By local standards, the Buffalo Niagara economy had a good year in 2015, growing faster than it has in all but one of the past five years.
By national standards, it wasn’t so great, with a growth rate that was, on average, about two-thirds slower than the country’s other metro areas.
Not surprisingly, new federal data shows that 2015 was a great year for financial services and a good one for construction and real estate.
It was a rough year for manufacturing, educational services and government.
If you put it all together, the Buffalo Niagara economy is the 53rd biggest among all of the nation’s metro areas and the largest in upstate New York, about 2 percent bigger than Rochester, which ranks 54th.
But the data from the federal Bureau of Economic Analysis also shows that the modest growth the rest of the country has enjoyed has been even more muted in the Buffalo Niagara region and across upstate, said E.J. McMahon, the president of the Empire Center, an Albany think tank.
Since the recession ended in 2009, growth rates across upstate have lagged well behind the rest of the country. Across the country, growth has averaged 1.9 percent since 2009. The only upstate areas that were even able to grow half as fast as the national average were Albany, at 1.1 percent, and Buffalo, at 1 percent, McMahon noted. Binghamton’s economy has shrunk, while Syracuse, Utica and Rochester all have grown at an anemic pace of between 0.3 percent and 0.4 percent a year.
Here’s a closer look at the ebbs and flows within the Buffalo Niagara economy during 2015.
Private employers, which includes everything except government entities, have been the driving force in the Buffalo Niagara economy for most of the last five years, and 2015 wasn’t any different.
Economic activity from private businesses grew by 1.4 percent, double the growth rate in 2014 and the second-fastest since 2010.
Over the last 15 years, the private sector has slowly carved out a bigger piece in the region’s economy. Private employers now account for a little more than 84 percent of all economic activity in the region, up from just under 83 percent in 2001.
With all of the building going on around the Buffalo Niagara Medical Campus and the SolarCity factory, it’s not surprising that construction was one of the driving forces in the Buffalo Niagara economy last year, growing by 3.9 percent. It was the biggest uptick in activity since 2008 for an industry that has struggled mightily since the recession.
The gains last year pushed construction activity back to the levels it was at in 2010-11, but the increase locally was well below the 5 percent rise across the country.
Just when it looked like the Buffalo Niagara region’s factories were back on the right track, they took a step back in 2015. Manufacturing activity declined by 3.1 percent last year, the first drop in three years, despite modest improvement nationwide.
The decline threw cold water on hopes that local manufacturing had turned the corner after decades of decline. Since the recession began nine years ago, manufacturing activity in the region has dropped by almost 17 percent.
Trade has been the Steady Eddie of the economy, with slow but steady growth over the past five years. Most of the growth has come from the retail side, despite the rise in the value of the Canadian dollar that has cut into the savings for shoppers coming across the border.
The retail sector had its fastest growth since 2010 last year, expanding at a 3.1 percent pace, while activity on the wholesale side, which had been more robust coming out of the recession, grew at its slowest pace since 2009.
No sector was hotter last year than financial services. With Geico steadily growing in Amherst, homegrown banks like M&T Bank pushing into new markets and beefing up their headquarters staff, and financial services firms like Citigroup building up their back office operations, financial services grew by nearly 6 percent last year.
That was a turnaround after two modestly down years for a sector that now accounts for more than 18 percent of the region’s economic activity, making it the biggest part of the Buffalo Niagara economy.
Professional and business services
While professional and business services has been a solid performer throughout most of the recovery, the sector, which ranges from management and scientific services to temporary help, has struggled locally.
Thanks to solid growth during the mid-to-late 2000s, the sector is playing a more prominent role in the local economy, accounting for just under 12 percent of all economic activity. It’s the region’s fifth-biggest industry sector.
Education and health services
Education and health services has been a steady part of the Buffalo Niagara economy, growing by 1.3 percent last year. The sector, the sixth-biggest part of the local economy, has been powered by growth in health services as the region’s population has aged.
The sector has been steadily expanding, now accounting for about 10 percent of all economic activity in the region, up from 9 percent in 2001. It has grown faster than the overall economy during each of the past two years.
Accommodation and food services
Local hotels and restaurants, which grew rapidly coming out of the recession, had a nearly average year during 2015, with their growth rate falling just shy of the region’s overall gain.
The highly visible segment doesn’t pack much of an economic punch, accounting for less than 3 percent of the overall economy. Growth has lagged behind the nation for three straight years.
No sector has struggled as much as the public sector as tight budgets have led to cutbacks at all levels of government. While government still is the second-biggest part of the local economy, accounting for just under 16 percent of all economic activity, its post-recession struggles have diminished its importance. In 2001, government accounted for more than 17 percent of all economic activity in the region.
It’s been a steady decline, with government activity shrinking during four of the past five years.