Labor Market Information
The Knoxville MSA’s unemployment rate in November was 4.3% (this is a decrease from last month’s 6.0% rate but higher than the 2.9% rate from November 2019). Knox County’s unemployment rate in November was 4.1% (down from 5.7% in October and up from 2.6% in November 2019). Tennessee’s unemployment rate was 5.0% in November (down from 7.2% in October and up from 3.1% in last November). The U.S. unemployment rate was 6.4% in November (down slightly from the 6.6% rate in October and up from the 3.3% unemployment rate recorded last November).
The size of the total labor force has increased locally and statewide in November from October. The Knoxville MSA’s labor force increased by 3.8% (from 435,091 to 451,628), Knox County’s labor force increased by 3.9% (from 247,246 to 256,765), and Tennessee’s labor force increased by 3.5% (from 3,332,952 to 3,450,249). Meanwhile, the national labor force slightly decreased by 0.4% (from 161,053,000 to 160,468,000).
Below is the 13-month unemployment rates trending comparison for the four largest MSA’s in Tennessee:
Source: U.S. Bureau of Labor Statistics; Tennessee Dept. of Labor & Workforce Development
For the month of November, there were 31,124 unique active job postings in the Knoxville MSA (up 0.5% from October and up 6.4% from last November). There were 19,212 unique active job postings in Knox County (up 0.4% from October and up 7.7% from this time last year).
The Top 10 industries (by number of job postings) in the Knoxville MSA in November were:
Below is the 13-month job postings trend for Knox County and the Knoxville MSA:
Source: EMSI Job Postings Analytics
ADP National Employment Report®
Each month, ADP, a large-scale payroll and human resources company releases their National Employment Report®, which provides a high-level look at month-over-month private-sector employment changes across the country.
The November report shows an increase of 307,000 in nonfarm private-sector employment (a lower increase than the 365,000 jobs gain reported in October). Midsized businesses (50-499 employees) led the way by adding 139,000 jobs in November (this gain is more than the 135,000 jobs added in October). Large firms (500+ employees) added 58,000 jobs in November (a much smaller gain than the 116,000 jobs gain reported in October). Small businesses (1-49 employees) added 110,000 jobs in November (4,000 less than the October gain of 114,000).
ADP’s Small Business Report, which further synthesizes the small business landscape, shows that most of the 110,000 jobs gain came from the “Very Small” businesses (1-19 employees) accounting for 60,000 of the added jobs. The remainder of the job gains came from the small businesses that employ 20-49.
Sources: ADP; U.S. Bureau of Labor Statistics; Tennessee Department of Labor & Workforce Development
Automation Projected to Increase in 2021
The CFO Survey, a collaboration of Duke University’s Fuqua School of Business and the Federal Reserve Banks of Richmond and Atlanta, is a quarterly survey of the nation’s chief financial officers that gauges their future economic expectations and concerns.
The CFO Survey Q4 2020 report released in December included an interesting item regarding a projected shift away from labor towards automation. The survey reports that “While hiring is expected to rebound in 2021, more than half of large firm CFOs say their companies are implementing technology to replace labor, and for most of those firms, at least some of the automation was intended to solve labor-related challenges caused by the pandemic. Much of the increase in automation was also intended to replace low-skilled workers.”
The survey also showed that most of the nation’s CFOs are “generally optimistic about U.S. economic prospects” in 2021 but are uncertain about the pace of the recovery.
You can read The CFO Survey Q4 2020 in full here.
Source: The CFO Survey Q4 2020; Duke University Fuqua School of Business; Federal Reserve Banks of Richmond and Atlanta
Consumer Price Index / Inflation Rates
The national inflation rate from November 2019 to November 2020 is 1.2%. This rate is unchanged from the October 2019 to October 2020 period. Nationally, the inflation rate in 2020 has been trending downward from 2.5% in January to as low as 0.1% in May and then modestly increasing through the June to November period.
Knoxville falls into the South Size Class B/C (population of 2.5 million or less) grouping. The current inflation rate for this region is 1.3% for the November 2019 to November 2020 period. This rate is down from the 1.4% rate in the October 2019 to October 2020 period. Similar to the national rate, the South Region’s B/C class inflation rate has been trending downward in 2020 from 2.3% in January to as low as -0.3% in May and then modestly trending upward back into positive territory through the June to November period.
Source: U.S. Bureau of Labor Statistics; Consumer Price Index, not seasonally adjusted
November’s existing-home sales in the Knoxville area were down 6% from October but up 22% from one year ago. Knox County’s home sales decreased 8% from October to November but are up 25% from last November. Nationally, existing-home sales in November dropped to 6.69 million — down 2.5% from the prior month but up 25.8% from one year ago. Home sales in the South also decreased by 3.8% from the prior month but are up 25.9% from one year ago.
The median home sales price in the Knoxville area was $242,500 in November — down 2% from October but up almost 25% from one year ago. Knox County’s median home sales price was $260,000 in November – up 1.6% from last month and up 17% from last November.
Housing inventories remain tight nationally, regionally, and locally. In the Knoxville area, more than 6 in 10 homes sold in November were on the market for less than one month.
Total housing inventory declined in November for the eighth consecutive month. Months of inventory, the number of months it would take to exhaust active listings at the current sales rate, declined to 1.28 in November, and the absorption rate, or the percentage of inventory sold per month, increased to 78 percent.
