This morning the Oregon Employment Department released the initial estimates for June 2016 in terms of jobs and the unemployment rate. Overall the data continue to bring good news, even as the unemployment rate ticked up a bit. The reason being is the state continues to add jobs and the labor force is growing. As shown below, our office’s measures we use to gauge labor market slack continue to improve — certainly over the past year.
First, it is estimated that Oregon added 3,000 jobs last month. Overall the job gains have slowed in recent months relative to late 2015 and early 2016. This is a similar pattern as seen in the U.S. data. However those strong gains of 5,000 or more per month are not sustainable over a long period of time. Such gains are only seen during peaks in the business cycle. Most importantly for Oregon’s economy is the fact that the recent gains are still more than enough to keep pace with population growth.
Furthermore, Oregon has now reached another milestone in terms of the recovery and expansion. Not only has Oregon added enough jobs to regain all the Great Recession losses, the state now has caught back up with population growth. Even as the economy cratered, people kept moving to Oregon and the state’s Jobs Gap hit nearly 170,000 or 10% back in early 2010. Today this gap is now closed.
Our office’s outlook has the economy to add jobs at a full-throttle rate until the labor market slack is gone, and for the economy to even run a bit stronger for a little longer than that. So our concern is that if jobs have caught up with population growth, the slowdown in job gains to a more sustainable rate of growth may come earlier than what we have in our outlook. This is something we discuss regularly and is a key factor in the timing of our forecast. So while jobs have caught up with population, the state’s Total Employment Gap still indicates some slack in Oregon, albeit considerably less than in the recent past. Right now the labor market is as tight as it was during the peak of the housing boom. However there remains room for improvement. In fact, the gap increased 0.27 percentage points from May to June. This was due to both the unemployment rate and the share of Oregonians working part-time but want full-time work increasing. These gains were offset somewhat as the labor force participation rate also increased, which is a good thing.
All told the Oregon economy continues to improve. It is expected that job growth will slow to a more sustainable rate as economic slack diminishes. However our office’s forecast calls for full throttle rates of growth through the remainder of the biennium. Should the slowdown occur a bit sooner, then we will adjust our outlook accordingly. To date, however, withholdings out of Oregonian paychecks continue to show robust gains. In fact our growth is among the strongest in the nation based on recent conversations with out counterparts in other states.