Ohio Receives Positive Rating Outlook from Fitch

This report is a summary of third-party economic research and perspectives to foster communication with business and economic development stakeholders.

Key Economic Insights

• Global: IMF member nations approved the largest resource injection in the fund’s history, allocating $650B to assist countries dealing with debt from the global pandemic.
• U.S.: U.S. Job Openings reached a new record in June, with available positions rising to 10.1M. New weekly jobless claims fell for a third straight period to 375,000.
• Ohio: Ohio’s bond rating and outlook was elevated to the highest level in 42 years, citing the state’s sustained trend of balanced finances and growth in reserves.

Global Insights

30.8% of the world population has received at least one dose of a COVID-19 vaccine, and 16.1% is fully vaccinated. Moderna reached a deal with the Canadian government to build a vaccine manufacturing plant to supply the nation with Covid shots. Global GDP in Q3 is on track for a 1.8% expansion from the previous three months, according to early estimates. IMF member nations approved the largest resource injection in the IMF’s history, allocating $650B to assist countries dealing with debt from the global pandemic.

China facing long-term economic damage from delta outbreaks and China’s port shutdown raising fears of closures worldwide. Goldman Sachs and Morgan Stanley both cut their full-year growth outlooks for China over the past week as Beijing imposes tough measures to curb the delta strain. China’s factory-gate prices matched the highest level in more than 12 years. China’s PPI rose 9.0% in July, the biggest surge in producer prices since 2008.

In the UK, more electric vehicles were registered than diesel cars for the second month in a row in July. It is the third time battery electric vehicles have overtaken diesel in the past two years. The UK plans to ban the sale of new petrol and diesel cars by 2030, and hybrids by 2035. The White House this week urged OPEC to boost oil production, stating recent planned increases are insufficient as countries seek to emerge from the global pandemic.

U.S. Insights

58.9% of the US has received at least one dose of a COVID-19 vaccine, and over 50% is fully vaccinated. The Delta variant now accounts for more than 90% of known COVID-19 cases in the U.S., according to the CDC. The continued spread of the Delta variant has led many corporate leaders to delay office reopening’s originally slated for the Fall. More than a dozen large U.S. corporations have recently announced vaccine mandates.

The US Senate voted to approve a $1.2T bill that would direct billions to modernize the country’s infrastructure, expand high-speed internet systems and the nation’s network of electric vehicle charging stations. The Biden administration extended federal student loan forbearance through January 2022. The U.S. budget deficit narrowed to $2.5T during the first 10 months of the fiscal year from $2.8T in the same period a year earlier.

U.S. job openings reached a new record in June, rising to 10.1M from an upwardly revised 9.5M in May. Economists had projected an increase to 9.27M openings. Total hires rose to 6.7M, while the hires rate increased to 4.6%. Layoffs and discharges were little changed. Labor supply is expected to increase in the coming months as supplemental federal jobless benefits expire and schools reopen. New weekly jobless claims fell for a third straight period. Continuing claims were 2.87M, below the 2.90M expected and a decline from the revised 2.98M from the prior week.

The Consumer-Price Index rose 5.4% in July from a year earlier, matching June as the highest 12-month rate since 2008. Nonfarm business sector labor productivity increased 2.3% in Q2, with output increasing 7.9% on a seasonally adjusted annual basis. Unit labor costs increased at an annual rate of 1.0%, with a 3.3% increase in hourly compensation.

The NFIB Small Business Optimism Index decreased in July to 99.7, reversing June’s gain as labor shortages remain a primary concern. The unemployment rate for information technology (IT) occupations reached a two-year low in July. The unemployment rate for tech occupations dropped to 1.5% in July, the lowest level since August 2019 and close to the historic low of 1.3%.

Ohio Employment & Economic Insights

Ohio inched closer to a triple-A rating as Fitch Ratings lifted the outlook on its AA-plus rating to positive.  The rating agency cited “Ohio’s sustained trend of balanced finances and growth in reserves that strengthens the state’s financial resilience as it confronts cyclical economic and revenue trends.”  The rating action is Fitch’s first change in 11 years and represents the highest rating level for Ohio’s IDR since 1979.

50.5% of Ohioans have received at least one dose of a COVID-19 vaccine, and 46.7% are fully vaccinated. The delta variant is the dominant strain of the virus in the state, according to the Ohio Department of Health, accounting for more than 86% of the cases in Ohio.

Columbus-area homes sold in a median of 17 days during July, tied for the fastest pace in the nation according to a new report from Realtor.com. The number of homes listed in the Columbus area jumped 43% in July over a year ago, the largest increase in the country and above the U.S. average of 6.5%. Homes in the Cincinnati and Cleveland areas both sold faster than the national average.

Resources

• Ohio Department of Health’s COVID-19 Website: coronavirus.ohio.gov
• JobsOhio’s resource portal and information about Open, Secure Supply Chains in Ohio.