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Exhibit MIEC 105C - February 2015 Moody's Analytics Report for the St. Louis Area
Attachment 2 crnklnIC &. rnhftl IMCA re nrr nun! VTIr MOODY'S ANALYTICS ECONOMIC DRIVERS FINANCIAL CENTER LOGISTICS TOURIST DESTINATION BUSINESS CYCLE STATUS ST. LOUIS MO -IL EMPLOYMENT GROWTH RANK 2013-2015 221 3rd quintile 201 3-201 8 218 3rd quintile 8esr=i, Worst=3e2 RELATIVE COSTS LIVING BUSINESS 91% U.S.=F0O% ANALYSIS Data Buffets MSA code: MSTL VITALITY RELATIVE 90% V.S.=r00% RANK 248 Sest-t. Wors2=384 Expansion RECOVERY At Risk Moderating Recession In Recession STRENGTHS & WEAKNESSES STRENGTHS » Highly diverse industrial structure. » Favorable business and living costs. » Centrally located within the U.S. and near major highways and the Mississippi River. WEAKNESSES » Persistent out -migration, especially of the younger age cohort, because of a lack of job opportunities. » Exposure to structurally declining manufacturing. FORECAST RISKS RISK EXPOSURE J Highest=1 2014-2019 2 / 5 4th quintile towest=384 UPSIDE » Boeing's new IT center creates momentum in well -paying high tech. » Financial industry cost-cutting leads to further investment downtown. DOWNSIDE » Long-term cuts to defense spending hit Scott Air Force Base worse than expected. » Office space costs rise, making Kansas City more attractive for new businesses. MOODY'S RATING Aa3 COUNTY AS OF MAY 22, 2012 Recent Performance. St. Louis' recovery has stalled in recent months, but the pieces for stronger growrh are in place. Consumer -related industries were the primary culprit behind the slowdown in job creation. However, a lagged, but more accurate, measure of employment in- dicates that the weakness is oversrated and up- ward revisions are likely in srore for retail. The unemployment rate fell below 6% in the fourth quarter for the first time since the start of the re- covery, but remains elevated relative ro the state and region. The labor force resumed growing af- ter a brief hiatus last year but remains well short of its prerecession peak. Although wage growth is tepid, low energy prices are helping to magnify household purchasing power. Manufacturing. Cheap oil will be a boon for STI:s factories, which use petroleum products intensively in their production processes. For every dollar of output, manufacturers in the metro area use 40% more petroleum than the national average. The effect of cheaper oil will cut costs significantly for petroleum product and chemical manufacturers, boosting their profit- ability and helping to offset the effects of weaker demand from abroad. However, this effect will be temporary, as a pickup in the global recovery over the next two years will raise oil prices and squeeze profit margins in turn. Manufacturing's prominence in the metro area will decline over the long run because of labor -substituting capi- tal investment projects and increasing competi- tion from abroad. Healthcare. Healthcare will be a stable growrh driver throughout the forecast, helping to fill the Tong -term void left by the decline of manufac- turing. Despite a slight deceleration in recent months, industry fundamentals remain sound thanks to an aging population. Sitting on the border of Missouri and Illinois, STL serves as a regional healthcare hub, attracting patients from both states. A larger than average share of residents over the age of 65 underpins industry demand. This share will expand as baby boom- ets retire. Given these favorable