PNC economist: Manufacturing gains lead Mobile’s tempered recovery

By Kelli Dugan | kdugan@al.com
Email the author | Follow on Twitter
on August 11, 2015 at 3:43 PM

Manufacturing gains, cheap gasoline and modest housing progress set a promising – if guarded – tone for Mobile’s economy through the close of 2015 and beyond, according to the most recent market outlook released by Pittsburgh-based PNC Financial Services.

“Mobile is one of the few areas that has more manufacturing jobs now than before the recession. Production jobs were 15 percent higher in mid-2015 than their previous peak in 2008,” PNC Assistant Vice President Mekael Teshome, an economist for the southeastern region, wrote in the third-quarter 2015 forecast for Mobile County.

Teshome pointed primarily to the uptick in activity associated with Airbus’ A320 final assembly line preparing to enter production at Mobile Aeroplex at Brookley.

Toulouse, France-based Airbus will launch production this month at its first A320 final assembly line on U.S. soil at Brookley, expected to figure prominently in the company’s ability to efficiently fill the mounting backlog for the popular single-aisle aircraft. The $600 million facility is expected to deliver its first Mobile-assembled aircraft to JetBlue in the second quarter of 2016 and employ about 1,000 peoplewhen it reaches full annual production of 40 to 50 aircraft by 2018.

“Besides the manufacturing jobs that will be created once the facilities are operational, many of the goods and services the company needs could be sourced locally and suppliers moving into Mobile add upside potential to the outlook,” Teshome wrote, adding, “Mobile’s longer-term outlook is more optimistic with payroll growth at least matching the nation’s pace. We expect to see population growth and in-migration normalize over the next few years as the regional economy continues to heal. Low business costs and strong infrastructure networks could attract investment.”

In addition, he noted trade, transportation, finance and professional services should contribute to near-term recovery and the “precipitous decline of energy prices over the past year is an additional benefit that will lower input costs for the region’s manufacturers.”

Moreover, Teshome said lower gas prices mean increased disposable income that should ultimately boost tourism spending because “Alabamians spend a greater than average share of their incomes on gasoline.”