Sunday, March 28, 2010

Potholes on the Road to Economic Recovery

Like Pittsburgh drivers dodging potholes on their way to work, occasionally hitting one that causes some damage, the Pittsburgh Region’s economy hit a pretty big pothole last month on its road to economic recovery. The region lost 5,200 private sector jobs between January and February, which is the second biggest private sector job loss between those two months in the past two decades.

The job loss was so big that it gave Pittsburgh the second worst private sector job performance in the past month among the top 40 regions, losing jobs when the majority of regions and the U.S. as a whole actually added net new jobs.

Total jobs in the region declined, but not quite as badly, however, because of the addition of nearly 3,000 government jobs in February, two-thirds of which were state government jobs (which includes state universities). Some of this is likely a result of the federal stimulus spending, although the Pittsburgh Region saw the third highest increase in state government employment among the top 40 regions.

Combining both private and public sector jobs, the region had 2,300 fewer jobs in February than in January, making Pittsburgh one of only 8 regions among the top 40 that had a net loss in total non-farm jobs between the two months. Moreover, revised figures for January show that we lost 700 more jobs that month than the preliminary data released a couple of weeks ago had indicated.

Although it had appeared that regional job losses had peaked in December at 36,700, February now holds the record – we had 38,800 fewer jobs in February 2010 than two years earlier (February 2008), just before the national recession hit. The loss of jobs was so big that it wiped out more than a decade of job growth here – the region now has 10,000 fewer jobs than it did in February 1999.

What caused the big job loss here in February? Although the biggest contributor was the loss of 2,700 retail jobs, that’s a typical seasonal change between January and February. What was far from typical was the loss of 900 jobs in the health care and social services sector, one of the few times in the past 20 years that health care jobs haven’t increased and one of the largest monthly losses during that period. An even bigger negative was the leisure and hospitality sector, which lost 1,300 jobs, the largest January-February job loss in two decades, and the second-largest decrease among the top 40 regions.

At the other end of the spectrum, higher education was the only non-governmental sector that added jobs. Although the number was large – 2,300 jobs – that’s actually a pretty typical seasonal change for February, and the increase was below average compared to other regions around the country.

The total number of manufacturing jobs in the region didn’t increase or decline in February, but that’s actually pretty good news after 19 consecutive months of job losses. Some manufacturing subsectors grew slightly, but others declined.

So unfortunately, despite hopes that the Pittsburgh Region was finally on the road to economic recovery, the road is pretty rough and at the moment, we’re losing ground rather than making progress. We’re still better off than many other regions – although 38,800 jobs lost is a lot, it represents 3.4% of the jobs that were here two years ago, and that’s the fifth smallest loss among the top 40 regions. But unless we start to see more private sector job creation here soon, the regions that have begun growing again will keep narrowing that gap and ultimately leave us behind, as they have in the past.


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