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.
THIRD QUARTER, 2023 - (Vol. 8, No. 3)
- The seasonally adjusted industry diversification index in Southwest Florida decreased to 5.194 in the first quarter of 2023, ranking 9th out of all 24 workforce regions.
- The Naples-Immokalee-Marco Island MSA was the third most diversified MSA in the state (out of 22 total MSAs). Moreover, the Cape Coral-Fort Myers MSA and Punta Gorda MSA ranked 12th and 19th in the state, respectively.
- Industry diversification for the state of Florida decreased to 5.214 for the first quarter of 2023, ranking it 23rd out of 50 states.
The seasonally adjusted Cape Coral-Fort Myers FGCU Industry Diversification Index (IDI) slightly increased in the first quarter of 2023, registering at 5.069. This was an increase from both the fourth quarter of 2022 (revised at 5.056) and the same quarter in the previous year (5.064). The MSA remained the same in the rankings, registering as the 12th 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 had seen a steady increase in industrial diversification since 2012 with the exception of a dip in the previous few quarters. The year-to-year improvements in the IDI coincides with losses from some of the top industries in employment, including leisure and hospitality (down 6.5 percent compared to the first quarter of 2022) and increases from other industries outside the top three, including construction (up 10.9 percent over the same period).
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 fourth quarter of 2022 to the first quarter of 2023. Leisure and hospitality saw the largest quarter-to-quarter increase in employment share (0.9 percentage points), while professional and business services saw the largest decline (down 0.5 percentage points).
The Naples-Immokalee-Marco Island seasonally adjusted IDI declined in the first quarter of 2023, with an IDI of 5.299 — a decrease from the fourth quarter of 2022 revised measure (5.305) as well as the first quarter of 2022 (5.348). The IDI recorded in the first quarter of 2023 represented the lowest index registered for the MSA. Despite the decline, the Naples-Immokalee-Marco Island MSA managed to remain toward the top of the rankings, coming in as the third most diversified MSA in the state for the quarter.
The seasonally adjusted IDI measure in the first quarter of 2023 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 education and health services, construction, and trade, transportation and utilities outpaced employment growth for some of the smaller sectors (such as manufacturing, natural resources and mining, and information) over the past 12 months.
Half of the industries in the Naples-Immokalee-Marco Island MSA saw an increase from the previous quarter, while the other half saw declines. The largest increases were in the leisure and hospitality industries and the other services industry, with 8.3 and 4.6 percent increases, respectively. The next largest increases were in the top industries of education and health services and trade, transportation, and utilities, both with increases of 1.9 percent. The natural resources and mining and the unclassified industries saw the greatest declines, decreasing 12.3 percent and 19.6 percent, respectively.
The Punta Gorda seasonally adjusted IDI in the first quarter of 2023 was 4.736, a decline from the last quarter (revised at 4.768), and a decrease from the same quarter last year (4.763). The Punta Gorda MSA had the 19th highest IDI in the state of Florida, consistent with the ranking from the previous quarter and from the same quarter the previous year.
The MSA’s seasonal IDI continues to be the least diverse in Southwest Florida with the top five sectors accounting for 82.9 percent of the employment in the MSA and the top three accounting for 62.5 percent. For comparison, the top three industries in Cape Coral-Fort Myers MSA and Naples-Immokalee-Marco Island MSA account for 56.3 and 57.2 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 62.5 percent of total employment in the first quarter of 2023. 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— decreased from the fourth quarter of 2022. The workforce region’s seasonal IDI measured 5.194 in the first quarter of 2023, a decline from the previous quarter (revised at 5.206), and down from the first quarter of 2022 (5.224). The region slipped one spot 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 first quarter of 2022. This fall in IDI can be attributed to growth in some of the larger industries (such as education and health services, construction and professional and business services) outpacing growth in some of the smaller industries (such as manufacturing, financial activities, 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 decline in the seasonally adjusted IDI during the first quarter of 2023. Florida’s seasonal IDI measured at 5.214, down from both the fourth quarter of 2022 (revised at 5.222) and from the first quarter of 2022 (measured at 5.226). Florida was the 23rd most industrially diversified state in the first quarter, behind Hawaii (5.225) and ahead of New Mexico (5.204). The highest seasonal IDI for the first quarter of 2023 was Washington (5.763) while the lowest IDI in the nation belonged to Mississippi (4.881).
Over the past four quarters, the state has seen considerable improvement in employment from some of its larger industries – professional and business services industry (up 6.6 percent) and leisure and hospitality industry (up 5.5 percent). All other industries in Florida, except for natural resources and mining (decreased 3.4 percent), saw increases in employment over the past four quarters.