South's economy growing

Economists at the Federal Reserve Bank are "cautiously optimistic" that Alabama's manufacturing sector will continue to grow in 2007 and praised an upswing in Alabamians' individual income in 2006.

In a report Wednesday from the bank, economists said the southeastern economy is expected to see modest growth this year.

In Alabama, auto manufacturers and suppliers will continue to expand their presence as a result of Kia Motors' plant project in western Georgia, the report said.

That's important for Montgomery because of the strong auto supplier base already established here. Local economic developers traveled in 2006 to Korea to make contacts with new Korean auto manufacturers and try to facilitate that process.

The Federal Reserve economists said new contracts from oil and gas producers and the military will stimulate Alabama's shipbuilding industry, but "sluggishness" in the housing industry could slow the wood industry.

It also warned that the textile industry probably would shed more workers. Thousands of workers were affected in 2006 when Avondale Mills shut down factories across the state.

Published each year, the bank's outlook report also looks back at the year that was. This year's report shows some very positive economic news for Alabama.

The state expanded its employment base by 1.5 percent in 2006. Additionally, in the first nine months of 2006 Alabama's unemployment rate averaged about 3.6 percent, the reserve bank said, which is the lowest level in 30 years.

The most striking news, however, was Alabama's growth in real per capita income, which increased at a rate of 3.4 percent in the first six months of 2006.

The national rate was 2.7 percent. This solid growth, the reserve bank said, "helped close the income gap between Alabama and the nation as a whole" and positions Alabama's per capita income at 86 percent of the national average, its highest reading on record.

Many of the predictions made by the federal reserve were on the agricultural front. Alabama Commissioner of Agriculture and Industries Ron Sparks said last year was pretty unlucky for many farmers, so it won't take much to improve this year.

"We have an optimistic outlook for our poultry farmers," Sparks said. "We feel that they will do very well, but it certainly depends on a lot of things," such as market forces and weather.

The Federal Reserve bank said bird flu fears in 2006 caused considerable hardship for the poultry industry, but agreed with Sparks that, "barring unforeseen problems, the poultry industry should regain some stability in 2007."

Additionally, the authors of the study cited the difficulty being faced by livestock raisers who are battling higher feed costs by taking herds to slaughter early.

"That's one of the crises that we are in right now, is to try to find supplementary feed for our cattle. We are trying every thing we can to do that," Sparks said.