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Decline blamed on factory closure and tourism slump

By Haidee V. Eugenio

SAIPAN, CNMI (Saipan Tribune, Mar 19, 2009) - CNMI businesses posted sales of only US$1.3 billion in 2007, a 28-percent drop from the 2002 level of US$1.8 billion due to garment factory closures since 2005, the continuous decrease in tourist arrivals, and a general downturn in the economy.

These are based on the 2007 Economic Census of the CNMI released yesterday by the U.S. Census Bureau.

With the ongoing global and local economic crises and the complete demise of the garment industry, current business sales are expected to be much less.

Just the same, comparing the 2007 data with the 2002 economic census provides the public with a more meaningful look at the changes that have occurred between the two periods.

From 1,276 businesses in 2002 accounting for more than US$1.8 billion in sales, the CNMI had only 1,191 businesses in 2007 with only US$1.3 billion in sales.

The number of individuals employed by businesses also went down by 31 percent-from 32,790 in 2002 to only 22,622.

Annual payroll also dropped by 35 percent from US$381.6 million in 2002 to only US$246.1 million in 2007.

In 2007, the Northern Marianas had 200 businesses with 20 or more employees, representing 17 percent of all businesses. These businesses accounted for 67 percent or US$866 million of total sales.

The 2007 Economic Census for the CNMI-which includes the number of establishments, sales, payroll, number of employees and other items-is the first data to be released for the U.S. island areas.

The 14-island CNMI, a U.S. territory in the western Pacific Ocean, had an estimated population of 86,616 in 2008.

Data for Guam, American Samoa, the U.S. Virgin Islands and Puerto Rico will follow between May 2009 and September 2010.

More information about the Economic Census of Island Areas is available at

Press secretary Charles P. Reyes Jr. said the CNMI government and the CNMI economy have experienced substantial changes since 2007, as reflected in the budget and revenue collections and estimates.

"We have had to significantly revise projections and budget allocations as a result of the complete loss of the garment industry and the softening of our tourism industry. The CNMI has also been affected by the Japanese recession and the substantial drop in the value of the Korean won," he told Saipan Tribune.

Japan and Korea are the main tourism markets of the CNMI, which also suffered reductions in airline flight capacity.

Posing additional challenges to the CNMI are the impending start of the transition to federal immigration and another 50-cent increase in minimum wage in May as required by federal law.

"In other words, we are facing a substantially different economic situation from 2007. In 2007, the U.S. stock market hit a record high. This year, the U.S. and international markets have suffered substantial losses-losses not seen in decades. The CNMI is also affected by the global economic environment," Reyes said.

He added that the 2007 Economic Census may not be as helpful today given the changed circumstances. "The Conway-McPhee economic report may actually be more useful and relevant," he added.

The retail trade sector in the CNMI accounted for US$272 million in sales, employed 2,770 people, and paid US$28.6 million in annual payroll in 2007, the 20027 economic census says.

The 2002 data was better, with retail trade accounting for US$312 million in sales, employed 2,916 people, and paid US$29.3 million in annual payroll.

General merchandise stores made up the largest share of the retail sales, accounting for 33 percent or US$89.1 million of total retail sales in the CNMI.

Businesses on Saipan reported more than US$1.2 billion in total sales, nearly 97 percent of the total reported for the entire Commonwealth.

Besides releasing the 2007 Economic Census for the CNMI, the U.S. Census Bureau also released yesterday the preliminary data from the 2007 Economic Census.

This advance report is the first in a series of industry and geographic area data, including information for more than 1,000 communities not available from previous censuses.

The economic census is conducted every five years and is the most comprehensive and detailed profile of the U.S. economy, covering millions of businesses representing more than 1,000 industries. The census provides the foundation and benchmark for gross domestic product, monthly retail sales and other indicators of economic performance.

Wholesale trade, manufacturing, and retail trade remained the largest sectors in the U.S. economy.

Wholesale trade businesses reported more than US$5.9 trillion in receipts in 2007, an increase of nearly 28 percent from the US$4.6 trillion reported in 2002.

Manufacturers reported shipments of more than US$5.3 trillion in 2007, an increase of more than US$1.4 trillion from the US$3.9 trillion reported in 2002. This was the largest increase among all sectors covered in the economic census.

Over the same period, the manufacturing sector experienced a loss of more than 1.3 million jobs, falling to 13.3 million; this was the second largest decrease of any sector.

Data from the 2007 Economic Census will be released over a two-year period, through June 2011. These data primarily cover the nation’s 7 million businesses with paid employees. Separate data on the 21 million businesses without paid employees will be released in mid-2009.


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