Cincinnati earns an overall grade of A, ranking in the 66.8th percentile among 50 US metros, with a strong labor demand and low unemployment rate defining its current economic character. The city's labor demand composite score of 4.58 and unemployment rate of 3.70% are key metrics that shape its economic landscape. With an employment growth rate of 0.06% and weekly hours deviation of 0.198%, Cincinnati's economy is characterized by genuine demand expansion.
Labor Demand
Cincinnati's employment growth rate of 0.06% and weekly hours deviation of 0.198% signal genuine demand expansion, indicating that the city is adding jobs and workers are putting in more hours than the 12-month trend. This combination suggests that businesses are experiencing increased demand for their products or services, leading to a need for more labor. As a result, companies can expect to find a workforce that is engaged and motivated.
Unemployment
The unemployment rate in Cincinnati is 3.70%, which is in the top tier, ranking in the 92nd percentile. This low unemployment rate indicates a tight labor market, making it challenging for businesses to hire new employees. As a result, companies may face upward pressure on wages as they compete for scarce labor, which could increase their labor costs.
Wage Growth
Cincinnati's year-over-year wage growth rate is 3.26%, which is near the median, ranking in the 40th percentile. This moderate wage growth rate suggests that labor costs for employers are rising, but not excessively so. At the same time, workers are experiencing an increase in their purchasing power, which could boost local consumer demand.
Cost of Living
Cincinnati is relatively affordable, with a cost of living percentile rank of 82, and a price-to-salary ratio of $192/sqft to $35.21/hr, or 5.45. The fact that the price per square foot is falling by 0.5% year-over-year further enhances the city's affordability. This makes Cincinnati an attractive location for talent, as workers can enjoy a relatively high standard of living without requiring excessive wage premiums.
Labor Force Growth
The civilian labor force in Cincinnati is shrinking, with a year-over-year growth rate of -0.39%, ranking in the 40th percentile. This contraction in the labor force supply could create a structural headwind for hiring, making it more challenging for businesses to find the workers they need. As a result, companies may need to invest in training and development programs to upskill their existing workforce.
Building Permits
Cincinnati is experiencing a significant increase in residential building permits, with a year-over-year change of 19.15%, ranking in the 76th percentile. This expansion in housing supply is a positive sign for future affordability and workforce accommodation, as it will provide more options for workers to live in the city. As a result, businesses can expect to find a more stable and attractive environment for their employees.
Days on Market
The median days on market in Cincinnati is 37 days, with a year-over-year increase of 8.8%, ranking in the 84th percentile. This slower pace of home sales makes the city's housing market more accessible to relocating workers, giving them more time to find a suitable home. As a result, businesses can expect to find a more competitive and attractive environment for their employees.
Office Economy
Cincinnati has a relatively deep professional talent pool, with an office economy percentile rank of 60. This makes the city well-suited for businesses in the tech, finance, consulting, and HQ sectors, which require a high concentration of specialized knowledge workers. However, the city may be less suitable for industries that require a large workforce in industrial or logistics roles.
In conclusion, Cincinnati offers businesses a strong labor demand, low unemployment rate, and relatively affordable cost of living, making it an attractive location for talent. However, the city's shrinking labor force supply is a significant risk that decision-makers should factor in, as it could create challenges for hiring and workforce development. Overall, Cincinnati is a viable option for businesses looking to establish or expand their operations in a city with a growing economy and a high quality of life.