Published Mar-26-2012
Employment is expected to inch up 0.3 percent (4,400 jobs) in the first quarter of 2012 and gradually pick up steam as the year progresses. Overall, Oregon's economy will grow 1.1 percent, or 17,400 jobs, when the books close on 2012; a similar pace to 2011. Next year will be better, with growth projected at 2.4 percent (40,000 jobs).
Oregon's private sector will be entirely responsible for job growth. An estimated 20,800 new jobs spread across most major industries will counter a loss of 3,500 jobs in government.
Education and health services will be the fastest growing broad industry (+2.8%; 6,500 jobs). Strong gains in the health care component will offset a slight loss in education.
The outlook for construction, which added jobs in 2011 for the first time since 2007, is positive yet relatively subdued. Unlike past recessions, this sector will not power the recovery. The housing market still has a ways to go, and stronger job gains will have to wait until the single family market rebounds. OEA doesn't see this happening until 2014. In the meantime, employment will grow between 2.5 and 3.0 percent annually.
OEA downwardly revised forecasted growth in manufacturing to show a slight decline in 2012. The durable goods component will still add jobs, but at a slower pace than in 2011, reflecting an anticipated slowdown in business spending. Metals and machinery will take a breather, transportation equipment manufacturing will be flat, and other durables will decline. On the positive side, wood products will eke out a small gain for the first time in seven years. High tech remains the bright spot as industry sales are projected to remain high through 2012. Hiring will likely be dominated by expansions at Intel. Nondurable goods will offset gains elsewhere in manufacturing as the volatile food products sector pulls back.
The information sector, which includes newspapers, software, and telecom, will end the year up 1.5 percent. The outlook for 2013 is better, with projected growth of 3.0 percent. Financial activities will grow at the same pace as the overall economy (1.1%) as the residential and commercial markets slowly recover and credit conditions continue to ease. Professional and business services will add jobs at a moderate clip (1.3%), with growth accelerating to 3.8 percent in 2013. Finally, trade, transportation, and utilities should see gains in all three major components, although growth in retail will slow significantly from 2011.
Oregon, like most states, is struggling to balance its budget. Consequently, layoffs in state and local government will continue. After growing by 1.2 percent in 2011 - due entirely to solid gains in state education - state government will lose jobs this year and next. The educational component will still expand, but not fast enough to offset losses elsewhere. Unlike the state's public universities, local government educational institutions (e.g. K-12) slashed thousands of jobs last year and are expected to cut another 1,700 this year. Overall, Oregon's public sector will decline by 1.2 percent in 2012 (-3,500 jobs).
Risks to the recovery remain. The European crisis still looms large, housing prices may fall further, and oil prices may rise higher. Growth in China, the state's largest trading partner, could slow more than expected. A bad turn in fiscal policy - either too lax or too austere - could derail the recovery. Barring these or other unknown jolts to the economy, OEA expects a continued, albeit slow, recovery for Oregon over the next few years with employment returning to pre-recession levels by the end of 2014.
The OEA's complete report is available at: www.oea.das.state.or.us.
