IDP Reports
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.
SECOND QUARTER, 2024 - (Vol. 9, No. 2)
- The seasonally-adjusted IDI in Southwest Florida increased to 5.228 in the fourth quarter of 2023, ranking 7th 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 11th and 19th in the state, respectively.
- Industry diversification for the state of Florida improved to 5.238 for the fourth quarter of 2023, ranking it 22nd out of 50 states.
The seasonally adjusted Cape Coral-Fort Myers FGCU Industry Diversification Index (IDI) increased in the fourth quarter of 2023, registering at 5.121. This was an increase in both the third quarter of 2023 (revised at 5.107) and the same quarter in the previous year (5.060). The MSA rose in the rankings, rising from the 12th to the 11th 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.
Apart from 2022, the MSA has seen a steady increase in industrial diversification since 2012. The year-to-year improvements in the IDI coincide with gains in employment for the top three industries, as well as numerous increases in industries outside of the top three, including Construction (up 10.5 percent), Other Services (up 8.2 percent) and Information (up 8.1 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. Except for a few outliers, employment distribution amongst the industries remained consistent from the fourth quarter of 2022 to the fourth quarter of 2023. A 0.3 percentage point increase in Leisure and Hospitality, a 0.6 percentage point decrease in Professional and Business Services, and a 0.7 percentage point increase in Construction, have balanced employment share to around 13.7 percent for each.
The Naples-Immokalee-Marco Island seasonally adjusted IDI decreased slightly in the fourth quarter of 2023, with an IDI of 5.313 — a decrease from the third quarter of 2023 (revised at 5.315). The IDI has followed a declining pattern since the beginning of 2020. Despite these consistent declines, the Naples-Immokalee-Marco Island MSA remained toward the top of the rankings, measured as the third most diversified MSA in the state for the quarter.
The seasonally adjusted IDI measure in the fourth quarter of 2023 continued a general downward trend for the MSA that began in the 2nd quarter of 2020. The decrease in IDI for the latest quarter was fueled by quarterly decreases in the share employment for majority of the smaller sectors in the MSA. On the other hand, the share of total employment for the Leisure and Hospitality sector, the 3rd largest industry in the MSA, rose 1.2 percentage points from the prior quarter, the largest quarterly increase in the MSA. Together, this resulted in a higher concentration of employment for the top three industries in the MSA (up from 55.3 to 56.6 percent).
Other quarterly increases were seen in the Education and Health Services, Natural Resources and Mining, and Unclassified industries (increasing 0.5, 0.5, and 0.1 percentage points, respectively). The largest decreases were seen in the Professional and Business Services, Construction, and Trade, Transportation, and Utilities industries (slipping 0.6, 0.5, and 0.3 percentage points). On a year-to-year basis, Education and Health Services, Construction, and Professional and Business Services shared the largest decline in employment share (down 0.2 percentage points each), while the Leisure and Hospitality industry saw the largest year-to-year improvement (up 0.8 percentage points).
The Punta Gorda seasonally adjusted IDI in the fourth quarter of 2023 was 4.787, a decrease from the last quarter (revised at 4.802) but up from the same quarter last year (4.771). 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 82.5 percent of the employment in the MSA and the top three accounting for 62.3 percent. For comparison, the top three industries in Cape Coral-Fort Myers MSA and Naples-Immokalee-Marco Island MSA account for 55.8 and 56.6 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 62.3 percent of total employment in the fourth quarter of 2023. These permanent residents help support these industries in the Punta Gorda MSA throughout the year.
1 Source: U.S. Census Bureau, 2022 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— fell from the third quarter of 2023. The workforce region’s seasonal IDI measured 5.228 in the fourth quarter of 2023, a decrease from the previous quarter (revised at 5.239) but still above the fourth quarter of 2022 (5.211). The region remained the seventh most diversified workforce region in the state (out of 24 total regions).
The year-to-year improvement in IDI can partially be attributed to growth in the Leisure and Hospitality, Construction and Other Services industries, each of which outpaced growth in the Education and Health Services and Trade, Transportation and Utilities industries, the two largest industries in the region. The largest annual increase was seen in the Unclassified industry (up 174.6 percent), while the largest annual decrease was seen in the Natural Resources and Mining industry (7.3 percent decrease).
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 small increase in the seasonally adjusted IDI during the fourth quarter of 2023. Florida’s seasonal IDI measured at 5.238, up from both the previous quarter (revised at 5.233) and the fourth quarter of 2022 (measured at 5.224). Florida was the 22nd most industrially diversified state in the fourth quarter, behind Wisconsin (5.245) and ahead of Nevada (5.201). The highest seasonal IDI for the fourth quarter of 2023 was Washington (5.733) while the lowest IDI in the nation belonged to Mississippi (4.882).
Over the past year, the state has seen an increase in employment in some of its larger industries – Education and Health services industry (increased 4.5 percent) and Leisure and Hospitality industry (increased 3.4 percent). Most other industries experienced increases in employment over the past year, with the exception of the Information industry (down 1.3 percent) and the Natural Resources and Mining industry (down 4.6 percent).
