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Originally published March 2, 2010 at 11:03 AM | Page modified March 3, 2010 at 7:41 PM

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State's job numbers grow for the first time since late '08

The first increase in statewide payrolls since late 2008 was joined by another glimmer of optimism: One forecast says Washington will lead all other states in job growth this year.

Seattle Times business reporter

Washington could lead states

Five states with the biggest projected job growth this year:

Washington

1.42%

Texas

1.36%

Virginia

1.05%

California

0.94%

Iowa

0.85%

Source: IHS Global Insight

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One swallow doesn't make a summer, and one month of employment gains doesn't make a recovery.

But Washington's January jobs numbers, reported Tuesday by the state Employment Security Department, were the most promising in a long time: 12,400 net new payroll jobs, the first increase since November 2008 and the biggest one-month gain in nearly three years.

The report supported last week's projections by a respected research firm that Washington will lead all other states in job growth this year.

Steven Frable, an economist with IHS Global Insight, said demand for professional and business services — a sector in which Washington is strong — should surge this year, while a rebound in house sales and homebuilding should give a lift to the battered construction industry.

"That will remove a major drag on the local economy," Frable said.

IHS Global Insight's forecast models show Washington jobs growing by 1.42 percent this year, exceeded only by the 1.62 percent growth expected for the District of Columbia.

January's numbers lend credence to that forecast. Construction shed 66,400 jobs — nearly one-third of its peak payroll — between mid-2007 and the end of 2009, but regained 2,700 jobs in January, with most of those gains coming in residential construction.

And professional and business services, a broad category that includes workers from lawyers and accountants to office clerks and waste haulers, notched its fifth monthly jobs gain in a row, adding 1,000 jobs.

Although 600 of those jobs were at employment services — meaning temporary workers — many labor economists view temp hiring as an early indicator of broader recovery. And in fact, nearly all sectors of the economy added jobs in January.

Frable said he expects rapid growth among Washington's administrative-support workers and temps this year, as businesses staff back up. Growth on the professional-services side probably will be moderate this year but be stronger in 2011, he said.

But like true love, the course of economic recovery never did run smooth. The state unemployment rate edged up a tenth of a percentage point, to 9.3 percent, after adjusting for seasonal variations.

Dave Wallace, the state's top labor economist, said that was because people have started returning to the work force faster than jobs are being created.

It's not uncommon for the unemployment rate and the payroll figures to point in opposite directions in the short term, especially during economic turning points.

"I remain cautiously optimistic, as there is still a certain amount of economic turbulence, and any recovery is likely to be uneven," Wallace said.

He pointed out that the December jobless rate was revised down, from the initial 9.5 percent to 9.2 percent, and the total number of Washingtonians in the labor force grew by 4,600 — suggesting that as the job market picks up, more people who had given up are starting to look again.

Washington's unemployment rate remains below that of the nation, which was 9.7 percent in January. The jobless rate for the Seattle metro area was unchanged at 8.9 percent.

The unemployment rate is derived from a telephone survey of state residents — not, as is sometimes thought, by counting how many people are receiving unemployment benefits. People are counted as unemployed if they say they're able to work and are actively seeking work.

The broadest measure of unemployment and underemployment includes people who've given up looking for work, other "marginally attached" workers and part-time workers who'd rather be working full time. By that measure, Washington's "labor underutilization" rate is about 7 percentage points higher than the official jobless rate.

Durable-goods manufacturing gained a net 1,000 payroll jobs in January, 600 of them in aerospace. Retailers added 3,000 jobs, mostly in general-merchandise stores; hotels and restaurant payrolls grew by 900 jobs.

Health and social services, a bulwark during the recession, gained an additional 2,100 jobs.

The few industries that lost jobs in January included state government, down 1,200 jobs; transportation and warehousing, down 900; accounting and bookkeeping, off by 700; and membership associations and organizations, which cut 1,000 jobs.

On a seasonally unadjusted basis, Ferry County in northeast Washington had the state's highest unemployment rate at 16.2 percent. Whitman County, home to Washington State University, had the lowest at 6.2 percent.

The January jobs report was delayed so Employment Security could recalibrate its estimates. The revised data show job losses in 2009 were more severe than first reported: State payrolls shrank by 132,000 jobs, or 4.5 percent, versus a drop of 105,900 jobs, or 3.6 percent, originally reported.

All told, Washington lost 192,900 jobs between the peak of the job cycle in February 2008 and the end of 2009 — 6.5 percent of all payroll jobs.

About 260,000 Washingtonians a week are collecting unemployment benefits, down from 285,000 or so a month ago.

It will be several more months before it's clear whether January's gains were the start of a real recovery or just a blip. But state economy watchers won't have to wait long for the next set of clues: February's jobs report comes out in two weeks.

Drew DeSilver: 206-464-3145 or ddesilver@seattletimes.com

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