KNOXVILLE, Tenn. — Tennessee’s monthly index of leading indicators points to a continued slow-down in the state’s economic growth through the summer, a University of Tennessee report said Friday.
The index, which provides a hint of economic conditions six to nine months in the future, dropped 3.4 percent in May. It was the second straight monthly decline and the fourth in five months, the report said.
“We are clearly seeing a new trend develop, and that is toward much slower growth than we’ve seen the last two years,” Murray said.
However, the negative data “do not as yet point to any kind of general economic downturn,” said economist Matt Murray of the UT-Knoxville Center for Business and Economic Research.
Three of the Tennessee index’s five components were negative for the month. Taxable sales dropped sharply, there was an increase in initial claims for unemployment benefits, and the U.S. index fell for the fourth straight month.
On the positive side, taxable mortgages and construction contracts rose sharply.
Murray said the state’s employment picture remains good despite the increase in the unemployment rate.
“The Tennessee unemployment rate remains below what analysts consider a full employment rate. Even when the economy is operating at full capacity, some unemployment will exist and is in fact desirable as workers seek better quality jobs,” Murray said.
“I think the (Tennessee) economy is going to remain very healthy. We’re likely to see the unemployment rate inch up a bit. We’re also likely to see job growth to continue for Tennessee. At this point, all signals point to a pretty good Christmas season, although it’s a bit premature to offer a conclusive forecast.”
The metropolitan indexes for Nashville, Memphis, Knoxville, Chattanooga and Tri-Cities fell in May.
Contact: Matt Murray (615-974-5441)