Louisville Burgundy Book: Robust Transportation and Manufacturing Buoy Rising Economic Optimism

ST. LOUIS—A February survey of business contacts in the Louisville Zone of the Federal Reserve Bank of St. Louis revealed improving economic optimism, with nearly three-quarters of respondents expecting local economic conditions to be better in 2015 than the previous year. However, some manufacturers fretted about the recent rise in the foreign exchange value of the dollar.

The information was published March 24 in the latest quarterly release of the Burgundy Books, a publication produced by the St. Louis Fed. The reports offer comprehensive economic information for each of the bank’s four zones: St. Louis, Little Rock, Ark., Louisville, Ky., and Memphis, Tenn.

The Louisville Zone includes southern Indiana and western Kentucky, with a population of approximately 3.4 million people, including the nearly 1.3 million who live in the Louisville metropolitan statistical area (MSA).

Total nonfarm payroll employment in the Louisville MSA increased 3.2 percent in the fourth quarter of 2014. Employment growth was modestly weaker in the Bowling Green, Ky., Evansville, Ind.-Ky., Elizabethtown, Ky., and Owensboro, Ky., MSAs. Kentucky benefited from strong transportation employment and manufactured exports growth in the fourth quarter. Indiana experienced slightly stronger growth of manufacturing employment, but weaker export growth.

The Louisville Zone’s unemployment rate averaged 5.5 percent in the fourth quarter of 2014, its lowest rate since the first quarter of 2008. Across the MSAs, unemployment rates ranged from 5 percent in the Owensboro MSA to 5.7 percent in the Louisville MSA.

Residential real estate activity slowed in the Louisville MSA in the fourth quarter, but was generally stronger in the Zone’s other MSAs. Office vacancy rates fell sharply in the fourth quarter in the Louisville MSA.

Auto loan delinquencies surged in the nation but remained unchanged in the Louisville Zone in the fourth quarter.

Loan demand in early 2015 changed little from the previous year, according to a February survey of bankers. Indiana commercial banks outperformed their Kentucky counterparts in the fourth quarter of 2014.

Kentucky pastureland values rose at a healthy rate in 2014. Indiana’s coal production in 2014 registered its second-highest total since data have been available.

View the entire Louisville Zone report at http://research.stlouisfed.org/regecon/burgundybooks/15/03/BB0315Lou.pdf.  

The next Burgundy Books will be released June 23, 2015.