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VIRGINIA ECONOMY SHOWS STRONG GROWTH IN OCTOBER

 RICHMOND, Va., Dec. 18 /PRNewswire/ -- The Virginia economy surged ahead in October after contracting moderately in September according to the Coincident Index constructed by Crestar Bank. Moreover, the Crestar Leading Index of activity in Virginia continues to signal further growth ahead. (All data in this report are seasonally adjusted.)
 October Highlights
 -- The Virginia economy grew sharply in October as measured by the
 Crestar Coincident Index.
 -- Real retail spending rose slightly in Virginia.
 -- Nonfarm employment rose significantly in Virginia and increased
 in each of its four largest metropolitan areas except for Central
 Virginia.
 -- The Virginia Leading Index continued its upward trend in October.
 The Coincident Index
 The Crestar Coincident Index jumped 1.0 percent in October after falling a revised 0.1 percent in September (the downward adjustment was concentrated in the employment components). The Virginia Coincident Index was 1.8 percent below year-ago levels in September while the U.S. Index was 0.7 percent above year-ago levels.
 Five of the six components in the Coincident Index contributed to its growth in October. This breadth of strength in the Index suggests that the recent growth in the Virginia economy is sustainable. As shown in the following table, the employment composite experienced the sharpest growth by far. Growth in this component was a particularly welcome sign given the meager job growth that the state has experienced over the recovery. Despite the gain in employment, however, inflation-adjusted taxable retail sales in the state rose only slightly in October. Regionally, Northern Virginia experienced a three-month moving average gain of 2.3 percent. By comparison, sales in Hampton Roads and Central Virginia fell 2.0 percent and 0.2 percent, respectively. The only indicator in the Coincident Index to fall in October was inflation-adjusted manufacturing wages.
 Virginia Employment
 Nonfarm employment rose 19,000 in October after experiencing virtually no growth in September. All nine major sectors expanded in October, although growth was up only slightly in six of those sectors. The services sector added about 6,000 jobs, mainly in business services. The government sector also rose sharply by adding 5,000 jobs that were mainly in local government.
 Employment in October rose in each of the state's largest metropolitan areas, except for Central Virginia which declined slightly. Northern Virginia experienced the largest monthly gain (9,000) followed by Hampton Roads (3,600) and Southwest Virginia (700). In terms of year-over-year change, Hampton Roads led the regions with growth of 0.3 percent. In the other regions, growth from a year ago was up 0.2 percent in Southwest Virginia, off 0.8 percent in Northern Virginia, and off 2.2 percent in Central Virginia.


Looking Ahead
 The Virginia Leading Index recorded a moderate gain of 0.3 percent in October after posting an upwardly revised gain of 0.7 percent in September. Five of the nine series that comprise the index rose during October. The average length of the manufacturing workweek posted the largest gain after a similarly large loss last month. Residential and nonresidential building permits rose moderately as did the U.S. Leading Index and Virginia stock prices. On the negative side, initial unemployment claims, new business starts and newspaper ad lineage all declined -- a sign that although job growth surged in October, it is likely to continue at a more moderate pace.
 In summary, the October data indicate that the Virginia economy experienced a burst of growth just in time to help out retailers during this Christmas season. Although the recovery in Virginia will remain on track according to the Leading Index, the defense cuts yet to come will likely keep the state from exceeding the national growth rate in 1993.
 Note: Northern Virginia is defined as the Virginia portion of the Washington, DC, MSA. Central Virginia is the Richmond-Petersburg MSA. Hampton Roads is the Norfolk-Va. Beach-Newport News MSA. Southwest Virginia is the Roanoke MSA, Lynchburg MSA, and Virginia portion of the Bristol MSA.
 COMPONENT CONTRIBUTION TO LEADING & COINCIDENT INDEXES
 (Increases in Net Contribution Indicate Growth in the Economy)
 Leading Index Net Latest Previous Year-Ago
 Contrib. Monthly Monthly Monthly
 Percentage Level Level Level
 Avg. Weekly Hours
 In Mfg. (A) 0.25 41.2 41.1 41.0
 Initial Unemployment
 Claims (B) -0.03 7,771 7,725 8,348
 New Business
 Starts (A) -0.31 1,631 1,731 1,677
 New Auto
 Registrations (000) -0.20 26.6 34.9 32.4
 Residential Building
 Permits (A) 0.11 3,491 3,242 3,044
 Newspaper Ad Lineage
 (Index greater than
 or equal to 77
 equals 100) (A) -0.12 80.3 82.5 95.7
 Virginia Stock
 Value ($) 0.08 413.3 399.8 297.1
 U.S. Leading Index 0.09 149.1 148.5 145.2
 Real Nonres. Building
 Contracts ($000) (A) 0.15 112,954 96,277 131,976
 Total Leading Index 0.26 168.1 167.7 161.6
 Coincident Index
 Total Employment
 Composite (000) 0.91 2,919 2,897 2,942
 Mfg. Employment (000) 0.03 401.6 401.3 412.3
 Real Taxable Retail
 Sales ($000)(A) 0.01 28,250 28,220 27,755
 Electricity Comsumption
 (Index greater than or
 equal to 77 equals
 100) (A) 0.15 172 168 174
 Real Bank Debits
 (Index greater than or
 equal to 77 equals
 100)(A) 0.01 242 242 283
 Real Avg. Hourly Wage
 in Mfg. ($) (A) -0.10 7.66 7.69 7.63
 Total Coincident Index 1.01 142.3 140.9 144.9
 (A) Three-month moving average.
 (B) Inverted series (a decrease increases the index) and three-month
 moving average.
 -0- 12/18/92
 /CONTACT: Christine Chmura, Economist, Crestar Bank, 804-782-7164/
 (CRFC)


CO: Crestar Bank ST: Virginia IN: FIN SU: ECO

SB -- CH009 -- 8393 12/18/92 16:38 EST
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No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1992 Gale, Cengage Learning. All rights reserved.

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