Oregon Employment Forecast: StableOctober 16, 2018 Oregon’s economic expansion continues, albeit at a slower pace. Through the third quarter of 2018, the state gained 42,600 new jobs over the year for a growth rate of 2.3 percent. While still considered healthy, it has definitely moderated since topping out at 3.7 percent in the spring of 2015. Oregon isn’t alone. The nation and most states are growing more slowly today as the aging expansion settles into its 10th year.
Despite this more subdued growth, the outlook remains positive according to the latest Oregon Economic and Revenue forecast from the Office of Economic Analysis (OEA). The state will end 2018 up 42,000 jobs, or 2.2 percent, over 2017. Growth slows in 2019 (36,700 jobs; 1.9%), but should still be enough to absorb new workers entering the labor force and keep the unemployment rate low.
Most major industries will share in the slowdown. Construction is notable, finally cooling off from the red hot pace of 2016 through 2018 even as OEA expects the housing rebound to continue. They believe the recent pace of growth is unsustainable, and also point out that growth has significantly outpaced increases in new home construction, which is arguably also unsustainable.
Manufacturing will outperform the overall economy in 2018 as the cycle continues to strengthen – particularly in the state’s food processors and beverage manufacturers. Looking further out, global weakness and/or a stronger dollar could weigh on growth.
Professional and business services is the only major sector expected to grow faster next year than today, boosted in part by anticipated strength in company headquarters. It will outperform the overall economy by nearly three-to-one (5.2% vs. 1.9%). This large and diverse industry includes company headquarters, temp help firms, engineering, and computer systems design.
IHS Economics, a contributor to the forecast, shares OEA’s optimistic outlook for Oregon. They expect the state's Real Gross State Product to grow faster than all but six states, with gains averaging 2.5 percent annually through 2023. Job growth will be the eighth-strongest at an annualized pace of 1.3 percent.
Oregon’s favorable job growth forecast depends on maintaining three major competitive advantages that have served us well in the past: our ability to attract and retain a skilled labor force; our industry structure; and a favorable climate for new business formation.
It also depends on the national economy. While most leading indicators are leaning positive for the near-term, the next recession is a matter of when, not if. Outside of unforeseen financial or geopolitical shocks, it’s unlikely to happen any time soon. IHS puts the probability at 20 percent over the next year, and the Wall Street Journal consensus is 18 percent.
The OEA's complete report is available at www.oregon.gov/das/OEA/Pages/forecastecorev.aspx.