Louisville forecast 2013.

• Author: Dufrene, Uric
• Position: Louisville, Kentucky - Sector Growth and unemployment rate of metro areas

As 2012 came to an end, the Louisville metro (1) was just shy of hitting a pre-recession peak in nonfarm payrolls. As of September 2012, payrolls were just 7,000 short of the 627,000 nonfarm payrolls that the Louisville metro observed in January of 2008. This progress comes with very strong year-over-year growth in nonfarm payrolls, well exceeding the U.S., Indiana and Kentucky. As we move into 2013, will this high growth be sustained, or can we expect growth to level off to levels consistent with the national, Indiana and Kentucky economies?

The 2013 outlook for the Louisville metro is for growth to continue, but likely decelerate compared to 2012. The national economy in 2013 will be affected by uncertainty surrounding the fiscal cliff. Slower nationwide growth will have an impact locally. Consequently, slower payroll growth for the Louisville metro is expected in 2013.

Labor Markets

The unemployment rate for the Louisville metro has trended down since 2011 and just moved under the national rate as of September 2012. The Southern Indiana area of the metro region fared better, with rates hovering around 7 percent and the lowest among the region and both states (see Figure 1). Despite a lower unemployment rate, the number of unemployed remains stubbornly high--nearly double than prior to the recession.

[FIGURE 1 OMITTED]

Sector Growth

The professional and business services sector was a key sector in overall job growth for the Louisville metro last year. Professional and business services added 5,400 jobs out of 19,300 added for the entire region, as of September 2012 (see Figure 2). However, the professional and business services sector appears to be decelerating compared to early gains. Year-over-year gains had reached 11.3 percent earlier in the year, but have declined to 7.0 percent in September. This is likely reflective of an overall soft economy, but could also be indicative of subsequent slowing of total payrolls in the metro region.

[FIGURE 2 OMITTED]

Leisure and hospitality also showed solid gains, reflective of improving sentiment among consumers. Education and health services continued to show gains, but at a slower pace compared to recessionary and post-recession years. While housing continues to recover, construction continues to face challenges in overall employment. Despite the increase in building permits, construction employment remains flat compared to last year. Transportation and utilities, as well as retail and...