A Wells Fargo report recently showed that the Pennsylvania economy is continuing to build momentum in recent years with significant growth in the natural gas industry leading the way.
Wells Fargo’s Pennsylvania 2019 Midyear Outlook reported a 2.9 percent increase in the commonwealth’s gross domestic product (GDP) in the first quarter of the year, which is on par with the national average. The recent economic rise is being driven by gains in construction, leisure and hospitality, and professional services as well as an increase in state energy, education and healthcare industries. The report found that the state’s largest metropolitan area, particularly Philadelphia, is accounting for the bulk of economic gains.
In particular, the natural gas industry is helping to drive the upturn in Pennsylvania’s economy. First-quarter 2019 real GDP growth in the state was led by an 18.4 percent year-over-year surge in the mining, oil and gas industry. The GDP gain was a welcome change against the state’s nearly 6 percent decline throughout 2018 alongside lower natural gas prices. The Marcellus and Utica Shale formations – which primarily sit under Pennsylvania, Ohio, West Virginia, and New York – are estimated to have the largest proven natural gas reserves in the country.
“Even with some quarterly swings lately, the importance of the natural gas industry to the state economy cannot be overstated,” report authors and economists Mark Vitner and Charles Dougherty wrote.
The increased natural gas production in the state has helped drive the need for more robust energy infrastructure, leading to a significant uptick in heavy and civil engineering construction jobs. Over the past few years, the Mariner East 2 Pipeline, despite some delays, has been a shining example of the state’s ongoing energy infrastructure buildout. Additionally, the 400-acre Shell ethane cracker in Beaver County is currently at “peak construction” and employs approximately 6,000 construction workers, according to the report.
“Given the sheer volume of natural gas being extracted, it would not be surprising to see other large ethane cracker plants, which convert petrochemicals to consumer plastics, sprout up in the area,” the report stated.
With the national gas production continuing to increase year-over-year, Pennsylvania is reported as one of the nation’s top electricity exporters.
While nearly every metro in Pennsylvania registered declines, areas such as Lebanon, Reading and Lancaster have fared among the best in terms of the retail and local economy. The outlook reported that the Lancaster economy, specifically, has a strong and resilient manufacturing base. The area is home to New Holland Agriculture and Construction, while Armstrong Flooring, Turkey Hill Dairy and Dart Containers have a significant presence. Johnson & Johnson, Pfizer and GlaxoSmithKline all have production and packaging locations in Lancaster County.
The area’s success is attributed in part to a more diverse economic landscape as Lancaster has expanded its education and healthcare portfolio in recent years.
The state’s transportation and logistics industry, particularly in Central Pennsylvania and the Lehigh Valley near Allentown and Bethlehem, has been strongly affected by the area’s growth in warehouse and distribution facilities. The Lehigh Valley I-78/I-81 corridor’s primary advantages are its relatively low rents and land prices combined with a strategic line of sight to both Philadelphia and New York and the Northeast’s wealthy consumer base, the report said. Rapid industrial development is also evident in Allentown’s labor market, as transportation & warehousing payrolls have more than doubled since 2010.
The Wells Fargo report also showed that Pennsylvania has seen a significant rise in tech investments and innovations. Employment growth in the professional, technical & scientific services industry amounted to 5.2 percent year-over-year in July, making the sector one of the fastest growing in the Philadelphia metro division. As an example, Comcast has done its part growing the tech sector’s presence in the state with its recent development and construction of two skyscrapers in Center City, Philadelphia, which includes the 60-floor Comcast Technology Center. It will eventually house 1,500 new tech workers. With roughly 22,000 employees, the firm is the second-largest private employer in the greater Philadelphia region.
“The metro’s growing tech scene is also readily apparent across the Schuylkill River in University City, which has seen rapid development over the past few decades and become a significant catalyst of economic growth for the entire region,” the report stated.
Other examples of collaboration between university and healthcare industry investments have shown increasing promise in the state’s biotech sector, creating a state-wide environment of innovation and entrepreneurship.
Read it from Pennsylvania Business Report –
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