Manufacturing helped support Oregon's recovery in its early stages, propelled by business spending and exports. According to OEA, the manufacturing cycle is now past its peak. Businesses are putting off making long-term investments and the global slowdown has reached Oregon's shores as major trading partners have cut back on orders for our products. The good news is that the recent improvement in housing might pick up some of the slack. This handoff should help keep growth positive, yet it won't be enough to build significant momentum this year or next.
State and local government agencies are still dealing with budget constraints. The public sector will cut 5,400 jobs this year, with K-12 and community colleges once again feeling the brunt of it. After another round of school cuts this year, government employment levels will stabilize in 2013. Schools will start adding back staff next year, but these new jobs will be offset by cuts elsewhere in government.
Countering losses in government, the private sector will add 25,200 jobs in 2012 (1.9%) and 30,000 jobs when the books close on 2013 (2.2%).
Construction finally stages a comeback. After being a drag on economic growth well into the recovery, the housing market is showing signs of life. Multi-family, commercial, and remodeling projects had a bit of a head start. We're seeing this reflected in recent and projected job growth for construction, which OEA expects to be the fastest-growing broad industry in 2012 (4.8%). Growth slows but remains solidly in the positive territory in 2013 (2.5%). Momentum builds in the following years, with growth topping 5 percent annually.
Solid gains in professional and business services last year will continue this year and next. This sector was among the first to turn around following the recession, powered predominantly by a surge in employers' use of temporary help. Growth in most other components kicked in a bit later. This year should see the creation of nearly 7,000 jobs (3.7%), moderating somewhat in 2013 (2.9%).
Leisure and hospitality will be the third-fastest growing industry in 2012 (1.9%) with growth accelerating in 2013 (2.8%). OEA expects that after cutting back on spending during and in the aftermath of the recession, consumers will begin to spend a bit more on vacations, recreation, and entertainment.
Reduced domestic and international demand will slow manufacturing growth from 2.7 percent last year to 1.9 percent this year and 1.4 percent in 2013.
Although the risk of another recession remains uncomfortably high, OEA isn't factoring one into its current forecast. The three biggest threats to the state and global recovery are the euro zone recession (and potential crisis); a slowing Chinese economy; and the U.S. federal budget situation and policy environment. Unless they happen simultaneously, OEA believes the U.S. recovery can survive any one of these shocks.
Barring simultaneous or other unforeseen shocks to the economy, Oregon is expected to regain the nearly 150,000 jobs lost during the Great Recession by the second half of 2015 - nearly six years after hitting bottom. Meanwhile the unemployment rate, which tends to be one of the last indicators to improve as the economy recovers, will slowly decline from its current 8.7 percent rate to 7.0 percent by the end of 2015.
The OEA's complete report is available at: www.oea.das.state.or.us.