After two years of growth, the Dayton region’s economy contracted by 0.7 percent last year, meaning only 40 urban areas nationwide had a worse economic performance, according to government data released Tuesday.
Real gross domestic product (GDP) is the broadest measure of economic health, and the Dayton metropolitan area’s real GDP fell to $29.4 billion in 2012 from $29.6 billion in 2011, according to inflation-adjusted data from the U.S. Bureau of Economic Analysis.
Dayton was one of less than 20 percent of U.S. metro areas that saw its economy shrink, and it was the only urban area in Ohio to see a decline.
Layoffs last year by local paper companies and other manufacturers of nondurable goods were likely a major factor driving the contraction, and subpar job growth in other industries did not help.
Dayton’s output needs to return to moderate growth to ensure the region remains the nation’s 70th largest economy.
“GDP is a dollar value of everything produced in a year, and it is highly related to the number of jobs in your economy,” said William Even, Glos professor of economics with Miami University. “Generally speaking, you want to see GDP going up, because it means we are producing more goods and services, which translates into a higher amount of total income for the area.”
Real GDP is the broadest measure of economic activity, and it captures the total value of all goods and services produced in metropolitan areas, said Ralph Rodriguez, an economist with the U.S. Bureau of Economic Analysis.
Last year, about 305 of the 381 U.S. metro areas saw an increase in real GDP (80 percent of the total), according to new and revised government data that was adjusted for inflation.
On average, U.S. metro areas saw a 2.5 percent increase in real GDP in 2012, up from 1.7 percent growth in 2011.
But the Dayton metro area’s economy shrank by 0.7 percent in 2012 after growing 2.6 percent in 2011 and 2.2 percent in 2010. The metro area includes Greene, Miami and Montgomery counties.
“While Dayton was doing fairly well in 2010 and 2011, it seems to have slowed down relative to the rest of the U.S. economy and Ohio economy, and now it is performing below all of Ohio’s other cities,” Even said.
In the region, economic activity declined most sharply in transportation and utilities (-1.1 percent), nondurable goods manufacturing (-0.6 percent) and financial activities (-0.25 percent).
The largest increases in output occurred in durable-goods manufacturing (+0.6 percent) and professional and business services (+0.3 percent).
Nondurable goods often are consumed immediately and do not have a lifespan of more than 3 years. They include food, personal products, plastics, textiles, clothing and paper.
Paper manufacturers have struggled to cope with falling demand as social interactions and business activities increasingly migrate online.
Appvion, formerly Appleton Papers, laid off 330 workers at its West Carrollton mill in May 2012, reducing its payrolls to about 100 employees. Other area paper mills include NewPage Corp. in Miamisburg and Ahlstrom in West Carrollton.
Eastman Kodak Co. also laid off almost 70 workers at its Kettering facility in 2012 after the company declared bankruptcy. The company also struggled because of the digital revolution, which led to the proliferation of camera phones and changing consumer preferences for digital photography.
A few local distribution companies shed workers last year. SuperValu Inc. closed its distribution center in Xenia in 2012, resulting in 120 workers losing their jobs.
In the region, employment in transportation and utilities increased last year by 2.4 percent to 11,300 workers. Local employment data for nondurable goods was not available.
But the Dayton region has struggled to create new jobs.
Local nonfarm payrolls grew by 0.9 percent in 2012, less than Cincinnati-Middletown, Akron, Cleveland and Toledo. Employment grew more than twice as fast in Canton (+2.1 percent) and Columbus (+2.6 percent).
The economies of Ohio’s other urban areas also fared much better than Dayton’s last year.
Cleveland saw its economy expand by 1.5 percent, while Springfield saw 1.9 percent growth.
Akron’s economy grew 2.5 percent, and Cincinnati-Middletown and Columbus saw 2.7 percent growth.
“We have 10 of the fortune 500 corporate offices in our region, and that surely is a good sign of both the stability of the area and what big business thinks of our area,” said Joe Hinson, president and CEO of the West Chester-Liberty Chamber Alliance.
Dayton’s economy is the 70th largest in the nation, but it was the 68th largest in 2011.
Cincinnati-Middletown has the 29th largest U.S. economy.