demographic trends, healthcare will gain importance to the economy throughout the forecast. While jobs will be created in nursing and residential care facilities, the majority of the additions will be in high -paying positions and come from well - established firms and hospitals. Office -using industries. Payroll growth in higher -paying industries will also accelerate in the coming years as the regional economy heats up. While office using job growth in the Midwest is limping along, hiring in STL is outperforming even the high U.S. standard. Low business costs and increasing national demand for health insur- ance as a result of the Affordable Care Act are giv- ing a boost to insurance payrolls. Similarly, low office renrs are enticing many firms ro relocate management funcrions to the metro area. The addition of these high -paying jobs will lift retail sales and demand for single-family homes. Hir- ing au offices will also increase commercial real esrate values and provide a much needed boost to construction payrolls as development kicks into a higher gear to keep up with increasing demand. St. Louis' recovery will accelerate over the next several quarters and payrolls will exceed their prerecession peak by the end of this year. Cheap oil will provide a boost to manufactur- ers, and low gasoline prices will give consumers financial breathing room. Office -using indus- tries will put wind in the sails of the labor mar- ket over the next two years and healthcare will be a stable source of growth for the foreseeable future. However, an aging population will limit long-term potential and cause STL to under - perform the U.S. for most of the forecast. Michael McGrane 1-866-275-3266 February 2015 help@economy.com 2008 2009 2010 2011 2012 2013 INDICATORS 2014 2015 2016 2017 2018 2019 129.4 126.6 129.7 130.4 131.5 131.8 0.9 -2.2 2.5 0.5 0.8 0.3 1,358.7 1,301.6 1,292.4 1,305.4 1,306.0 1,315.2 -0.3 -4.2 -0.7 1.0 0.0 0.7 6.5 9.9 9.8 8.8 7.7 7.2 4.9 -3.9 1.2 4.3 5.8 1.6 53.9 52.1 50.8 51.8 52.2 54.0 2,817.6 2,829.3 2,839.7 2,844.0 2,847.0 2,851.5 0.4 0.4 0.4 0.2 0.1 0.2 -2.1 -0.2 -0.7 -5.3 -6.2 -4.6 4,670 4,058 4,263 3,310 4,032 4,659 1,083 1,114 1,407 1,116 1,489 908 131.4 124.0 128.6 119.9 121.9 131.9 Gross metro product (C09$ bil) % change Total employment (ths) % change Unemployment rate (%) Personal income growth (%) Median household income ($ ths) Population (ths) % change Net migration (ths) Single-family permits (#) Multifamily permits (#) Existing -home price ($ ths) 129.8 134.2 140.5 143.8 147.1 149.4 -1.5 3.4 4.7 2.4 2.2 1.6 1,330.4 1,357.8 1,395.4 1,414.1 1,425.2 1,431.3 1.2 2.1 2.8 1.3 0.8 0.4 6.7 5.3 5.0 4.8 4.7 4.6 2.8 5.0 6.3 5.6 4.8 3.6 54.0 56.0 58.3 60.5 62.5 64.1 2,851.8 2,854.0 2,858.3 2,863.8 2,870.5 2,877.1 0.0 0.1 0.2 0.2 0.2 0.2 -8.1 -5.8 -3.5 -2.0 -0.4 -0.3 4,336 7,389 9,837 9,733 9,524 9,085 2,388 2,921 3,576 2,943 2,400 2,364 138.8 145.8 149.3 151.1 153.1 156.9 88 MOODY'S ANALYTICS / Precis© U.S. Metro / Midwest / February 2015 PRECIS® U.S. METRO MIDWEST St. Louis MO -IL ECONOMIC HEALTH CHECK BUSINESS CYCLE INDEX 3-MO MA Jul 14 Aug 14 Sep 14 Oct 14 Nov 14 Dec 14 7.9 7 6 0.8 01 0.4 6,0 6.7 55 '5.3 6.0 Fi.li 63,1 63.6 63.7 63.9 59.4 SrJ 595 59.7 604) Employment, change, the Unemployment rate, % Labor force participation rate, % Employment -to -population ratio, % 63.9 595 Average weekly hours, # 34.8 34.8 34.4 Industrial production, 2007=100 103 i Residential permits, single-family, # - 4,542 4,379 4,047 263 Residential permits, multifamily, # 