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Borough economy looking healthy

Posted: Friday, July 18, 2008

First quarter statistics for 2008 show healthy increases in both gross and taxable sales across the Kenai Peninsula compared to last year, according to a report released recently by the Kenai Peninsula Borough's economic analysis office.

The latest Quarterly Report of Key Economic Indicators compares figures from the first three months of 2008 to numbers from the same period in 2007. It also includes historical data from earlier years for comparison purposes.

In an executive summary of the 140-page document available online at the borough's Web site, analyst Jeanne Camp reported that gross sales in the first quarter reached $485.8 million, more than $24.3 million more than in the first quarter of 2007.

Each of the borough's five cities -- Kenai, Soldotna, Seward, Homer and Seldovia -- registered increases. Gross sales fell 0.2 percent in the unincorporated areas outside cities.

Taxable sales, of prime interest to the borough and its cities, also rose, Camp reported, reaching $178.5 million, a gain of nearly $9.4 million over the 2007 first quarter. All areas saw increased sales.

"First quarter key indicators clearly indicate the Kenai Peninsula Borough economy is continuing its expansion," said Bruce Richards, special assistant to Borough Mayor John Williams, who was in Anchorage Thursday. "Increases across the board in gross, taxable and retail sales combined with increased construction numbers indicate a healthy first quarter."

The latest data comes with some caveats, however, Camp explained.

"As conversion to the new sales tax software continues, there will be some dramatic changes," she said. "In particular at this time, sales by land and water guides have been removed from transportation into their separate categories under tourism. The increase in tourism sales from 2005 to 2006, and similar decrease in transportation over the same period is a result of fine tuning the system."

Camp said such situations would continue for another year or so until the updating process is finished.

In gross sales, the largest percentage gain (32.1 percent) came in the sale of wholesale goods, which grew from $48.6 million to $64.2 million comparing first quarter 2007 to first quarter 2008. Wholesale goods led the way for six other gainers -- service sales, resource production, retail sales, transportation and warehousing sales, government sales and property sales.

Manufacturing led the first-quarter decliners in gross sales, falling 16 percent. Other losers were tourism sales (down 14.2 percent), professional sales, and utility sales.

Eight of 12 lines of business increased their taxable sales, however, with sales in transportation and warehousing leading the way with a 30.6 percent gain. Retail sales, which fell in gross sales, joined the list of gainers when it came to first quarter taxable sales. So did utility sales, down in gross, but up in taxable sales.

Manufacturing's taxable sales fell 17.3 percent comparing 2007 to 2008 first quarter data. Also dropping were taxable tourism sales, taxable government sales, and taxable professional sales.

Kenai led the way in gross sales with an 11.7-percent gain over 2007, followed by Soldotna, 11.3 percent, Homer, 6.1 percent, Seldovia, 2.7 percent, and Seward, 2.2 percent. The area outside cities registered a slight decrease of 0.2 percent.

However, when it came to taxable sales, Seldovia and areas outside cities (labeled as "Other") registered the largest gain, 11.1 percent over 2007. Homer sales increased 4.8 percent, Seward increased 4.2 percent, Kenai gained 2.8 percent, and Soldotna was up 2.2 percent.

In other areas, the quarterly report showed construction permit values in the first quarter had rebounded significantly over 2007. Last year, the first three months produced permit values of $2.47 million. This year, that figure jumped to $6.5 million. There were 31 permits in 2007, 46 this year.

"Both value and volume, while not setting record highs, provided strong activity for the quarter," Camp reported.

The unemployment rate for the quarter averaged 10.3 percent, up from the same period in 2007 when the figure was 9.8 percent. However, the number of people available for work --the labor force -- was larger in the first quarter of 2008 than in the previous year. In addition, the average monthly employment also grew. In other words, more people were working than were in the first quarter of 2007, but the number of people available for work grew faster, producing a slight increase in overall unemployment.

The estimated population of the borough in 2007 stood at 52,386 people, an increase of 2 percent over 2006. Since Census 2000, the borough's natural increase -- births minus deaths -- has resulted in a gain of 2,695 people. Other changes were due to in or out migration, Camp noted.



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