THE VIRGINIAN-PILOT 
              Copyright (c) 1996, Landmark Communications, Inc.

DATE: Thursday, October 17, 1996            TAG: 9610170339
SECTION: BUSINESS                PAGE: D1   EDITION: FINAL 
SOURCE: BY LON WAGNER, STAFF WRITER 
                                            LENGTH:   37 lines

AREA'S ECONOMIC OUTLOOK APPEARS STRONG, SAYS ODU FORECAST

The Hampton Roads economy should continue to expand during the final months of the year, boosted by retail sales and a booming new-home construction market, according to a forecast by the Old Dominion University economics department.

The strength of the regional economy is most evident in a projected 15.5 percent increase in the value of single-family home permits, according to Old Dominion economics and business professors Gilbert Yochum, Vinod B. Agarwal and Mohammad Najand.

Home construction has carried the regional economy for much of 1996, Yochum said, even with a rise in interest rates during the first part of the year. The value of single-family home construction jumped 27.1 percent in the second quarter.

``Interest rates are a marvelous predictor and they spiked, and housing construction just blew right through it,'' he said. ``Itsurprised everybody.''

The forecast predicts the region's labor market will tighten. The number of jobs will increase by just 0.6 percent, but the unemployment rate will drop by 6.2 percent over last year's fourth quarter. That could mean an increase in wages during the quarter.

The economists expect taxable sales to grow by 6.7 percent over last year's fourth quarter, which Yochum finds somewhat puzzling considering the slow employment growth.

``One possibility is some of the downsizing you're seeing like NADEP and in shipbuilding was expected,'' Yochum said, ``so it's already been factored in the minds of consumers.'' MEMO: More information on the forecast can be found on the Internet at

http://www.odu.edu/(tilde)forecast

KEYWORDS: ECONOMY by CNB