3,046 • E� 2,773 1,899 Unchanged from prior 3-mo MA Worse than prior 3-mo MA Sources: BLS, Census Bureau, Moody'sAnalytics 34.1 34.1 34.31 104.0 1 D4.4 4,353 4,538 1.380 1,118 EMPLOYMENT OUTLOOK 6 4 2 0 -2 -4 -6 -8 -10 -12 -14 %CHANGEYRAGO 10 11 12 13 14 Government Goods producing - Private services Sources: BLS, Moody'sAnalytics 125 120 115 110 105 100 95 CURRENT EMPLOYMENT TRENDS % CHANGE YR AGO, 3-MO MA Apr 14 Aug 14 Dec 14 Total Construction Manufacturing Trade 0.7 2.7 -0.8 0.2 1.4 1.4 4.6 7.3 0.3 -0.8 -0.8 -0 P Trans/Utilities -0.5 2.9 3.0 Information Financial Activities Prof & Business Svcs Edu & Health Svcs. -0.8 3.7 3.6 -0.6 -1.4 -1.8 3.4 3.7 3.9 3.6 -0.1 1.4 Leisure & Hos•italit Other Services Government 2.2 -1.0 -1.5 5.7 2.7 0.8 0.9 -1.5 -1.5 Sources: BLS, Moody'sAnalytics RELATIVE EMPLOYMENT PERFORMANCE JAN 2004=100 1 1 1 '1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 04 05 06 07 08 09 10 11 12 13 14F 15F 16F 17F 18F 19F 20F 21F 22F 23F STL MO - U.S. Sources: BLS, Moody'sAnalytics BUSINESS COSTS Total Unit labor Energy State and local taxes Office rent U.S.=100 0 20 40 60 80 100 120 140 2007 1 2012 Source: Moody'sAnalytics EDUCATIONAL ATTAINMENT 100% - 80 % - 60 % - 40% - 20% - 0% - % OF ADULTS 25 AND OLDER 30 32 12 29 28 14 STL MO U.S. • < High school 21 Some college r Graduate school High school College Sources: Census Bureau, Moody's Analytics, 2012 116 114 112 110 108 106 JAN 2002=100 104 - 102 100 98 96 05 STL Source: Moody'sAnalytics I I 08 11 MO U.S. 14 HOUSE PRICE 220 200 180 160 140 120 100 80 96 1996Q1=100, NSA 99 02 05 08 11 14 STL MO Sources: FHFA, Moody'sAnalytics U.S. HOUSING AFFORDABILITY INDEX GREATERTHAN 100=MORE AFFORDABLE 350 300 250 200 150 97 01 05 09 13 STL MO - U.S. Sources: NAR, Moody's Analytics POPULATION BY AGE, % a75 70-74 65-69 60-64 55-59 50-54 45-49 40-44 35-39 30-34 25-29 20-24 15-19 10-14 5-9 0-4 0 1 2 3 4 5 6 7 8 A STL U.S. Sources: Census Bureau, Moody'sAnalytics, 2073 MOODY'S ANALYTICS / Precis® U.S. Metro / Midwest / February 2015 89 PRECIS® U.S. METRO MIDWEST ;!? St. Louis MO -IL St. Louis Universi y AT&T United States Postal Service Wells Fargo_ Enterprise Holdings Edward (ones Ameren Cog,. Monsanto Co. Express Scripts Inc. CitiMortgage Inc. Source: St. Levis Business foumal, 2012 Federal State Local 2013 Sector Mining PUBLIC EMPLOYMENT & INDUSTRY TOP EMPLOYERS BJC Healthcare Boeing Defense, Space & Security Washington university in St. Louis Scott Air Force Base SSM Health Care System Archdiocese of St. Louis Wal-Mart Stores Inc. Schnuck Markets Inc. 25,374 14,730 13,677 13,020 11,312 11,207 10,600 10,553 Mercy Health Care 10,247 McDonald's Corp. 9,500 7,495 7,100 6,356 5,300 4,830 4,813 4,408 44,200 4,188 4,000 25,299 16,942 119,038 Construction Manufacturing Durable Nondurable INDUSTRIAL DIVERSITY Most Diverse (U.S.) 1.00 - 0.84 0.80- 0.60- 0.40- 0.20 - 0.00 - Least Diverse EMPLOYMENT VOLATILITY Due to U.S. fluctuations Relative to U.S. 100%- 80%- 60%- 40%- 20%- 0% �NotduetoUS. DuetoU.S. STL U.S. COMPARATIVE EMPLOYMENT AND INCOME Transportation/Utilities Wholesale Trade Retail Trade Information Financial Activities Prof. and Bus. Services Educ. and Health Services Leisure and Hosp. Services Other Services Government % of Total Employment STL 0.1% 4,3% 8.6% 60.9% 39.1% 3.5% 4.6% 10.6% 2.3% 6.5% 15,0% 17.9% 10.8% 3.5% 12.3% MO U.S. 0.1% 0.6% Average Annual Earnings STL MO U.S. nd $48,986 $103,753 3.9% 4.3% nd $56,079 9.2% 8.8% 58.5% 62.8% 41.5% 37.2% 3.5% 3.7% 4.3% 4.2% 11.0% 11.1% 