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Job Growth Climbing Back to Average in 2012
by Nick Beleiciks
Published Jan-22-2013

 
Words like "slow" and "weak" and "sluggish" are often used to describe Oregon's job growth these days. They each accurately describe the jobs situation, but another adjective could find its place among these economic synonyms - average.

Oregon's job growth in 2012 was not enough to fill in the deep hole dug by the recession (Graph 1), but growth was actually kind of average compared with the job growth seen each year since 2000. From November 2011 through November 2012, preliminary estimates from the Bureau of Labor Statistics show that Oregon added 20,000 jobs, a growth rate of 1.2 percent. That rate of growth was well above the average growth rate for all years since 2000, which is not impressive because that average was close to zero. Job growth in 2012 was well below the average when compared with only years of job growth, but still ranked in the middle of this pack of growth years.

Oregon's unemployment rate fell slightly over the year, falling to 8.4 percent by November. The unemployment rate bounced around between 8.9 percent and 8.4 percent during 2012. The falling unemployment rate in the second half of the year was driven more by the shrinking labor force than by more people finding jobs. The average pay of those with jobs increased through the first half of 2012 at a faster pace than prices did, so annual wage gains in Oregon were ahead of inflation.

The employment figures used in this annual review are preliminary estimates from the U.S. Bureau of Labor Statistics. They will be revised as more complete information becomes available from employers, which could change the trends discussed here.

Graph 1
Oregon's job growth average in 2012
Neighboring States Grew Faster in 2012
 
Oregon's job growth rate of 1.2 percent was slightly slower than the U.S. growth rate of 1.4 percent from November 2011 through November 2012 (Graph 2). Oregon, along with Nevada, ranked 21st in job growth rate among the states and Washington, D.C.

Oregon's other neighboring states grew faster. Idaho's job growth rate ranked 7th in the nation. California and Washington also added jobs faster than the nation as a whole.

Graph 2
Oregon ranks 21st in job growth
Private Sector Drove Job Growth in 2012
 
Oregon's private sector added 21,400 jobs between November 2011 and November 2012, but the loss of 1,400 jobs in government means Oregon's net job growth was 20,000. Table 1 shows how each major industry sector performed according to the number of jobs added or lost, their growth or loss rates, and the rank of each sector's growth rate among the 50 states and Washington, D.C.

The collapse of the housing market and fallout from the 2008 financial crisis were starting to wane in Oregon's real estate and banking industry as measured by employment in financial activities. After reaching a recessionary low in December 2011, the sector bounced back by adding 3,200 jobs over the year, a growth rate of 3.5 percent. More than one-third of the jobs in this sector are in the real estate industry, which housed most of the job growth.

Manufacturing finally saw a year of strong growth in 2012, adding 5,000 jobs. Durable goods manufacturing added 3,100 jobs, seeing growth in wood products, fabricated metal products, machinery, and computer and electronic products. Nondurable goods manufacturing added 1,900 jobs, most of which was in food manufacturing.

Professional and business services is a broad industry that includes legal, architectural, and computer services, management companies, and administrative and support services for businesses, among others. It added 4,300 jobs over the year for a growth rate of 2.3 percent. Employment services, the industry that includes temporary help agencies and is sometimes considered an indicator of future hiring, lost 400 jobs since November 2011.

Many Oregonians continued to have fun in 2012, as is evident from the 3,300 jobs added in the leisure and hospitality sector. Accommodation and food services added 2,300 jobs and 1,000 jobs were added in the arts, entertainment, and recreation industry.

Oregon's largest sector - trade, transportation, and utilities - added 6,500 jobs over the year, a growth rate of 2.0 percent. Much of the growth in the sector was in the retail trade industry, which added 4,900 jobs. Wholesale trade added 1,700 jobs, but transportation, warehousing, and utilities hardly moved at all, losing 100 jobs since November 2011.

The information sector added 500 jobs for a growth rate of 1.5 percent. The sector includes publishing, motion picture and sound recording, broadcasting, telecommunications, and data processing services.

Private educational and health services was the only sector that seemed to avoid job losses during the recession, but it has not been doing as well during the recovery. The sector lost 400 jobs between November 2011 and November 2012.

Other services, the catch-all service sector which includes repair and maintenance businesses, personal and laundry services, and membership associations and organizations, was essentially unchanged over the year, losing 100 jobs.

The public sector suffered fewer job losses in 2012 than the year before. Government employers cut 1,400 jobs, a 0.5 percent reduction. Local education bore the brunt of the job cuts in 2011, but job losses in federal government led the cuts in 2012. State education facilities continued to grow, adding 400 jobs over the year.

