than offsetting increases in construction contracts, new claims for unemployment benefits, and a rise in the U.S. index.
The indexes for four of Tennessee’s five largest metropolitan areas improved. Nashville was the lone decliner.
The Tri-Cities index shot upward due to a decline in new unemployment benefit claims, an abrupt drop in bankruptcies and an 11.7 percent increase in sales. The Knoxville, Chattanooga and Memphis indexes rose only slightly.
The Tennessee economic indexes are compiled by the UT-Knoxville Center for Business and Economic Research. The August indexes were delayed because some data from other agencies were unavailable.
Contact: Matt Murray (423-974-5441)