Oregon Office of Economic Analysis

This morning the Oregon Employment Department released the preliminary December 2012 jobs report. After the revision to November, that month now shows job losses of 900 while December’s job gain is 2,000 (+2,300 Private Sector, -300 Public Sector). The unemployment rate held steady at 8.4 percent (U.S. was 7.8 percent). As discussed numerous times on the blog, our office has been calculating and using a preliminary benchmark series of employment that allows us to incorporate the more complete count of employment, available via the QCEW, rather than relying solely on the monthly employment estimates produced by the BLS. The Employment Department also just recently released the latest QCEW for 2012q3 and we can update this preliminary benchmark series.

The graph shows a number of interesting points, two being that employment has slowed over the Spring and Summer (our data on withholdings out of wages and salaries also show this) but that the expected revisions continue to be positive, but not increasingly so. It does appear that BLS’ monthly estimates are getting better, or rather not getting worse, as the gap between the preliminary benchmark series and the current published series is not getting larger. This appears to be the case across many states, as discussed previously. A more complete look at each industry is available here (PDF): Benchmark_2012q3.

Given the industry variability in both this expansion so far and also in the revisions, it is important to step back and see how each industry is performing. The graphs below use the QCEW data available through the third quarter to show two things: where the job growth is and how much of the recessionary losses each industry has regained so far. In terms of overall job growth the private sector has added 60,000 jobs between February 2010 and September 2012 and the graph on the left breaks these gains down by industry. The graph on the right shows these gains as a percentage of the jobs lost during the recession. Manufacturing has regained over 9,000 of the 46,000 jobs lost which equates to 21 percent. Overall the statewide private sector in Oregon has regained 39 percent of the jobs lost (the red line). Education and Health Services are at 100 percent because these industries are at an all-time high in terms of employment and while the recession slowed their growth rates, they did not lose jobs for any sustained period of time.

The one industry that surprised me somewhat when examining the data is Leisure and Hospitality. Given the “new normal” of household indebtedness and reduced consumer spending one would think this category may suffer more than others (the industry is about 13% arts, entertainment and recreation, 13% lodging and 74% bars and restaurants) however that does not appear to be the case. We know household balance sheets have been repaired quite a bit, however they are not back to pre-recession levels, but it does appear that consumers are increasingly going out to eat, drink and socialize more each year. If you break this employment down further, you can find that the employment at bars and restaurants is doing a little bit better than the industry total although the other categories are increasing as well. The consumer continues to chug along as jobs, income and spending all continue to steadily increase, albeit at a slow pace.

The one industry where we have not seen as strong of growth is Retail. Even though sales are up, jobs are not following suit to the same degree. The industry has regained 30 percent of the jobs lost but this industry has been and will continue to undergo major structural changes with the ever increasing online sales, big box retailers looking to downsize or outright close stores and the implementation of workforce management software/systems becoming more widespread within the industry. These trends, while maybe more economically efficient for the consumer or firms, do coincide with slower employment growth in the industry. One final issue to watch today is the impact, if any, of the American Taxpayer Relief Act just passed by Congress. While marginal tax rates for high income earners did increase, the largest immediate impact will likely be the expiration of the 2% payroll tax cut. Beginning January 1, 2013, workers’ post-tax paychecks will decline 2%, all other things being equal, as the contribution to Social Security returns to the full 6.2%. This impact will not affect state income tax revenues directly but will affect consumers’ take home pay and likely their spending, unless fully offset by a decrease in savings.