Retail and Restaurants Employment Estimates Revised Lower

by David Cooke

December 4, 2018

Retail and restaurant employment growth through June wasn’t as fast as originally reported. This news comes from quarterly updating to the industry payroll employment estimates.

Every three months we get an update to the monthly industry employment data. We call this “quarterly benchmarking” and it can tell us a somewhat different and improved story about Oregon’s economy trends among its many industries.

The latest revisions incorporate solid data up through June 2018. This data is from the Quarterly Census of Employment and Wages, which derives its totals from employer tax reports that nearly all employers are required to file with the State of Oregon.

Earlier this month, when we plugged in the latest QCEW data, total nonfarm payroll employment was revised lower by 10,100 jobs for June 2018. This was a downward revision of only one-tenth of a percent. So, the original estimates that are produced by the U.S. Department of Labor’s Bureau of Labor Statistics were close to the mark at the total level.
However, most of the individual industries had larger percent revisions for the ending month of June. Three industries accounted for much of the total revision. Retail trade was revised lower. Accommodation and food services was revised lower. And professional and business services was revised higher.

Over the past two years, retail trade has seen multiple store closures and the bankruptcies of several major national retailers. These closures and other factors contributed to a moderation in overall retail employment growth. Since October 2016, Oregon’s retail employment grew at an annual rate of only 1.0 percent, which was about half the growth rate of Oregon’s total nonfarm payroll employment.

In mid-November, revised industry employment numbers show that retail trade hasn’t been growing as fast as originally estimated. Earlier indications were that retail trade grew by 1.6 percent between June 2017 and June 2018, but the revised figures show an essentially flat trend over that 12-month period. We’re reviewing the data ending in June because that is the most recent month survey-based we’ve revised using universe-based data from employer tax records.
Somewhat counterbalancing retail’s slowing was moderate growth in wholesale trade (up 2.8% in the past 12 months) and in transportation, warehousing, and utilities, which grew consistently close to a 3 percent annual rate over the past six years.

Accommodation and food services grew by 2 percent in the 12 months ending in June 2018. This is far slower growth than the 6 percent growth estimated by BLS. This more modest growth rate of 2 percent seems reasonable – given the overall economic backdrop of moderate growth – and was in line with Oregon’s overall payroll employment which expanded by 1.7 percent during that time.

Most jobs in this industry are in restaurants. It is unclear what factors are contributing to slower job gains, but we do know that Oregon’s minimum wage has been increasing during this time due to Oregon’s minimum-wage laws, and that demand for workers is quite tight at this stage of Oregon’s economic expansion, with the unemployment rate below 4 percent for the first time in decades. Average wages in the broader industry of leisure and hospitality rose to $16.86 in October 2018 from $15.91 in October 2017, equal to an increase of 6.0 percent, according to the Current Employment Statistics survey.
Professional and business services was revised higher by 1,500 jobs by June 2018 when compared with the BLS estimates. This industry has slowed its rate of growth over the past two years compared with economy-leading growth throughout the prior portion of Oregon’s economic expansion dating back to 2010.

According to the latest estimates, the industry professional and technical services, which employed 96,000 in October 2018, is estimated to be essentially flat with its year-ago total. This slowdown contrasted with the industry’s very fast growth between 2011 and 2017.

Management of companies and enterprises – another component industry within professional and business services – continues to expand in Oregon. It employed 49,500 in October 2018, which was up from 47,400 in October 2017.

The third component industry, administrative and waste services, has shown a predominantly slow growth trend over the past three years. It employed 104,900 in October 2018.

The quarterly benchmark revisions show that the original estimates were pretty close overall, up through June 2018. However, several industries experienced large revisions indicating that the trend of those industries was somewhat different than originally thought.

 


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