The Regional Economic Research Institute first developed the Industry Diversification Index in Spring of 2016 and updates it on a quarterly basis.
Researchers and academics are encouraged to contact the RERI to request access to the data for use in academic studies and modeling. The IDI begins in 1990 and is computed for each Florida metropolitan statistical area, each Florida workforce region, and each U.S. state. Upon request, the RERI will compute it for any MSA in the United States.
FIRST QUARTER, 2023 - (Vol. 8, No. 1)
- The seasonally adjusted industry diversification index in Southwest Florida decreased to 5.215 in the third quarter of 2022, ranking 9th out of all 24 workforce regions.
- The Naples-Immokalee-Marco Island MSA was the 2nd most diversified MSA in the state (out of 22 total MSAs). Moreover, the Cape Coral-Fort Myers MSA and Punta Gorda MSA ranked 13th and 19th in the state, respectively.
- Industry diversification for the state of Florida rose to 5.227 for the third quarter of 2022, ranking it 23rd out of 50 states.
The seasonally adjusted Cape Coral-Fort Myers FGCU Industry Diversification Index (IDI) slightly decreased in the third quarter of 2022, registering at 5.059. This was a decrease from both the second quarter of 2022 (revised at 5.067) and the same quarter in the previous year (5.078). The MSA remained in the same position in the rankings, registering as the 13th most diversified MSA in the state, out of 22 total MSAs in Florida. The index registers between 0 and 10, with 0 being the least diversified, and 10 being the most diversified.
The MSA has seen a steady increase in industrial diversification since 2012 but has slipped in the past four quarters. The year-to-year decline in the IDI coincides with gains from the top three industries in employment, including education and health services (up 9.5 percent compared to the third quarter of 2021), trade, transportation, and utilities (up 5.1 percent) and leisure and hospitality (up 7.1 percent).
Seasonality plays a significant role in the Cape Coral-Fort Myers MSA economy, as it is typical for the MSA to experience its lowest unseasoned IDI measures during the first and fourth quarters of the year, while having its highest unseasoned measures during the second and third quarters. With the exception of a few outliers, the distribution of employment amongst the industries remained relatively consistent from the second quarter to the third quarter of 2022. Education and health services, professional and business services, and construction each saw the largest increase in employment share (0.2 percentage points), while leisure and hospitality saw the largest decline (down 0.6 percentage points).
The Naples-Immokalee-Marco Island seasonally adjusted IDI declined in the third quarter of 2022, with an IDI of 5.323 — a small decrease from the second quarter of 2022 revised measure (5.338), and a larger dip from the third quarter of 2021 (5.402), bringing the index back to pre-Covid-19 levels. The Naples-Immokalee-Marco Island MSA managed to maintain its ranking as the 2nd most diversified MSA in the state for the quarter.
The seasonally adjusted IDI measure in the second quarter of 2022 continued a downward trend for the MSA that began in the 2nd quarter of 2020. The decline in IDI for the latest quarter was largely fueled by annual increases in employment for the largest sectors in the MSA. Industries such as trade, transportation and utilities, leisure and hospitality, and education and health services outpaced employment growth for some of the smaller sectors (such as natural resources and mining, public administration, and manufacturing) over the past 12 months.From quarter to quarter, the two of the largest three industries in the area (trade, transportation, and utilities, and leisure and hospitality) both saw decreases in employment, slipping 1.5 and 7.3 percent from the previous quarter, respectively. This is typical for the Naples-Immokalee-Marco Island MSA in the third quarter, as the lack of seasonal residents leads to decreased demand for these industries. The construction industry saw the greatest quarterly incline (5.6 percent), while the natural resources and mining industry had the greatest decline, dropping 36.8 percent from the previous quarter.
The Punta Gorda seasonally adjusted IDI in the third quarter of 2022 was 4.794, an incline from the last quarter (revised at 4.780), but a decrease from the same quarter last year (4.886). The Punta Gorda MSA had the 19th highest IDI in the state of Florida, consistent with the ranking from the previous quarter, and an increase from the same quarter the previous year.
The MSA’s seasonal IDI improved from the big drop experienced at the beginning of 2022, as sectors such as professional and business services and construction have grown since the first quarter of 2022. However, the MSA continues to be the least diverse in Southwest Florida with the top five sectors accounting for 82.2 percent of the employment in the MSA and the top three accounting for 61.7 percent. For comparison, the top three industries in Cape Coral-Fort Myers MSA and Naples-Immokalee-Marco Island MSA account for 56.2 and 55.7 percent of total employment, respectively.
Historically, the Punta Gorda MSA’s unseasoned IDI has exhibited less seasonal fluctuation than the other two coastal Southwest Florida MSA’s. Because the population in Punta Gorda has one of the highest median ages in the country (second highest median age out of 392 MSAs in the United States1), the region remains highly concentrated in industries catered towards the elderly, with the trade, transportation, and utilities, education and health services, and leisure and hospitality industries accounting for 61.7 percent of total employment in the third quarter of 2022. These permanent residents help support these industries throughout the year, as opposed the Cape Coral-Fort Myers MSA and Naples-Immokalee-Marco Island MSA.
1 Source: U.S. Census Bureau, 2021 American Community Survey 5-year estimates, Table B01002: Median Age by Sex
The seasonally-adjusted IDI for the Southwest Florida workforce region—comprising Charlotte, Collier, Glades, Hendry, and Lee counties— was virtually unchanged in the third quarter of 2022. The workforce region’s seasonal IDI measured 5.215, an infinitesimal change from the second quarter of 2022 (revised at 5.216), but a decline from the third quarter of 2021 (5.281). The region increased a ranking to the ninth most diversified workforce region in the state (out of 24 total regions).
The region’s seasonally adjusted IDI has decreased since the third quarter of 2021. This fall in IDI has been driven by year-to-year increases in bigger industries (education and health services, leisure and hospitality, and trade, transportation, and utilities) outpacing some of the smaller industries (natural resources and mining, public administration, and other services).
Historically, the region typically experiences higher unseasoned index measures during the quarters spanning January through June, and lower index measures during the quarters spanning July through December. The higher index measures during the winter period can be attributed to an influx of tourism and seasonal residents, which leads to an increase in demand for both the retail trade and accommodation and food service industries to meet the seasonal demand. In return, the increased seasonal demand in these industries create spillover effects for all of the other super sector industries in the region. In addition, the first two quarters of the year are associated with crop harvesting in the region, creating demand in all other sectors of the economy as well. During the second half of the year, there is a higher concentration in fewer industries driven by construction, professional and business services, trade, transportation and utilities, and education and health services.
Florida’s workforce experienced a very small increase in the seasonally adjusted IDI during the third quarter of 2022. Florida’s seasonal IDI measured at 5.227, a marginal increase from the second quarter of 2022 (revised at 5.225), and up from the third quarter of 2021 (measured at 5.209). Florida’s ranking amongst the states remained consistent with the previous quarter, ranking at 23rd, behind Rhode Island (5.234) and ahead of New Mexico (5.184). The highest seasonal IDI for the third quarter of 2022 was Washington (5.762) while the worst IDI in the nation belonged to Vermont (4.712).
Florida’s seasonal IDI for the third quarter of 2022 stayed steady when compared to the second quarter of 2022. Over the past four quarters, the state has seen considerable improvement in employment for the information industry (up 11.0 percent), the professional and business services industry (up 8.5 percent), leisure and hospitality industry (up 8.3 percent) and the financial activities industry (up 6.3 percent). The two top industries in Florida (trade, transportation and utilities, and education and health services) increased 4.5 and 3.7 percent respectively.