Today Experian Business Information Services released a special report on business credit in the manufacturing industry, which was plagued by poor weather throughout the South, Northeast and Midwest in the opening months of 2014. The automotive sector suffered frigid temperatures which kept buyers out of showrooms in December and January, but sales topped 16 million units in February indicating a spring thaw was under way as buyers pulled the trigger on postponed purchases.
Job gains were robust as employers added 288,000 jobs overall in April, the most since January 2012. Manufacturing increased by 12,000 jobs. which was in line with the prior three-month average. Over the past 12 months, manufacturing has added 99,000 jobs, with the majority of the gains occurring in durable goods. Moody’s Analytics suspects overall monthly job growth will remain north of 200,000, on average, for the rest of 2014. A ramp-up in construction activity will support an acceleration in vehicle sales as contractors and builders replace their weary fleets.
Key Credit Performance Highlights
A booming tech sector placed Portland, Oregon and Seattle, Washington in the top three with Pittsburgh, Pennsylvania for top credit risk scores. At the other end of the scale, we see mostly cities in south Florida and Nevada, two states that have been a major drag on the U.S. economy in all sectors since the Crash of 2008.
Richmond-Petersburg, VA, New York, NY and Toledo, OH maintain the lowest bankruptcy rates while Sacramento, CA, Sarasota-Bradenton, FL and Denver, CO remain at the bottom.
If there's a pattern to be found among cities with the lowest bankruptcy rates in the manufacturing sector, it's that they represent old-school industries. While high tech may be sizzling, old-fashioned hard goods production — such as automobiles, appliances and furniture in cities like New York, N.Y., Toledo, Ohio, and Milwaukee, Wis. — is keeping their local economies stable.
Salt Lake City, UT, Santa Rosa, CA and San Diego, CA maintained low delinquency rates, while predictably Miami, FL, Fort Lauderdale, FL and Jacksonville, FL remain in the bottom three.
Fort Wayne, IN, Allentown, PA and Seattle, WA emerge as the top three metros in manufacturing for fewest number of days beyond terms bill payment. At the bottom of the list we again find our "usual suspects," major Florida cities along with Las Vegas. None of this is a surprise, with these markets being in bad shape across all economic sectors.
A lot of pent-up demand exists in the consumer auto market. Findings from Experian Automotive’s most recent State of the Automotive Finance Market report showed that the average automotive loan term on new vehicles reached a record high of 66 months, and that 4.7 million consumer auto loans were originated in the first quarter of 2014, its highest mark since 2006. This is a 2.75% increase from the previous year.