Oregon Office of Economic Analysis

On Wednesday, the Oregon Employment Department released the preliminary December employment figures. On a seasonally adjusted basis, Total Nonfarm employment in Oregon decreased 1,800 in December, following a downwardly revised +2,800 gain in November (originally estimated at +6,300). The past two months worth of data are less bright than October (+6,700) however on a quarterly basis, employment has improved substantially and came in stronger than our office’s most recent forecast by 2,000, or 0.13 percent . All told, 6 of the 12 months in 2010 saw positive job gains, with a total annual net gain of 11,900 from December 2009 to December 2010 – meaning the positive months were larger than the negative months. Note that the annual average for 2010 will still be down about 1.0 percent from the 2009 annual average.

On a year-over-year basis, Total Nonfarm employment in Oregon has increased 0.75  percent from December 2009. This marks the fourth consecutive month of positive year-over-year job numbers. In fact, for 2010 Q4, employment was positive year-over-year, which is the first quarterly such gain since the beginning of the recession – way back in 2008 Q1. Since February 2008 when state total nonfarm employment peaked, Oregon has lost jobs in 28 of the 34 months. Currently, Total Nonfarm employment is 7.86 percent below peak levels, or 136,700 jobs. 34 months into the early 1980s recession, Oregon had lost 120,400 jobs or 11.22 percent.

The good news embedded in the December report is that the private sector added 400 jobs in the month and the -2,200 public sector employment change is primarily attributable to a timing issue around the holiday break for local education. This is most likely a sampling/reporting issue where given how the holiday break fell for educational institutes (and/or furloughs) resulted in an undercounting/underreporting of employment. Expectations are for this to be reversed once the January data becomes available. All told, December was more or less a “flat” employment month with no real changes on net, after accommodating the local government reporting issue. The industries that saw the largest gains in December were Professional and Business Services (+1,900) and Leisure and Hospitality (+1,000). Manufacturing (-1,900) and Other Services (-700) saw the largest declines, outside of Government.

When looking at the industry breakdown over recent months, a major driver in the overall increase is Retail Trade. Specifically, Clothing and Accessories, General Merchandise and Nonstore retailers have seen the largest gains within the industry. In total, the industry has increased 9,500 on a non-seasonally adjusted (NSA) basis from September to December. The graph below illustrates these NSA changes over time and one can see the historical hiring patterns as retailers ramp up employment for the holiday shopping season. After seeing strong gains in October and November, Retail Trade only saw a minor increase in December as most of the seasonal workers were hired prior to the month. The gains in 2010 are the largest since 2006 and indicate increases more associated with economic expansions than recessions. One possibility may be stronger expectations on behalf of retail stores and the general projection for sales this holiday season. It warrants mentioning that the vast majority of these jobs are of a limited duration and likely were eliminated in January, however they are a useful indicator of business expectations and the mood (i.e. willingness to spend) of the consumer.

Also included in the December report was the unemployment rate estimate. On a seasonally adjusted basis, Oregon’s unemployment rate was 10.6 percent in December, essentially unchanged from the 10.5 percent in November. The unemployment rate in December 2009 was also 10.6 percent. Since peaking in May and June 2009 at 11.6 percent, the unemployment rate has fallen one full percentage point, however it remains essentially unchanged over the past fourteen months. The unemployment rate is based on what is commonly referred to as the “household survey”, which provides monthly estimates on the number of labor force participants and the levels of employment and unemployment. The graph below illustrates the numbers for the labor force participants and the self-reported employed. As both series have moved together over the past year or so, the unemployment rate holds steady around the 10.5 – 10.7 percent range.

Overall, the good news is that both surveys of employment are showing positive year-over-year gains for the past few months. The Local Area Unemployment Survey (LAUS) is the “household survey” and tracks the overall labor market. The Current Employment Statistics (CES) tracks the reported number of jobs at businesses. The self-reported employment figures (LAUS) have been positive year-over-year since April, 2010 and that employment series is 3.31 percent higher in December 2010 than in December 2009, or 57,212 jobs. As detailed above, the business reported employment numbers are 0.75 percent higher in December 2010 than in December 2009, or 11,900 jobs.