Things are looking up for N.H. economy
All systems go. But is the economy really ready for liftoff?
For the last several years the state’s economy has been hovering on the launching pad, and no one was sure whether it was going to soar or crash. The statistics have been mixed, and could be read either way. During the first six months of this year, however, the signs have become clearer. True, the unemployment rate still can’t break below the 4 percent barrier, and job growth continues to be sluggish. The state did gain some 10,000 jobs over the last year, but higher-paid manufacturing jobs continue to decline in comparison to retail and service jobs.
Yet nearly everybody – including manufacturers – say they are planning to hire more, according to a New Hampshire Business Review survey of chief executives and Manpower’s quarterly survey, which shows that nearly half of the employers in the Manchester area expect to hire more workers in the next three months.
And a recent review of job announcements compiled by Manchester economist Dennis Delay – now director of special projects at the Workforce Opportunity Council — shows the state will be gaining twice as many jobs as it will lose.
Is the nearly jobless recovery finally going to get some jobs?
“I like to see faster job creation,” said Delay. “But things are better now than a year ago, and they will probably be better in the next three compared to the last three.”
One economic engine is the infusion of increased government spending. A planned federal prison could help revive the Berlin area. And the Pentagon is spending freely again. Local contractors are lining up – and not just big traditional contractors, like BAE Systems, but small high-tech firms, such as Harmless Hazards Training LLC.
The Bedford firm, formed back in 1999, provides virtual hazards in real settings for training purposes. The Navy uses it to practice fighting fires on ships. The Army and Air Force are following suit, and local governments, flush with Homeland Security cash, are starting to sign up as well for other possible hazards: chemical and explosives.
The state of Delaware is taking an HHT device around in a trailer to local fire departments. Eventually, the company plans to hit up large companies with their own emergency crews.
“That’s on the list,” said Bob Ebberson, vice president of business development at the firm.
There are other good signs for small start-up companies. Jim Cook, a Manchester attorney who represents such companies, reports that it’s easier to garner investment dollars from angels and venture capital firms.
In addition, larger companies, which have cut back, are coming around.
“I sense a pickup as bigger companies are willing to acquire new technologies,” he said. “There are still more difficult times ahead, but it has been better than it has been in the last few years.”
Michael Monks is seeing some of the signs of that life as well. Smaller office space is starting to fill up again. “The small users are back in the market,” he said. “That usually is a good sign because it often means someone is taking that first big step to move out of the house and actually lease some space.”
Indeed, there is little to complain about in the commercial real estate market. Most commercial prices are going up, though large industrial leases outside of cities are still soft.
Other sectors of the economy – which never really suffered in the recession – are still going strong, even though some apparent hurdles are in the way.
Despite an increase in interest rates, the residential real estate market is still hot, or maybe, as some suggest, the increasing rates might be forcing people to close on homes before they get even higher. The last hurrah, perhaps?
“Last year was the best year until this year,” said Paul Hamblett, owner of RE/MAX Coast to Coast on the Seacoast.
While housing prices declined a little, the volume was up, he said.
“The buyers were more cautious. They were looking longer, but it was reasonably healthy,” Hamblett said. “There was a slowdown of the $2 million homes down in Rye, but we just closed on a condo in Newmarket for $1.7 million. The condo market has been the big surprise, maybe because that’s the most affordable option in this housing market.”
Statewide statistics seem to confirm Hamblett’s impressions. While the average price of a home — $232,667 – for the first quarter of the year is up slightly from last year, it is actually down a little over the last two quarters. But sales volume is up considerably from last spring, resulting in a total sales increase of nearly 20 percent.
Those statistics don’t reflect the last three months, and in early spring, it did seem that home sales were languishing in the Concord area, “but then they just went flying off,” reports Bob Wiita, a broker with ERA The Masiello Group/Wiita Family Realty. “Maybe people thought interest rates were moving up, but I still think the market is strong. It still is a seller’s market — the demand is way up there and the supply is still very limited.”
Despite the high costs of material and labor, construction is still booming.
Residential building permits rose some 8.1 percent over the previous quarter, and construction jobs continue to expand, especially in the Lakes Region.
“The development community is optimistic,” said Russ Thibault, president of Applied Economic Research in Laconia.
“It’s hard to say if they’ll be right in the short term, but in the long term, when those baby boomers retire, if you sell a million-dollar home down in Massachusetts, that money goes a long way in New Hampshire.”
On the non-residential side, business also seems to be brisk.
“You hear about the cost of steel, lumber and labor – especially with health insurance going up,” said Gary Abbott, executive vice president of the Associated General Contractors of New Hampshire.
“There is still a shortage of personnel. And there is still a strong economy across the board. I don’t hear many contractors complaining about the lack of work.”
The tourism industry also is faring well, despite the rising price of fuel. But gas prices are not such a big deal, said Lauri Klefos, director of the New Hampshire Division of Travel and Tourism Development. In fact, they might even help.
“Are these people going to stay closer to home?” she asked. “That’s not bad news. We are fortunate enough to be in the backyard of great population centers of the Northeast. These are the folks that are not going to drive cross-country this year.”
The DTTD’s $2.6 million budget was cut by $400,000 and resulted in elimination of a television ad campaign in Philadelphia, which is in the area of those most likely to drive to New Hampshire. But it has been replaced by an ad campaign involving late advertising, to catch people who are making up their minds at the last minute. Whatever the state is doing appears to be working.
Inquiries are up 15 percent, Klefos said. In addition, there has been a rebound in interest from Europe and Canada, thanks to a favorable exchange rate — the same exchange rate that is likely to keep U.S. tourists in this country.
And the weather has cooperated for the most part — Memorial Day weekend broke all sorts of records.
All this is coming off a pretty good winter for the tourism business. The state’s “travel barometer” reported that the number of state visitors increased by more than 4 percent and spending increased by more than 7 percent from December through February. And that is in a winter when skiing and snowmobile visits actually decreased, thanks to the relatively low amount of snowfall.
“It’s more back to normal,” said Shari Young of the Portsmouth Sheraton Harborside hotel. “This year is definitely showing growth in the corporate segment.”
That rebound has been echoed around Manchester Airport, where hotels are springing up to serve the influx.
“There has been incredible growth in that area,” said Paul Hartgen, executive director of the New Hampshire Lodging and Restaurant Association.
Meanwhile, restaurants chains are still marching through the state. Outback Steakhouse and 99 Restaurants continue their march up New England. All told, there’s expected to be a 5 percent growth in restaurant sales during the next year in New Hampshire, according to the National Restaurant Association.
Finally, despite a slight downturn in consumer confidence in the last few months, big box retail construction continues unabated, and thus far few storeowners are complaining about the lack of sales, according to Nancy Kyle, president of the Retail Merchants Association of New Hampshire. And when things are bad she gets an earful.
But when it comes to big ticket items – like cars — some consumers appear to be hesitating.
“There has been a slowdown from last year, but nobody is pushing the panic button,” said Dan McLeod, president of the New Hampshire Automobile Dealers Association. Zero interest financing and
large rebates continue to fuel sales. Gas prices don’t seem to have hurt SUV sales, he said, though hybrids are starting to get hot.
The last few years have been great years for auto sales, he said. “This year it is not as good, but that’s still pretty darn good.”