Index Forecasts Tennessee Economic Growth Into 1997

KNOXVILLE, Tenn. — Tennessee’s economy continues to make slow, steady progress like an old locomotive on a long climb, a new University of Tennessee report shows.

The monthly index of leading economic indicators, based on May data, improved for the seventh straight month, the UT-Knoxville Center for Business and Economic Research announced Monday.

“The economy is on course for moderate growth and should remain on course into 1997,” UT economist Matt Murray said.

Murray cautioned that the economy is always subject to unforeseen shocks. Still, he said, the overall picture is positive.

“The combination of a low unemployment rate, low interest rates and fairly strong retail sales should carry over into slow to moderate growth into the winter months.”

The index has five components, and four of them were positive. Sales and mortgages increased dramatically, initial claims for unemployment benefits fell for a second straight month, and the U.S. index improved for the fourth consecutive month. The only negative was a slight drop in new construction contracts.

Murray said Tennessee’s employment picture, on the whole, bodes well for the future.

Since last December, the state’s unemployment rate has fallen from 5.6 percent to 4.7 percent, compared to the national rate of 5.6 percent.

“The only major concern we have is the continued sluggish growth in Tennessee’s nonagricultural employment,” Murray said. “The textile and apparel sectors have been losing jobs for several decades, and the trend continues.”

The economic indexes for four of the state’s five metropolitan areas improved.

Memphis fell for the second straight month, mainly because of a decline in nonagricultural jobs and a slowdown in the formation of new business corporations.

The Chattanooga, Nashville, Knoxville and Tri-Cities indexes improved.

Contact: Matt Murray (423-974-2225)