Economic update | 2nd quarter

The Maryland Chamber Foundation is delighted to unveil a new series of quarterly economic updates.

As we continue to mitigate the impact of COVID-19, access to and analysis of key economic indicators are critically important to charting our course to recovery. Over time, the Maryland Chamber Foundation quarterly economic reports will allow us to gauge progress and measure the impact federal and state policies are having in overcoming the economic fallout of the pandemic.

These reports will be prepared for the Maryland Chamber Foundation by Mangum Economics, a firm that specializes in producing objective economic, quantitative, and qualitative analysis for strategic decision-making.

Below you will find the most recent report for the 2nd quarter of calendar year 2020. We hope that you find this information insightful and instructive as you plan for the next phase of recovery for your own organization.

Thank you for your continued support of the Maryland Chamber of Commerce and the Maryland Chamber Foundation.


2nd Quarter Economic Update – Severe Weather


In Sum

Employment in Maryland plummeted in April:

Wage growth is surpassing the national norm:

Unemployment surged in April and has since receded slightly:

Where We Are

Total Nonfarm employment in Maryland declined by 237,400 jobs, or minus 8.5%, between June 2018 and June 2020.

Total Statewide Nonfarm Employment:  June 2018 to June 2020

Year-over-Year Percentage Change in Total Nonfarm Employment: June 2018 to June 2020

Between June 2019 and June 2020, statewide Total Nonfarm employment fell by 257,500 jobs, led by losses in the Leisure and Hospitality (down 95,700 jobs), Education and Health Services (down by 43,800 jobs), and Professional and Business Services (down by 27,200 jobs) sectors. From a regional perspective, the largest job losses occurred in the Baltimore-Columbia-Towson (down 128,100 jobs) MSA.

June 2019 to June 2020 Change in Total Nonfarm Employment by Sector

June 2019 to June 2020 Change in Total Nonfarm Employment by MSA

 

Maryland’s 9.2% year-over-year decline in statewide Total Nonfarm employment in June 2020 was above the 8.7% decline posted at the national level. Five of Maryland’s 14 major industry sectors “out-performed” the national norm over the period, in that in all but one instance they experienced employment losses that were less than the national norm. Those were: Construction (up 1.0% statewide vs. down 4.4% nationally); Total Government (down 3.3% statewide vs. down 5.8% nationally); Professional and Business Services (down 5.8% statewide vs. down 7.4% nationally); Retail Trade (down 7.1% statewide vs. down 7.7% nationally); and Mining and Logging (down 7.7% statewide vs. down 15.8% nationally).

On the other side of the ledger, Maryland’s: Financial Activities (down 4.4% statewide vs. down 1.5% nationally); Utilities (down 5.2% statewide vs. down 2.5% nationally); Wholesale Trade (down 5.7% statewide vs. down 4.8% nationally); Manufacturing (down 6.5% statewide vs. down 5.8% nationally); Education and Health Services (down 9.3% statewide vs. down 5.7% nationally); Transportation and Warehousing (down 12.9% statewide vs. down 7.9% nationally); Other Services (down 16.1% statewide vs. down 12.0% nationally); Information (down 17.6% statewide vs. down 10.0% nationally); and Leisure and Hospitality (down 31.6% statewide vs. down 27.1% nationally) sectors all under-performed the national norm.

Private Sector Average Hourly Earnings in Maryland increased from $30.35 to $32.18 between June 2019 and June 2020, a nominal year-over-year increase of 6.0%, which was above the 4.4% nominal increase posted at the national level. Maryland’s labor force participation rate, the proportion of the civilian population above the age of 16 that is either employed or looking for work, declined from 69.0% in June 2019 to 67.7% in June 2020. While at the national level, the labor force participation rate declined from 63.4% in June 2019 to 61.8% in June 2020.

Private Sector Avg. Hourly Earnings:  June 2019 to June 2020

Labor Force Participation Rate:  June 2019 to June 2020

Turning to unemployment, the statewide seasonally unadjusted unemployment rate stood at 8.3% in June 2020, below the national unemployment rate of 11.2% for that month, but an increase from the state’s 3.9% unemployment rate a year before. From a regional perspective, in May 2020 (sub-state unemployment rates are reported later than the statewide rate) the seasonally unadjusted unemployment rates in Maryland’s major MSAs ranged from a high of 11.3% in Cumberland to a low of 6.9% in California-Lexington Park.

Seasonally Unadjusted Unemployment Rate:  June 2019 to June 2020

Seasonally Unadjusted Unemployment Rate:  May 2020 by MSA

 

What to Look For

1) Employment

The big news in the 2nd quarter came in April when state restrictions on business activity in response to the covid19 virus brought about a drop in employment that was larger even than anything experienced during the Great Depression. In a single month, nationally we lost 19.8 million jobs and in Maryland alone we lost 336,100 jobs (approximately one out of every eight jobs in the state). In Maryland, the major industry sectors that were hardest hit between March and April were Leisure and Hospitality (down 110,000 jobs), Education and Health Services (down 57,600 jobs), Professional and Business Services (down 36,300 jobs), and Retail Trade (down 35,200 jobs).

The “good” news was that the Construction, Leisure and Hospitality, Professional and Business Services, Retail Trade, and Total Government sectors experienced employment losses that were less than the national norm. Because these sectors collectively comprised almost 62% of Maryland’s total employment, the state experienced an overall loss of Total Nonfarm employment between March and April that was somewhat below the national average (minus 12.2% in Maryland vs. minus 13.2% nationwide).

2) Wages

News on the wage front was better. Maryland’s year-over-year growth in Private Sector Average Hourly Earnings was 6.0% in June, in contrast to 4.4% growth at the national level. Since the beginning of 2019 Maryland has been trailing the national average in terms of wage growth. The state began closing that gap in the 2nd half of 2019 and surpassed the national growth rate in May. The June numbers represent a continuation of that trend.

3) Unemployment

Until March, Maryland and the nation were enjoying unemployment rates that were at half-century lows. But that was then. In June, Maryland’s seasonally unadjusted unemployment rate was 8.3%, below the national rate of 11.2% and an improvement over Maryland’s 9.7% unemployment rate in May, but a big jump over the state’s 3.9% unemployment rate in June 2019.

Initial claims for unemployment in Maryland peaked the week ending April 4 at 109.496 and have since generally declined, coming in at 19,463 in the week ending July 11, the most recent week for which data are available.

4) Labor Force Participation

Labor force participation, the proportion of the 16 and over population that is either employed or looking for work, declined precipitously during the Great Recession. In the last few years, however, historically low unemployment rates were drawing people off the sidelines and back into the labor force – as a result, labor force participation rates were rising again in Maryland and nationally.

Unfortunately, however, they are now again dropping. Between June 2019 and June 2020, labor force participation declined from 69.0% in Maryland to 67.7%, and nationally from 63.4% to 61.8%.

Data sources:


Prepared for the Maryland Chamber Foundation by Mangum Economics.


About Mangum Economics

Mangum Economics, LLC is a Richmond, Virginia based firm that specializes in producing objective economic, quantitative, and qualitative analysis in support of strategic decision making. Examples of typical studies include:

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