While the net job gain in the third quarter of 2012 is less than half the size of the third quarter 2011 net gain, it may be a truer indicator of genuine economic improvement. A portion of the apparent employment surge in 2011 was likely the result of a shift in normal seasonal hiring patterns within crop production industries brought on by an unusually cold spring and late growing season. By contrast, the job flow dynamics in the third quarter of 2012 were characterized by significant growth in a few large industry sectors, which outweighed smaller losses in several other sectors.
Professional and business services experienced the largest net loss of 702 jobs. Five other sectors reported smaller net job losses on a seasonally adjusted basis. Oregon BED data for natural resources, mining, and utilities are not disclosed to maintain employer confidentiality.
Comparing third quarter 2011 with third quarter 2012 reveals more industries with net job losses in 2012. Most sectors that reported gains in 2012 had smaller ones than a year earlier. The exceptions were wholesale trade, which added slightly more jobs in 2012 than in 2011; leisure and hospitality, which nearly doubled its already-significant growth of the previous year; and financial activities, which grew for the first time in 22 consecutive quarters.
Educational and health services and manufacturing both showed slower net job growth between June and September 2012 than in the same period the previous year. In manufacturing the drop was particularly sharp, from a gain of 1,765 jobs in the third quarter of 2011 to just 66 jobs gained in the third quarter of 2012.
The fact that seasonally adjusted net job gains in professional and business services entered negative territory for the first time since 2009 is not necessarily cause for concern. Large job gains and losses are commonplace in this sector and don't always fit into predictable seasonal patterns. Professional and business services suffered major job losses during the Great Recession, shedding almost 11 percent of sector employment between the fourth quarter of 2007 and the second quarter of 2009. Beginning in the fourth quarter of 2009, this sector began its climb out of the trough, logging substantial seasonally adjusted gains every quarter through June 2012. By September 2012, the sector regained 85 percent of the jobs lost during the recession.
It is likely that quarterly job gains are simply leveling off as the professional and business services sector approaches a full recovery. On an unadjusted basis, this sector continued to add jobs in the third quarter of 2012; however, it did so at a slower pace than in the past two years, resulting in a seasonally adjusted net loss.
The financial activities sector includes industries related to banking, lending, investments, insurance, and real estate. Troubles began in this sector well before the broader economy began to experience recession.
From 2002 through the middle of 2006, gross job gains in financial activities were relatively high and, with a few exceptions, tended to outweigh gross job losses. From the second quarter through the fourth quarter of 2005, these trends combined to produce net job gains on the order of one thousand jobs each quarter. Growth slowed dramatically in 2006 as gross job gains began to decline and gross job losses remained relatively high. In the second quarter of 2007, gross job losses outweighed gross job gains for the first time in three years. For the next five years, the financial activities sector contracted as job gains continued to trend downwards, persistently outweighed by job losses. In this context, the seasonally adjusted job growth in the third quarter of 2012 comes as welcome news indeed; the sector that was first into the recession may finally be showing signs of recovery.
In order to explain this encouraging development, it would be useful to know if the growth in Oregon's financial activities sector during the third quarter was concentrated in particular industries. The BED series does not provide us with this level of detail, but we can get a sense of where the action is from looking at Quarterly Census of Employment and Wages (QCEW) data.
As it turns out, the industries with significant quarterly and over-the-year growth in the third quarter of 2012 were all related to housing in some way. The biggest gains were among mortgage and nonmortgage loan brokers (+6.8% over the quarter and +4.1 % over the year); other nondepository credit intermediation, which includes mortgage lending (+2.4% quarterly and +6.2% annually); and offices of real estate agents and brokers (+3.5% quarterly and +5.4% annually). By comparison, the financial activities sector as a whole was up just 0.8 percent over the quarter and 0.5 percent over the year. It is worth noting that industries related to housing rental made significant gains too, though not as large as the gains among mortgage and real estate brokerage companies. Also, QCEW data does not cover self-employed people or those who are paid solely by commission, so the number of people actually working in these industries is higher than the figures cited here.
Third-quarter BED and QCEW data suggest an improving employment picture tied directly to Oregon's housing market. Do other indicators support this idea? The U.S. Census Bureau's Housing Vacancies and Homeownership Survey (HVS) is a source of timely information about housing inventories and homeownership rates in Oregon. The HVS does show a spike in Oregon's homeowner vacancy rate in the second quarter of 2012, followed by a jump in homeownership rates in the third quarter. Taken together, these numbers suggest a more active housing market in the middle of 2012. Lending further support to this view, home values in the Portland metropolitan area rose 3.7 percent from September 2011 to September 2012 according to the S&P/Case-Schiller Home Price Index. This is the first year-over-year increase in any September since before the recession, and the largest since September 2006.
A final indicator suggesting renewed momentum in Oregon's housing market is the U.S. Census Bureau's Building Permits Survey. This data series provides statistics on permits issued for the construction of new privately owned housing units throughout Oregon. The number of units authorized reached its pre-recession peak in the second quarter of 2006 and then dropped sharply, bottoming out in the dismal fourth quarter of 2008 just as the stock market was crashing (Graph 4). Since then, building permit levels remained persistently low, but some positive movement finally occurred in the second and third quarters of 2012. This improvement, along with rising home values and increased employment in housing-related industries, suggests that Oregon's housing market may finally be moving toward recovery.
Data on the quarterly gross job gains and losses come from the Business Employment Dynamics program at the U.S. Bureau of Labor Statistics. A more detailed Business Employment Dynamics Report is available at www.QualityInfo.org on the Publications page in the News box.