Over the past six months, the economic after-effects of the sub-prime mortgage crisis have become increasingly evident in Memphis.

For example, job growth in the metro area has slowed to a virtual standstill, from 1.0% year over year in November 2007 to 0% year over year in April 2008. Over the same period, Memphis' unemployment rate has increased from 5.3% to 6.2%, the highest it has been since mid 2006.

By far the major contributor to the weak job growth is the construction sector, where employment fell 3.8% year over year in April. Other sectors shedding workers over the past year include information services (-2.7%), manufacturing (-1.9%), transportation and trade (-0.6%) and financial services (-0.3%).

Among industrial sectors adding jobs over the past year were education and health (+0.9%), professional and business services (+0.9%), government services (+0.9%) and leisure and hospitality (+0.7%).

With respect to housing, it appears that a tightening of credit conditions has contributed to slower growth of consumer credit and mortgage approvals. Year to date, total building permits have dropped by 63% in Memphis, compared to -36% for the country as a whole.

Existing house prices are also down 18.5% year over year in Memphis, compared to a 7.7% decline for the nation as a whole. According to the most recent Federal Reserve Board (FRB) Memphis Zone Report, the inventory of new and existing homes is up significantly, thanks to this weak pattern of sales and increasing number of foreclosures.

Despite the dismal housing climate, the outlook for Memphis employment, particularly manufacturing employment, appears positive. According to the FRB report, manufacturing hiring plans have improved in the wake of a significant improvement in manufacturing activity during the first quarter.

This view is supported by the most recent Manpower Employment Outlook Survey, which indicated net hiring plans of +27% for second-quarter 2008, compared to +20% in second-quarter 2007.