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Higher tax withholdings point to more jobs filled; Mississippi sectors index shows gains

By TED CARTER

The value of an index tracking Mississippi’s key business sectors rose a full 1 percent in August, maintaining an upward trend that began five months ago, state economists said in the October “Mississippi Business Report.”

The growth in value tracked in the Mississippi Lead Index, or MLI, occurred in all sectors other than manufacturing, said Corey Miller, Business Report author and economic analyst for the University Research Center of the Mississippi Institutions of Higher Learning.

And even with manufacturing, the Mississippi Manufacturing Employment Intensity Index showed its first growth in a half year, according to Miller’s report.

Most of the sector gains are homegrown, a plus for self-sustaining growth, Miller said.

     

     

“Unlike in other months the gain in the MLI in August was driven by more than national measures,” he said, and added: “The question is, ‘Can the Mississippi economy sustain momentum for consecutive months,’”?

The Mississippi Leading Index, or BLI, uses a mix of state and national indexes and data on everything from consumer confidence to manufacturing to retail sales and the value of new residential construction. Those indicators are designed to track the ups and downs of key sectors.

The MLI showed August withholdings exceeded all months over the two years.  Building permits continued a recent stretch of gains while initial unemployment claims fell to their lowest level of the year, according to the MLI.

The increase in sector values follows a second quarter forecast from state economists of 1.8 percent economic expansion the rest of 2018. That forecast from the University Research Center came in one-tenth of a percentage point lower than the one for the first quarter state economists issued in January.

Hitting the 1.8 percent growth forecast would put Mississippi’s economy 1.5 percentage point over the anemic real GDP growth the state showed for 2017. The U.S. Bureau of Economic Analysis reported the state GDP growth in its estimate released in May, putting the dollar value at $98 billion.

The outlook is for the economy to expand 1.7 percent in 2019, a decline of three-tenths of percentage point from the 2019 forecast of the previous quarter. State economists put blame for the predicted decline on an anticipated slowdown next year in the U.S. economy.

State Economist Darrin Webb called the 1.8 percent forecast “relatively modest in historical terms.”

It follows an increase of 2 percent in 2016, and a one-tenth-of-one-percent increase in 2015. “We anticipate annual real GDP growth for the state in the 1.5 to 2 percent range for the next two to three years,” Webb said in a briefing of the Mississippi Legislature’s Joint Budgeting Legislative Committee in September.

For now, the state can claim a two-year high in income tax withholdings, indicating jobs are getting created and filled.

“The value of Mississippi income tax withholdings (three-month moving average) surged 3.2 percent in August,” wrote Miller in his Mississippi Business Report.

The increase marked the largest monthly gain since April 2016. Compared to one year ago the value for the month was 4.9 percent higher, which was also the largest year-over-year increase since April 2016.  Withholding levels increased 5.8 percent over the last six months, according to Miller’s report.

Webb, in his presentation to the budgeting committee, said payroll employment in Mississippi grew a half percent in 2017, the smallest gain in six years as employment growth in manufacturing and trade both slowed. The five-tenths of a percent increase in 2017 followed gains of 1.1 percent in 2016 and 1.2 percent in 2015, the largest annual increases in employment since the late 1990s, according to Webb.

It should get better, Webb said.

“We expect job growth in the state will rebound in 2018, as our latest forecast is for growth of 1.4 percent this year,” he said.

The gains are expected to include an increase in employment in a construction sector that has declined for the last several years.

Webb said he also expects a continuation of the new hiring in health care, food services and “temp” jobs that accounted for much of the job growth the last six months. “We anticipate maintaining these gains through the end of the year,” he said.

Webb said the moderate economic growth he expects in the months ahead could get a further boost from a strengthening U.S. economy, something that is typically seen.

This could be especially helpful in maintaining the expanded hiring and slightly higher wage levels, according to Webb.

Mississippi’s economy has struggled to gain momentum in the years since the Great Recession.  Growth remains below that of the nation, Webb said, but added: “We are at least observing continued if relatively small increases in real GDP and employment.”

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