Follow the Numbers to Find the Local Business Peg

If you've covered business during the past three years, no doubt you've covered a fair number of factory closings and job layoffs.

While both are news, I think it's also important that we help readers understand how broader economic forces result in local closings and layoffs in the first place. We also can help readers by anticipating economic change in their communities.

Most of us on the Business desks of small dailies -- myself included -- came to our jobs without advanced degrees in business or economics. Don't worry if you can't understand what Alan Greenspan is saying.

Yes, the Economy is big and complex, but even little newspapers can write local stories for their readers in meaningful ways. It starts with zeroing in on the hard numbers, then identifying expert sources who offer perspective on the information and "real people" who put a human face on it.

I've found several great sources for local economic data that generate a fairly steady number of daily stories and provide the backbone for more in-depth enterprise development.

One of the best sources for local economic data is the state employment department and the U.S. Bureau of Labor Statistics. Each month, the state compiles data on unemployed workers by metropolitan area, counties and cities with 25,000 population and larger.

State employment officials also track the average work week for factory workers by metro area -- a good gauge on whether or not your local factories are busy. When the economy was strong, factory workers averaged more than 40 hours a week. For the past three years, the average has been less than 40.

The state also has a wealth of information about which employers are cutting jobs and which are creating jobs. For example, the Rockford metro area lost 11,800 factory jobs between 1998 and 2002 -- amounting to one-fifth of the local manufacturing work force. In the same period, local companies providing health care services created 1,700 jobs.

Then we compared average local wages for health care versus manufacturing, using numbers from the U.S. Bureau of Labor Statistics. It was no surprise to learn that the factory jobs we lost paid better on average than the health service jobs we gained. But now we had the hard data to back up our hunch.

Other good sources of local economic information are business associations and universities. Our local Realtor association, for example, keeps track of housing sales each month, breaking down the sales by new and existing homes, as well as average sales price. We can even see where home sales are hot and where they're lagging in our circulation area. Also, the local visitor's bureau keeps tabs on hotel occupancy rates -- a good indicator of the health of our tourism economy.

To those who suffer from numbers-phobia, I say get over it. Find a way to make numbers your friends. As someone who's uncomfortable around numbers myself, I find it helpful to show the monthly unemployment report to other staffers who enjoy finding the story behind the numbers and asking them what they see.

To give our readers a continuous pulse on the local economy, we've developed a "scorecard" that tracks 10 leading indicators for our community. The indicators include home sales, unemployment, retail sales, bankruptcy filings, manufacturing work week and housing starts.

With the help of simple spreadsheet software, we track each indicator's performance by month or quarter, and update the scorecard weekly in print and online. If most of the indicators show improvement from a year ago, then the overall economy is improving.

While it's not scientifically weighted, we've found the Rock River Valley Economic Scorecard to be a pretty good reflection of what we've heard anecdotally from business sources and readers.

Numbers are the essential "bones" of any economy story -- local or otherwise. But the best stories don't stop there. Put flesh on the numbers by talking with local business people and workers about their perspectives.

I heard one tip just last week while I was picking out a new pair of glasses. The optician, without prompting or knowing who I was, commented that she was counting on business picking up in the coming weeks as people got their tax refunds.

She was no economist, but she knew enough to see the clear link between a prolonged manufacturing slump in our community and the fact that she had fit fewer pairs of glasses in the past couple of years. I can't help but believe that newspapers help their readers understand those connections.

Copyright © 2008 Donald W. Reynolds National Center for Business Journalism