The New England economy finished the year strong, adding jobs throughout the region. Nonagricultural wage and salary employment increased by 109,400 jobs (1.6 percent) from November 1998 to November 1999. As the economic expansion continues, a greater percentage of jobs are being created in places where growth had been lagging. Although Massachusetts and Connecticut still dominate, accounting for 64 percent of the new jobs in the region, Maine and Vermont gained jobs at a rate of 2.4 percent annually. The rate of increase in service industry jobs was also highest in the region's northern States. New England has one of the lowest unemployment rates in the Nation, 3.1 percent in November 1999; Connecticut, New Hampshire, and Vermont are all below 3 percent.

U.S. Census Bureau data indicate that New England experienced a modest increase in population between 1990 and 1999, gaining approximately 289,000 persons to bring the total population to 13.5 million. Gains were recorded in Maine (2.0 percent), Massachusetts (2.6 percent), Vermont (5.5 percent), and New Hampshire (8.3 percent), but Connecticut and Rhode Island showed losses of 0.2 percent and 1.3 percent, respectively. Despite the population gains, much of the region continues to record net out-migration. Only Vermont and New Hampshire recorded net in-migration.

Total residential building activity for 1999, as measured by building permits, was off less than 2 percent compared with 1998. Single-family activity was up less than 0.5 percent, and multifamily activity was down about 11 percent. Regionally, new residential construction appears to be leveling off as a result of limitations on buildable sites, shortages of labor and materials, and rising interest rates. Activity in Connecticut, Maine, and Massachusetts was down. Multifamily permits in Connecticut were down more than 50 percent, but activity in Massachusetts was up more than 18 percent.

The volume of home sales in 1999 changed little from 1998, in part because of limited inventory. With demand still strong, the limited inventory of houses for sale also plays a part in rising sales prices. Between third-quarter 1998 and third-quarter 1999, home prices increased 9 percent in New England, the highest rate of increase in the Nation, according to the Office of Federal Housing Enterprise Oversight. Prices increased almost 12 percent in Massachusetts and 10 percent in New Hampshire, ranking these States second and fourth in the Nation, respectively. The median sales price for an existing home in the Boston metropolitan area in 1999 was up 9.8 percent to $233,400, according to the NATIONAL ASSOCIATION OF REALTORS^®.

New England's rental housing markets remain tight, particularly in the areas where job growth is concentrated. The tightest markets are the lower Fairfield County, Connecticut, area, which includes Stamford, Norwalk, and Danbury; and the greater Boston metropolitan area, which now extends to Cape Cod on the south, Worcester on the west, and southern New Hampshire and Maine on the north. There is not enough inventory to maintain a balanced market in these areas. There is continued pressure for rent increases at all levels, and the few inventory additions that come to market are readily absorbed.

Spotlight on New London-Norwich, Connecticut

The New London-Norwich metropolitan area, located in southeastern Connecticut, is known for its major submarine base of operations and defense-related economy. However, during the 1990s the area has made a significant transition to a stronger and more diversified economic base. The unemployment rate has fallen from 7.1 percent early in the decade to 2.8 percent as of November 1999.

Since the economic recession in the early 1990s, the area has gained almost 20,000 jobs, developing new industries and capitalizing on its history and coastal location. For the 12-month period ending November 1999, wage and salary employment increased 1.4 percent, or by 2,000 jobs, to 141,800. This increase was in service-related industries, primarily trade, services, and local casino employment.

The loss of jobs in goods-producing industries appears to have ended. Employment at Electric Boat has stabilized, and Pfizer has begun to hire in conjunction with its 800,000-square-foot expansion under way in New London. Employment in the tourist industry is increasing as a result of gaming and the popularity of the coast, particularly Mystic Seaport. Work is continuing at the Fort Trumbull State Park in anticipation of this summer's Operation Sail, which will bring many classic tall ships to the area.

Residential building permits in 1999 totaled 927 units, down 13 percent from 1998. Since 1994, permits in the metropolitan area have averaged 965 units annually. Single-family homes accounted for 90 percent of the residential activity in the area in the 1990s. As a result of the overbuilt apartment market in the late 1980s, followed by the economic recession, apartment construction has been at low levels.

Activity in the sales housing market has increased significantly. Home sales increased 15 percent in 1997 and another 14 percent in 1998. Activity in 1999 continued to be strong, with sales in the first 9 months of 1999 up 8 percent from the same period in 1998. The median sales price of $125,000 was up 3.7 percent in third-quarter 1999 from the same period in 1998.

The rental housing market in the New London area is very tight. Construction of new apartments during the decade has been negligible. With little new inventory, the increased employment and in-migration are putting pressure on the market.