According to Hancen Sale, Governmental Affairs and Policy Director at the Knoxville Area Association of Realtors®, “The decline in home sales for November is the first sign of an expected seasonal slowdown. There is little reason to worry about the outlook for the housing market moving into the new year aside from lingering supply issues. If demand for homes remains as strong as it has been throughout the pandemic—and there is good reason to think strong demand will persist—Knoxville’s housing supply will likely continue to dwindle. Addressing this supply issue is paramount for the housing market moving forward.”
Sources: National Association of Realtors®; Knoxville Area Association of Realtors
Sources: U.S. Housing & Urban Development – SOCDS – State of the Cities Data Systems; U.S. Census Bureau – Building Permits Survey
National Retail Sales
The total advance monthly retail sales estimate for November 2020 was $548.82 billion (down 1.5% from October and up 2.0% from last November).
The retail sectors that showed the most growth from this time last year were Non-store Retailers (+28.6%), Building Materials (+18.9%), Sporting Goods/Books/Hobby/Music Stores (+12.5%), Food and Beverage Stores (+6.6%), and Health and Personal Care Stores (+4.1%).
The retail sectors that experienced the biggest declines in sales from last November were Food Services and Drinking Places (-20.4%), Gasoline Stations (-19.9%), Clothing Stores (-19.6%), and Electronics and Appliances Stores (-12.0%).
Sources: U.S. Census Bureau; Advance Monthly Retail Trade Reports, not adjusted
Tennessee State and Local Sales Tax Collections
The nine-county Knoxville MSA region collected $96.77 million in state sales taxes in November (down 1.9% from October and up 3.8% from last November) and Knox County collected $61.03 million in November (up 0.1% from October and up 3.7% from last November). The state of Tennessee collected $875.29 million in state sales taxes in November (up 2.7% from October and up 7.1% from last November).
The Knoxville MSA collected $33.9 million in local sales taxes in November (up 0.3% from October and up 14.4% from last November) and Knox County collected $20.2 million (up 1.2% from October and up 12.2% from last November).
Source: Tennessee Department of Revenue
Knox County Business Licenses
Despite the ongoing COVID-19 pandemic and corresponding negative economic impacts on several industry sectors (mostly in April during the lockdown), the number of new business licenses issued in Knox County from May through December 2020 are higher than the same timeframe last year. A total of 1,929 new business licenses were issued from May to December 2020 (an increase of 39 businesses compared to the 1,890 new business licenses issued from May to December 2019). This could be further evidence that a few of the workers who were furloughed during the lockdown may have decided to start their own business or turn their creativity into a new entrepreneurial venture as we have been hearing from other sources. Below is a chart showing a comparison of business licenses issued between CY 2019 and CY 2020.
Sources: Knox County Clerk
Economic Report to the Governor 2021
Each year, the University of Tennessee Boyd Center for Business and Economic Research compiles an economic report for the governor and other state agency officials to assist in planning and budgeting efforts based on the overall economic environment with both short-term and long-term trend forecasts.
The 2021 report forecasts a slow uneven economic recovery in the short-term with a full recovery a few years away. Positive economic growth is forecast for the short-term but “the recovery may be one of fits and starts as we continue to grapple with the virus.” Economic activity in the short-term “will largely depend on the trajectory of the virus, accompanying government responses (to control the virus or provide fiscal support), the development and deployment of a vaccine or vaccines, as well as the behavior of individuals across the state, nation and world.”
Real GDP (inflation-adjusted gross domestic product) in Tennessee is projected to fall by 3.5% in 2020 due to COVID-19 and then increase by 2.9% in 2021 and 3.6% in 2022.
Nonfarm jobs in Tennessee are projected to fall by 3.7% in 2020 (representing a loss of 116,000 jobs from last year) but will increase by 2.2% in 2021 and 2.0% in 2022. Full job recovery to pre-pandemic levels will not occur until the third quarter of 2023. However, some industry sectors like leisure and hospitality will not fully recover until 2024 and manufacturing employment “is projected to remain below pre-pandemic levels throughout the decade, due to rising levels of uncertainty and a continued reliance on automation and advanced manufacturing. Even within the manufacturing sector, the recovery has been uneven, as factories that provide popular consumer goods have seen a surge in demand, while those relying on business-to-business sales continue to struggle.”
You can access the entire 2021 edition of An Economic Report to the Governor of the State of Tennessee here.
Source: University of Tennessee Boyd Center for Business and Economic Research, Haslam College of Business
McGhee Tyson Airport (TYS) Passenger and Freight Trends
The Metropolitan Knoxville Airport Authority recorded 121,005 passengers in October (up 37.4% from September passenger traffic and down 50.5% from the 244,240 passengers recorded in October 2019).
According to the Transportation Security Administration, the nation’s TSA checkpoints exceeded the 1 million mark nine times during the Christmas holiday despite travel being discouraged by health officials. Though even these numbers are still down from last year. About 2 million people pass through TSA checkpoints daily in a typical year. You can see how far off the daily TSA checkpoint travel numbers are here.
The total freight recorded in October at TYS was 7,663,332 tons (up 3.7% from September and down 1.6% from last October).
Source: Metropolitan Knoxville Airport Authority