OLMIS

by Amy Vander Vliet
Published Dec-20-2011

After a strong start to 2011, job growth in Oregon slowed in the second and third quarters. Uncertainty over Europe's debt situation and cuts in the public sector have been a drag on the economy. Nonetheless, Oregon's recovery is expected to continue. In their latest quarterly report, the state Office of Economic Analysis (OEA) believes that although risks to our recovery are mounting, they do not foresee a recession in the near future.

OEA expects employment to inch up 0.6 percent in the final quarter of this year and then pick up steam in the first quarter of 2012 (1.4%). Overall, their forecast calls for an increase of 1.5 percent when the books close on 2011 and a similar pace in 2012 (1.3%).

Oregon's private sector added jobs in each of the past six quarters and will be entirely responsible for job growth in 2012. An estimated 24,800 new jobs spread across all major industries will counter a loss of 4,100 jobs in government.

Leisure and hospitality will be the fastest growing broad industry in 2012 (+3.8%). Education and health services only lost jobs in one quarter during the recession. Solid growth in 2011 (+3.2%) will continue in 2012 (+3.0%), making it the state's second fastest growing broad sector.

OEA downwardly revised forecasted growth in manufacturing to a still-respectable 1.9 percent for 2011. Growth will be subdued in 2012 (0.2%), perhaps reflecting a slowdown in business spending nationally and moderating growth in some of Oregon's major trading partners. High tech will remain a bright spot, with hiring likely dominated by expansions at Intel. Nondurable goods manufacturing will decline as the volatile food products sector pulls back.

Construction will finally shake off the effects of the recession and add jobs in 2011 for the first time since 2008. Growth will continue in 2012, although at a sluggish pace as OEA believes a solid recovery in the housing market is still a ways off.

The financial sector will continue to lag the overall economy as the residential and commercial markets take time to recover, but mild growth (+1.4%) is forecasted as credit conditions continue to ease.

The information sector, which includes newspapers, software, and telecom, will end the year up 3.0 percent. The outlook for 2012 is also positive, with projected annual growth of 1.7 percent. Professional and business services will rebound from its mid-year slump and end 2011 up 2.6 percent over 2010. Growth will be more moderate in 2012 (1.3%). Trade, transportation, and utilities should see gains in all three major components, although growth in retail will slow significantly.

Oregon, like most other states, is struggling to balance its budget. Consequently, layoffs in state and local government will continue. Employment in the public sector will decline in 2011 (‑2.0%) and in 2012 (1.4%).

From start to finish, OEA estimates that Oregon lost 146,200 jobs over seven quarters during the Great Recession - a decline of 8.4 percent. Assuming that the Euro crisis doesn't spin out of control and cause a worldwide slump, employment is expected to return to pre-recession levels in the fourth quarter of 2014.

The Oregon Office of Economic Analysis also publishes an unemployment rate forecast for Oregon. They predict that the jobless rate, which tends to be one of the last indicators to improve as the economy recovers, will drop from 9.7 percent in 2011 to 9.2 percent in 2012. Declines will continue slowly in 2013 (8.6%), and 2014 (7.8%).

The OEA's complete report is available at: www.oea.das.state.or.us.