Oregon Office of Economic Analysis

Today in Part 1 we take a look at Oregon’s industrial outlook based on our most recent forecast. Tomorrow in Part 2 we see how this industrial outlook may play out across Oregon’s regional economies.

While Oregon has regained 4 out of every 5 lost jobs at the start of the pandemic, the recovery is not yet complete. Given the industry variation to date, the outlook is a combination of underlying growth in the economy and also some rebound associated with recovering from the pandemic. As such, expected industry growth in the coming years can vary widely depending upon where each sector is along this path.

To start, leisure and hospitality is still 12 percent below pre-pandemic peaks as of December 2021. On an annual average basis, 2021 employment in the industry was a whooping 24 percent below 2019 levels. As such, the strong growth expected in the forecast is really just the industry staffing back up to accommodate household demand for going out to eat and on vacation. Our office has the industry reaching all-time historic highs for employment in the years ahead. However, on a population-adjusted basis the industry never regains its peaks due to some structural changes in staffing when it comes to not cleaning hotel rooms every day, more counter or kiosk service and less staffing for sit down dining and the like.

Professional and business services are expected to grow the second fastest in the years ahead. Much of these gains are tied to the ongoing growth in office-based or at least office-type jobs in the economy, as more workers are likely to work from home a bit more frequently.

Education – both private and local government – are expected to see strong gains in the near-term as school-related employment remains below pre-pandemic peaks. Part of this is likely due to struggles school districts have in terms of filling both non-teaching positions like bus drivers, nutrition workers, and the like, but also substitute teachers. Similarly, college enrollments, particularly among community colleges, are down during the pandemic, meaning higher education requires fewer workers today. Looking forward, the expectations are employment will rebound, along with improving enrollment figures. However with stable or declining demographics for both K-12 and college-age populations, the long-term outlook similarly calls for slightly declining employment in education starting in a couple of years, and over the rest of the decade.

Transportation, warehousing, and utilities have been booming with the continued rise of e-commerce and big increase in goods spending during the pandemic. There have been multiple announcements of future distribution centers, primarily in the Portland region that are built into the outlook. Industrial and warehousing vacancy rates are very low, and new construction should bring more capacity and future growth online.

Health care and social services employment is currently 4 percent below pre-pandemic peaks, but expected to see above-average growth in the years ahead. Underlying demographic drivers of a growing, and aging population will result in increased demand for workers. See our office’s report on the trends and expectations for the different subsectors within health care and social assistance.

At the other end of the industry spectrum are sectors like construction and retail. Both have made a full recovery from the pandemic and face constraints moving forward. For example, long-term trends in brick and mortar retail are not kind. However with a growing population, our office expects retail to grow as well, just not nearly as fast as incomes or population alone would suggest. Similarly, construction employment is recovered and while our office’s housing outlook is positive, it calls for more of the status quo than for a lot of additional net growth.