Lexington — Strong and Broad-Based Employment Growth
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July 2016 | PDF
With a notably lower unemployment rate and faster employment growth, the Lexington metro area continues to have a stronger labor market than the nation or the state of Kentucky. The construction, leisure and hospitality services, and education and health services sectors continue to grow quickly. The metro area has a stable level of building permits and rising home values, which is on par with national housing market trends.
Metro Area Snapshot
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Unemployment Rate | Median Home Values | Payroll Employment | Credit Card Delinquency Rates | ||||
|---|---|---|---|---|---|---|---|---|
| April 2016 | One-year change | April 2016 | One-year change | December 2015 (thousands) | One-year change | 2016:Q1 | One-year change | |
| Lexington | 3.8% | −0.3 | $151,300 | 5.1% | 264 | 2.7% | 6.5% | 0.2 |
| Kentucky | 5.3% | 0.0 | $129,400 | 3.9% | 1,851 | 1.5% | 6.6% | 0.2 |
| United States | 5.0% | −0.4 | $187,000 | 4.9% | 140,751 | 1.9% | 7.7% | 0.2 |
| Nearby metro average | 4.3% | −0.4 | $152,040 | 5.5% | 896 | 2.2% | 6.2% | 0.0 |
Unemployment Rate
The Lexington metro area continues to have an exceptionally low unemployment rate, with 3.8 percent of the labor force unemployed in April 2016. While Lexington and Kentucky have similar trends in unemployment rates, the metro area’s rate is consistently lower than that of the state. Nearby metro areas have been following the national trend. Both nearby metro areas and the nation have higher unemployment rates than the Lexington metro area.
Gross Domestic Product
Lexington’s per capita GDP continues to underperform the state, nearby metro areas, and the nation. The reason for this disparity is that the Lexington metro area has had steady, strong population growth. Output fell during the recession while population continued to grow, which pulled down per capita GDP. This means that while Lexington’s real GDP fell 5.0 percent from 2007 to 2009, its real per capita GDP fell 8.0 percent. The metro area’s real per capita GDP has increased $1,523 (3.0 percent) since 2009.
Employment
Employment has continued to grow quickly in the Lexington metro area. The region added 7,072 jobs in 2015, a 2.7 percent increase. This is faster growth than the state, nation, and nearby metro areas had last year (respectively 1.5 percent, 1.9 percent, and 2.3 percent). At the end of 2015 Lexington had 8.0 percent more employment than it did at the start of the most recent recession, comparable to the average of nearby metro areas, but outpacing state and national growth. Lexington’s strong employment growth is tied to its hospitals and the University of Kentucky, as well as its well-educated workforce and population growth.
Employment Growth by Sector
With a 12 percent increase in employment in 2015, construction was the fastest-growing sector in the Lexington metro area and is experiencing strong demand from both commercial and residential customers. The next fastest-growing sector was education and health services, which grew 6.9 percent. Both of these sectors grew more than twice as much in Lexington as they did in the United States or Kentucky. Three sectors lost employment in Lexington in 2015: information (down 4.3 percent), manufacturing (down 0.2 percent), and natural resources and mining (down 0.2 percent).
Relative Employment Growth
With its high growth rate and large share of employment, the education and health services sector added 2,072 jobs in 2015—the most of any sector in the Lexington metro area. Professional and business services had the second-largest job gain, with 1,806 jobs added in 2015. The construction and leisure and hospitality sectors each gained more than 1,200 jobs in 2015.
Income Per Capita
In 2014, Lexington’s income per capita rose $791 to $42,430. This is a 2.0 percent increase, which is comparable to the increases of the nearby metro areas, the state, and the nation. Unlike the other areas, however, Lexington’s per capita income remained below its pre-recession level—$695 lower to be precise. The growth of per capita income has been restrained by population increases and because students are a sizable component of the metro area’s population.
Consumer Debt
After falling $6,500 from the beginning of 2009 to the beginning of 2015, Lexington’s per capita consumer debt has stabilized. As of March 2016, the average level of mortgage, credit card, and auto debt for a person with a credit report in Lexington was $32,501. This is about $5,300 lower than in the nation and $8,166 higher than in Kentucky. The Lexington metro area’s per capita debt is lower than the national level primarily because of relatively low home values. It is higher than Kentucky’s per capita debt because Lexington has higher home values and a younger population.
Credit Card Delinquency Rates
In March 2016 (the most recent period for which data is available), 6.5 percent of credit card balances in Lexington were 90 or more days delinquent. This is more than a percentage point below the nation’s delinquency rate of 7.7 percent. Credit card delinquency rates rose slightly during 2015 in the United States, Kentucky, and the Lexington metro area, but remained essentially unchanged in nearby metro areas. In all four geographic areas, delinquency rates are below where they were ten years ago. This is most likely a result of people’s increased ability to pay their bills as the economy recovers and credit card companies’ tougher lending standards in the aftermath of the financial crisis.
Housing Prices
The metro area has continued to have strong growth in home prices, with a year-over-year increase of 5.1 percent in April 2016, the most recent period for which data is available. This is well above the gain in Kentucky (3.9 percent) and comparable to the gains in nearby metro areas (5.5 percent) and the nation (4.9 percent). A key factor in the rise of home prices in Lexington is the region’s robust population growth. Home construction has been increasing and population growth has been slowing down since 2013, so it is reasonable to expect that home prices will grow more slowly in the years ahead.
Housing Permits
Residential building permits have been fairly stable in the Lexington metro area and the nation since the middle of 2015. They have been stable in nearby metro areas and Kentucky since late 2015. While permits in Kentucky, Lexington, and nearby metro areas have returned to the levels seen immediately before the Great Recession, they remain well below what was typical during the housing boom of the mid-2000s.
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Lexington Metro Area |
United States | ||
|---|---|---|---|---|
| 2014 | Change from 2009 | 2014 | Change from 2009 | |
| Population | 494,982 | +5.9% | 318,857,000 | +3.9% |
| Adults with less than a high school diploma | 10.4% | −3.0% | 13.1% | −1.7% |
| Adults with an undergraduate degree or higher | 35.0% | +0.5% | 30.1% | +2.2% |
| Median age (years) | 36 | +1.1 years | 37.7 | +0.9 years |
| Median household income | $50,806 | −2.5% | $54,229 | −3.2% |
Sources: US Census Population estimates, American Community Survey.
Demographics and Education
According to the 2015 US Census Bureau population estimates, Lexington remained the 107th largest of the nation’s 381 metropolitan statistical areas.
All monthly and quarterly figures are seasonally adjusted and all dollar figures are in current dollars, except home prices (which are left nominal). Where applicable, these adjustments are made prior to calculating percent changes or indexes. Several charts use indexed measures to facilitate comparisons across regions and have a reference line at 100. These numbers can be thought of as the percentages of pre-recession levels. If levels were growing before the recession, pre-recession indexes will be below 100; if levels were falling before the recession, pre-recession indexes will be above 100.