Sunday, August 23, 2009

Have We Finally Hit Bottom?

There are growing signs that the recession in the Pittsburgh Region is finally hitting bottom. After four straight months of accelerating job losses between January and May, the rate of job losses in the Pittsburgh Region increased by only one-tenth of a percent in the two months between May and July and total job losses in the region now stand at 32,800, compared to 32,000 in May. (Although the preliminary figures for June that were reported last month showed a slight improvement in jobs between May and June, the revised figures showed that there was actually no net change in the net number of jobs lost in June; the preliminary figures for July show a slight increase in job losses when comparing the July 2008 – July 2009 change to the June 2008 – June 2009 change.)

It’s important to note that while the total number of jobs in the region decreased by almost 15,000 between June and July, the number of jobs always decreases in July by a similar amount due to seasonal factors. In percentage terms, the decrease this year was similar and even slightly less than it has been in each of the past 8 years, which is why the numbers indicate that the rate of job losses has flattened out.

This stabilization is not unique to Pittsburgh. Job losses nationwide also flattened out in July, and 14 of the top 40 regions saw slight reductions in job losses between May and June. On the other hand, 13 regions saw increases in job losses that were 2-8 times as big in percentage terms as what we saw in the Pittsburgh Region. As a result, the overall rate of job loss in the Pittsburgh Region over the past year remains the 12th smallest (i.e., 12th best) among the top 40 regions.

What has not hit bottom in Pittsburgh is our manufacturing job losses. We lost an additional 1,200 manufacturing jobs between May and June – more than 1% of the total manufacturing jobs in the region – and 800 of those jobs were lost in June. That was the fifth biggest increase in loss of manufacturing jobs among the top 40 regions during that period of time. A few regions actually saw small increases in manufacturing jobs over the past two months. The Pittsburgh Region’s manufacturing sector has now lost almost twice as many jobs as any other sector of our economy.

As in previous months, the only sector of our economy that has seen any significant net job growth is health care and social services, which is now 2,900 jobs ahead of last year at this time. The mining sector has also seen a small amount of job growth – 200 jobs – much of which is likely a result of the boom in drilling for gas from the Marcellus Shale.

In addition, however, several sectors of the economy have improved significantly over the past couple of months; although they have many fewer jobs than they did a year ago, the leisure and hospitality sector, construction, and information sector account for fewer job losses now than earlier this year. Job losses in other sectors have continued to worsen slightly, however, including the financial services sector and the professional and business services sector. The biggest losses over the past few months have been in government jobs, particularly public education jobs, but this may be a temporary problem due to the state budget crisis.

So is the worst over? Although there are many positive signs, it’s still too early to say that there won’t be more bad news coming. The continuing losses in manufacturing jobs are particularly troubling, because they may be harbingers of additional job losses in supplier firms in the months ahead and they may slow the recovery in other sectors such as retail. However, the stabilization of the U.S. economy, and positive reports on many other economic indicators here and abroad, give us reason to hope that we may soon be on our way to recovery.


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