Bank analysts say local economy to progress

Despite a sluggish housing market that will continue to hinder the economy in 2007, the Pittsburgh region can expect steady economic gains this year, according to several forecasts.

"I'm not looking for any boom," said Norman Robertson, former chief economist for Mellon Bank who is the economic adviser for the Smithfield Trust Co. "But I do see another year of moderately good economic growth."

Small gains in employment, capital spending and consumer and government spending should offset the fall-off in new home construction, Mr. Robertson said.

PNC Financial Services Group's latest regional economic update echoes Mr. Robertson's outlook.

In its November report, PNC forecast "a course of slow but steady improvement" for the metro area that includes Allegheny, Armstrong, Beaver, Butler, Fayette, Washington and Westmoreland counties. While it expects new single-family housing permits to drop by 3.5 percent and for total home sales to plummet by 6.6 percent in 2007, the region did not experience the same housing boom as much of the United States did in recent years so it should "suffer less fallout from a cooling housing market than will other areas," PNC said.

Commercial construction activity, including a mix of projects in Downtown, should help offset the declines in single-family home sales, PNC said.

On the payroll front, PNC said manufacturing employment will probably drop by less than 1 percent in 2007. But growth in service industries should give the economy a boost with jobs in finance, health care and education expected to grow by about 2 percent.

Mr. Robertson also is looking for gains in retail sales and consumer spending.

"People always underestimate the resilience of the national and local economy; I think there'll be a good chance both will probably be a little better than most people expect."