Construction employment was nearly level in 2012, losing 600 jobs. The beleaguered industry saw growth in 2011, but not much change over the course of 2012.

Mining and logging lost 300 jobs between November 2011 and November 2012, a decrease of 4.3 percent and the largest percent decline of any major sector in Oregon.

Table 1
Most Oregon Industry Sectors Seeing Some Recovery
November 2011 to November 2012 Nonfarm Payroll Employment Change
  November November   Percent   U.S.
2011 2012 Change Change   Rank
Total nonfarm payroll employment 1,636,000 1,656,000 20,000 1.2%   21
Financial activities 91,200 94,400 3,200 3.5%   4
Manufacturing 164,900 169,900 5,000 3.0%   14
Professional and business services 185,100 189,400 4,300 2.3%   23
Leisure and hospitality 161,300 164,600 3,300 2.0%   24
Trade, transportation, and utilities 321,500 328,000 6,500 2.0%   20
Information 32,600 33,100 500 1.5%   16
Private educational and health services 242,800 242,400 -400 -0.2%   45
Other services 59,000 58,900 -100 -0.2%   38
Government 299,900 298,500 -1,400 -0.5%   32
Construction* 70,700 70,100 -600 -0.8%   21
Mining & Logging* 7,000 6,700 -300 -4.3%   34
* The U.S. rank for this industry is based on data for 44 states.
Source: U.S. Bureau of Labor Statistics, not seasonally adjusted data.
Unemployment Rate Fell as People Left the Labor Force
 
Oregon's unemployment rate fell slowly in 2012, but not entirely due to the average pace of job growth. A net 32,000 Oregonians left the labor force during the year. Their leaving reflects the weak labor market, more people reaching retirement age, fewer young people participating in the labor force, and slower population growth. Fewer people looking for jobs leads to a falling unemployment rate.

The unemployment rate fell from 9.1 percent in November 2011 to 8.4 percent in November 2012, although there was a slight increase during the summer (Graph 3). The number of unemployed Oregonians fell, but so did the number of people in the labor force.

Nearly every Oregon county saw improved unemployment rates over the year. The exceptions were Gilliam, Grant, and Sherman counties, which each saw slight increases. Some areas are doing better than the state average, while other areas are still suffering extremely high levels of unemployment. Unemployment rates vary dramatically among the counties, ranging from a high of 13.5 percent in Grant County to a low of 6.1 percent in Benton County in November 2012.

Graph 3
Oregon's unemployment rate decline slowed in 2012
Average Pay Rising Faster Than Inflation
 
Like most years, the average pay of workers in Oregon continued to rise through the first half of 2012. The four-quarter moving average trend, which smoothes seasonal bounces in pay, shows that average pay increased more than 3.5 percent over the beginning of 2011 (Graph 4).

The average pay increases grew faster than inflation, as measured by the increase in the Consumer Price Index (CPI) for the Portland-Salem area, so the average Oregon worker saw real gains in her paycheck. The CPI rose 2.5 percent from the first half of 2011 to the first half of 2012.

If consumer prices in Oregon mirror national trends during the second half of 2012, it's likely that inflation will run just above 2 percent over the year.

Graph 4
Oregon's average pay growing faster than inflation
Forecast Calls for Similar Job Gains in 2013
 
The official state economic forecast, produced by the Oregon Office of Economic Analysis, indicates that annual job gains in 2012 could be 21,500, an increase of 1.3 percent. Preliminary employment estimates indicate that employment is on track to meet that forecast. The forecast expects about the same pace of growth in 2013, followed by faster growth in later years. Employment is not expected to reach pre-recession levels until early 2015.

Oregon's economy is expected to do slightly better than the U.S. in job growth over the next few years. The forecast expects job growth in most private sectors, but anticipates strong job growth of 3 percent or more in just a few: professional and business services, wood product manufacturing, and transportation, warehousing, and utilities. The forecast expects construction to add jobs in 2013 and see aggressive job growth starting in 2014.

Of course, projecting job growth into the future is very difficult. The forecast notes risks such as the continued European debt problems and financial instability, prolonged housing market instability, commodity price inflation, and the loss of federal timber payments to Oregon counties. The volatility in overseas markets could impact Oregon's economy in a good or bad way, depending on how things shake out, as could local and federal policy changes.

Conclusion
 
Oregon's job growth over the past year ranked 21st in the nation, growing 1.2 percent between November 2011 and November 2012. It isn't stunning, but the growth rate came in at about the average since 2000. More of the same is anticipated for 2013.