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HOME BUILDING STRONG IN CHARLOTTE DESPITE HIGH UNEMPLOYMENT

 HOME BUILDING STRONG IN CHARLOTTE DESPITE HIGH UNEMPLOYMENT
 CHARLOTTE, N.C., April 7 /PRNewswire/ -- Home-building activity has risen sharply here for the past four months, and unemployment has begun to drop from its peak in January. Airport boardings are reaching new highs, bucking the trend of flat activity elsewhere in the nation, while the pace of commercial construction has slowed as Charlotte continues to absorb office space.
 These were among the highlights reported at the First Union Perspectives economic briefing today by Lee Keesler, First Union's Charlotte area executive.
 "Our housing numbers rebounded months before the national ones," Keesler said. "Housing is the hottest segment of the Charlotte economy right now. While the number of single-family homes permitted last year was down 14.3 percent from the previous year, the pace picked up sharply in the fourth quarter, up more than 44 percent. More importantly, January permits were up more than 65 percent, and we expect the first quarter of this year to be very strong."
 Last year, 3,413 homes were permitted in Mecklenburg County; 324 were permitted in January, compared to 196 last year. Sales of existing homes in the first quarter were up 23 percent over last year, and the average price rose 5.5 percent to $123,193. "That's probably boosted more by the fact that lower interest rates allow buyers to qualify for higher-priced homes, rather than inflation," Keesler said.
 Multifamily permits in Mecklenburg County totaled 874 last year, less than half the number in 1990, and declined 49 percent again in January to 232.
 Unemployment in the Charlotte MSA, including Mecklenburg, Gaston, Cabarrus, Lincoln, Rowan, Union and York counties, dropped to 5.9 percent in February after peaking at 6.1 percent in January. That's the highest level since last May, when the rate was 5.5 percent, and is the highest level in at least six years. The total number of people employed, which declined 1.7 percent last year, rose 0.5 percent in February to 609,300.
 "Here's what I think happened in our labor market over the past year or so: We had a dip in employment that lasted six to seven months, with the worst coming in the first half of 1991. Job growth started again by late 1991. And I expect 1992 will show a relatively strong increase in the number of jobs," Keesler said.
 The area's employment base will be boosted by strong economic development activity, which set a record in Charlotte last year, with major announcements by new and existing firms.
 "We think corporate expansion by existing firms will dominate economic development news this year," Keesler said. "Some corporations were wary of aggressively pursing new sites during the worst of the recession. Much of what was announced last year had been in the works for at least a year. So the pipeline now has a 'gap' in it. Firms already here are positioned to move faster with their plans."
 Strong business activity has been reflected at Charlotte/Douglas International Airport, where boardings topped 8 million for the first time last year at 8,431,844. That's an increase of 8.1 percent over 1990. Through February, boardings are up 16.9 percent over last year.
 In the commercial construction sector, Keesler said the decline in activity had been expected.
 "After three boom years with nonresidential construction values at or well over $300 million, our total of $185 million last year is a noticeable drop. But we predicted the drop at our Perspective briefings almost four years ago. We've been absorbing, rather than building, this past year, although absorption has been slow. For example, while suburban office space was absorbed, uptown office occupancy figures lost ground, with all our recent construction."
 Commercial construction permitting in January totaled $24.9 million, compared to $11 million during the slow Gulf War period. Keesler also noted an unusual number of church permits, citing 10 that exceeded more than $500,000.
 Retail sales in Mecklenburg County last year totaled $8.386 billion, compared to $8.916 billion in 1989. Keesler said weak car sales account for only about $23 million of the decline. Retailers surveyed, however, said sales have improved since Jan. 1. They also noted a trend of consumers placing more emphasis on value, eschewing higher-priced designer brands when bargain brands are available.
 Car sales declined 3.5 percent last year to 31,489 registrations in Mecklenburg County. Auto sales were up 11.8 percent through February to 5,110, compared to the weak Gulf War period last year.
 Keesler said that statistics for new-car registrations may have been misleading for the past couple of years because many buyers have purchased nearly new cars, or "program cars," that had been used by rental companies or fleets.
 Detroit is cutting back on the program car system, requiring fleet buyers to leave those cars in service longer before turning them into the dealer auctions for resale to consumers.
 "The program car of the past couple of years that might be four months old and have 8,000 miles on the odometer now will be held until it is six to seven months old and has perhaps 15,000 mile on it," Keesler said. "It will be more like a truly used car and less competition for the new models on the dealer's lot."
 In its forecast, First Union is calling for:
 - Continued growth in airport boardings, though probably
 not in double-digits after first quarter;
 - Economic development activity that will come mostly in
 the form of expansions by corporations already here,
 with new firm announcements more likely in the later
 months of the year;
 - Employment numbers that will stabilize and improve, with
 consistent job growth this year and then, toward year's
 end a more clearly declining unemployment rate;
 - Better retail sales (perhaps 4-7 percent for the year,
 with a stronger fourth quarter) and even greater new-car
 sales gains;
 - And while general non-residential and multifamily
 development will be unexciting this year, activity in
 single-family homes will be high, whether measured by
 construction or sales. MLS sales may be up 15 percent
 for the year, and new-home permits could grow by 15-20
 percent.
 The First Union Perspectives program also tracks the economy on an ongoing basis in Western North Carolina, Southeastern North Carolina, the Triangle and the Triad. Results are reported for each area three times per year. First Union National Bank of North Carolina is a principal subsidiary of Charlotte-based First Union Corporation (NYSE: FTU FTUpr) and operates 269 offices in some 200 North Carolina communities.
 -0- 4/7/92
 /CONTACT: Media Contact - Sandy Deem, First Union Corporation, 704-374-2710 (W) or 704-567-1176 (H)/
 (FTU FTUpr) CO: First Union Corporation ST: North Carolina IN: FIN SU: ECO


DF -- CH008 -- 5883 04/07/92 13:40 EDT
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Date:Apr 7, 1992
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