2.1% 2.0% 6.0% 5.8% 12.7% 13.6% 15.9% 15.5% 10,3% 10.5% 4.2% 4.0% 16.5% 16.0°% $85,276 nd nd $61,658 $85,940 $30,601 $106,379 nd $67,891 $50,900 $24,377 $33,213 566,892 570,110 $70,023 $70,237 559,631 $74,686 530,159 $100,740 543,273 $60,969 $48, 549 $23,070 $32,905 $60,309 $60,444 $77,051 578,697 $74,316 564,339 $81,024 533,130 $102,915 $52,549 $64,145 $51,580 $24,893 $35,425 $72104 Sources: Percent of total employment- BLS, Moody'sAnalytics, 2013, Average annual earnings -BEA, Moody'sAnalytics, 2013 MIGRATION FLOWS INTO ST. LOUIS, MO Chicago, IL Kansas City, MO Columbia, MO Springfield, IL Springfield, MO Los Angeles, CA Phoenix, AZ Dallas, TX Atlanta, GA Houston, TX Total in -migration FROM ST. LOUIS, MO Chicago, IL Kansas City, MO Dallas, TX Columbia, MO Houston, TX Phoenix, AZ Springfield, IL Springfield, MO Elizabethtown, KY Tampa, FL Total out -migration NUMBER OF MIGRANTS 1,656 1,025 932 694 593 516 502 467 447 418 4 9, 511 1,718 1,331 1,023 939 718 694 673 612 609 603 56,400 Net migration -6,889 NET MIGRATION, # 0 -1,000 -. -2,000 - -3,000 -4,000 -5,000- -6,000 - -7,000 -F 10 Domestic Foreign Total 11 2010 2011 -8,562 -9,359 7,827 4,016 -734 -5,344 12 2012 -10,666 4,430 -6,237 13 2013 -9,241 4,649 -4,592 Sources: IRS (top), 2011, Census Bureau, Moody'sAnalytics PER CAPITA INCOME LEADING INDUSTRIES BYWAGETIER 39 34 29 $THS I f I I I I 1 I 1 i I 02 03 04 05 06 07 08 09 10 11 12 13 2013 STL S4S,724 MO S.40,663 .S. $44,765 Sources: BEA, Moody'sAnalytics HIGH-TECH MPLOYMENT Ths I % of total STL 57.4 4.3 U.S. 6,553.6 4.7 HOUSING -RELATED EMPLOYMENT STL Ths % of total 130.9 9.8 U.S. 12,757.8 9.2 Source: Moody'sAnalytics, 2014 Location Employees NAICS Industry Quotient (ths) 5511 Management of companies & enterprises 2.0 41.1 V GVF Federal Government 1.0 25.4 = 6211 Offices of physicians 0.9 20.4 4251 Wholesale elect. mrkts, agents & brokers 1.9 16.3 GVL Local Government 0.9 116.5 13 6221 General medical and surgical hospitals 1.6 68.0 i 6113 Colleges, universities & prof. schools 1.5 23.9 5221 Depository credit intermediation 1.2 19.7 7225 Restaurants and other eatingplaces 1.1 97.$ 5613 Employment services 0.9 28.6 5617 Services to buildings and dwellings 1.3 22.7 6231 Nursing care facilities; 1.4 221 9 Source: Moody'sAnalytics, 2013 90 MOODY'S ANALYTICS / Precis® U.S. Metro / Midwest / February 2015 About Moody's Analytics Economic & Consumer Credit Analytics Moody's Analytics helps capita[ markets and credit risk management professionals worldwide respond to an evolving marketplace with confidence. Through its team of economists, Moody's Anatytics is a leading independent provider of data, analysis, modeling and forecasts on national and regional economies, financial markets, and credit risk. Moody's Analytics tracks and analyzes trends in consumer credit and spending, output and income, mortgage activity, population, central bank behavior, and prices. Our customized models, concise and timely reports, and one of the largest assembled financial, economic and demographic databases support firms and policymakers in strategic planning, product and sales forecasting, credit risk and sensitivity management, and investment research. Our customers include multinational corporations, governments at all levels, central banks and financial regulators, retailers, mutual funds, financial institutions, utilities, residential and commercial real estate firms, insurance companies, and professional investors. 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