The Cincinnati Metropolitan Statistical Area
The Cincinnati-Middleton Metropolitan Statistical Area (MSA) comprises fifteen counties in three states, including five counties in Ohio, seven counties in Kentucky, and three counties in Indiana. It is the twenty-fifth-largest MSA in the country, with a population of 2.1 million people in 2006.
Cincinnati's distribution of employment across industries is quite similar to the nation's as a whole, with a few important exceptions. Compared to the national economy, a greater share of Cincinnati's workforce is employed in professional and business services and manufacturing, and a substantially smaller share is employed in the information and government sectors.
Cincinnati's employment has grown less than the national average since the last business cycle peak in March 2001, but it has significantly outpaced overall state employment growth. During the 2002 recession, Cincinnati experienced less employment loss than the rest of the country as well as Ohio, and its employment rebounded relatively quickly. By the end of 2002, Cincinnati's employment had recovered to pre-recession levels, whereas U.S. and Ohio employment levels continued to fall well into 2003. However, since late 2005, Cincinnati's employment level has been relatively flat, as has Ohio's, while the nation's has continued to expand steadily.
Looking at the changes across broad economic sectors, Cincinnati's weak employment growth relative to the nation's can be explained largely by weaker growth in the nonmanufacturing sector. Cincinnati's nonmanufacturing sector expanded about 2 percentage points more slowly than the nation's since late 2005. On the other hand, the pattern of growth in manufacturing employment was quite similar in Cincinnati and the country as a whole. The MSA's manufacturing employment showed a steep decline of 16.7 percent over the period, while the country's fell 17.4 percent.
Breaking down employment growth into industry components provides a more detailed look at Cincinnati's labor market. Positive employment growth for the MSA was driven largely by two sectors of the economy - the education, health, leisure, government and other services sector, and the financial, information and business services sector. From 2001 to 2006, these sectors grew at average annual rates of 1.5 percent and 1.3 percent, respectively. Not surprisingly, Cincinnati's manufacturing sector acted as a drag on employment growth, showing declines in all six years.
A year-over-year employment growth comparison provides a snapshot of the employment situation from September 2006 to September 2007. During this period, the nation's total employment increased 1.2 percent, whereas Cincinnati's total employment was essentially flat, rising only 0.1 percent. The MSA lost goods-producing jobs faster than the nation due to particularly sharp declines in manufacturing. Cincinnati's service sector added jobs at a much slower rate than the nation as a whole (0.5 percent versus 1.7 percent). This lack of job creation in the service sector has been at the heart of slow employment growth in some of Ohio's major cities.Cleveland (on the) Rocks,a recent Federal Reserve Bank of Cleveland Economic Commentary, looks at this issue in terms of Cleveland's employment growth.
A look at unemployment rates over time reveals that unemployment levels in the Cincinnati area were below the U.S. average for quite a while - 1990 until late 2004. (In fact, between 1997 and 2001, Cincinnati's unemployment rate was under 4 percent - a very low rate.) However, since the 2002 recession,the area's unemployment rate has generally hovered between 4.5 percent and 6 percent, and recently, they surpassed the nation's. In August 2007, the area's unemployment rate stood at 5.0 percent, 0.3 percent above the U.S. rate.
As with many other Midwestern MSAs, Cincinnati's population growth has lagged the nation's over the last several decades. While the MSA's population grew 24.5 percent from 1970 through 2006, this growth fell well short of the nation's 47 percent. Still, the Cincinnati metro area has grown much faster than the state of Ohio as a whole, where the population has grown only 7.7 percent over the last 36 years.
A look at income trends shows that Cincinnati's personal per capita income has tracked the U.S. rate closely over the last several decades. Compared to Ohio, Cincinnati's per capita personal income growth has been somewhat stronger than the state's, especially since the mid 1990s. In 2006, Cincinnati's per capita personal income was $36,366 - very close to the U.S. average ($36,629) and higher than Ohio's ($33,217).