KNOXVILLE, Tenn. — Continuing improvement in the monthly Tennessee index of leading indicators points to the start of economic recovery by early summer, a University of Tennessee economist said Friday.
Dr. Dave Mandy, who compiles the data for the UT-Knoxville Center for Business and Economic Research, said the February index was up for the second straight month.
The February index rose 12.1 percent, and each of the index’s five components improved, Mandy said. The January index was up 23.4 percent.
”The strength in the index has been substantial enough in the last two months to make me fairly sure that this recession is coming to an end,” Mandy said.
”The major missing piece is that we still haven’t seen a turnaround in employment. If we can just get the labor markets to recover a little in Tennessee, I think we’ll be out of the woods.”
Taxable sales in February rose for the second straight month, and construction increased sharply for the third consecutive month, Mandy said. First-time unemployment claims dropped, mortgages were up, and the U.S. index of leading economic indicators rose.
”In addition to the vigorous performance of the state’s leading index, the Tennessee coincident index halted a four-month slide by posting an 11 percent increase,” Mandy said. The coincident index measures current economic activity.
But Mandy said the encouraging news must be tempered because of continued weakness in the state’s labor markets. For example, Tennessee manufacturing employment dropped 5 percent in February, its second decline in the last three months.
The latest indicators are encouraging but do not confirm that the state has entered a recovery, Mandy said.
Still, he added, the February index reinforces the ”expectation that the state will enter a recovery phase by early summer.”