Madison Paper Industries ceased operation in May 2016, reflecting the trend of paper mill closings and difficult economic times in rural Maine.

Maine’s economy hits a benchmark in 2016, but rural areas still suffer

In the first six months of 2016, Maine’s sluggish economic recovery hit a special benchmark: It rose up and out of the deep pit of the Great Recession.

Published Dec. 27, 2016, at 1:01 a.m.     |    

Maine’s economy hits a benchmark in 2016, but rural areas still suffer

Posted Dec. 27, 2016, at 1:01 a.m.
Last modified June 02, 2017, at 3:46 p.m.

PORTLAND, Maine — In the first six months of 2016, Maine’s sluggish economic recovery hit a special benchmark: It rose up and out of the deep pit of the Great Recession.

The state’s gross domestic product for the first half of the year surpassed 2007, the year that ended as the economic downturn began.

But while all the state’s services and all the state’s goods showed Maine’s economy getting out of the woods, 2016 showed it’s not coming back together like before.

Service industries are leading the recovery while industries like manufacturing and construction lag behind. And some of the state’s most rural areas are providing another example of where the country’s recovery is favoring urban areas.

Communities near Millinocket, Patten, Winterport, Livermore and Madawaska are prime examples.

Taxable sales in those five areas of the state have not yet cleared 2007 levels, not accounting for inflation. Through October, towns around Winterport were in the worst shape, still down 12 percent.

The year has shown growth for most of the state, not just the southern coast. The only significant drop in taxable sales was around Rangeley, and activity around Fort Kent and Madawaska, defined by economic summary areas that make up eight different districts in the state, was roughly flat.

This all comes as Maine has one of the slowest economic recoveries in the country. An economic activity index from the Federal Reserve Bank of Philadelphia blends together employment, wage and production trends into one number, with July 1992 as a starting point.

Maine is regularly low in the rankings, but the state’s index in 2016 began reversing course after gradually recovering from the recession, joining a few states where growth tapered off, such as Ohio, Louisiana, West Virginia and New Mexico.

Maine’s index was higher than Alaska, Michigan and Hawaii for the year.

On jobs, there’s an uneven recovery, too.

Preliminary employment estimates show a slow, continued rise in jobs statewide. They also reflect differing speeds of job recovery across the state.

For instance, the Portland area returned to 2007 employment levels in 2013. Lewiston-Auburn followed the next year and both areas kept growing.

The Bangor area reached 2007 levels last, in 2015, with job estimates correcting below that mark in November. It was the only area of the state with estimated year-over-year job losses for any months in 2016.

State labor economists pay most attention to those year-over-year changes, and not fluctuations by month, as their movement can be due to statistical methods used to produce the numbers and not necessarily real changes in the economy.

Such fluctuations appear in the statewide figures. Maine’s payroll job estimate reached a post-recession peak in July, but then took a sharp corrective turn. As new and more detailed data become available, those survey-generated numbers will be revised and the trend will smooth out.

That more detailed data are available for the start of 2016, when it, too, shows hints of troubled rural recovery.

Aroostook, Oxford and Franklin counties started the year with fewer payroll jobs than one year ago. A group of other mostly rural counties gained jobs at a slower pace than the state as a whole for the first three months of 2016.

The data give a much more detailed and accurate picture of employment, with figures coming from employer reports to the federal unemployment program.

Many of those areas continued to have the highest estimates of unemployment through the year.

For those working, wages have started to rise slightly.

The average wage of payroll employees rose a little more than 1 percent in the first three months of the year, driven by growth in places both rural and urban, not accounting for inflation.

Statewide, a rise in average wages for workers in the health care industry, accommodation and food services and construction helped boost the overall numbers. Those three industries account for about 175,000 of the state’s payroll workers.

To those abroad, Maine’s economy began to look different, too.

A shift in the industries fueling Maine’s economy is apparent in the goods the state sent to destinations abroad, too, led by growth in lobster and fish exports.

Through October, the value of fish and crustaceans sent abroad from Maine’s shores rose by more than $100 million — a 30 percent jump from 2015. By dollar value, aircraft parts showed the second largest gains.

Those gains were matched with sharp decreases in paper industry exports. Wood, wood pulp and paper exports offset fishery gains, dropping by more than $112 million from 2015 and continuing a long slide.

 

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