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What you need to know for 01/18/2018

Outlook 2012: Recovery will come slowly but surely, analyst says

Outlook 2012: Recovery will come slowly but surely, analyst says

New York state is on track to regain more than 350,000 jobs lost during the recession, but full reco

New York state is on track to regain more than 350,000 jobs lost during the recession, but full recovery will take longer than expected and is transforming the state’s economy, according to a labor market analyst with the state Department of Labor.

The same applies to the Capital Region, which embraces Schenectady, Albany, Saratoga and Rensselaer counties. Recovery is tepid in Fulton, Montgomery and Schoharie counties, and any growth there will likely occur in the health care segment, according to a labor market analyst for the area.

“We have added back 61 percent of the private-sector jobs that were lost during the state’s downturn,” said Kevin Jack, who monitors statewide labor market trends for the Labor Department.

The state lost 352,700 jobs, or 4.8 percent of its 7.3 million jobs, between April 2008 and December 2009, the period of the recession in New York state. The recession was the shortest in the state’s history since the 16-month recession in 1981-82, according to the state Labor Department.

At the same time, Jack said, the United States as a whole has regained 23 percent of private-sector jobs lost during the nationwide recession that occurred between December 2007 and June 2009. This recession claimed 7.5 million private sector jobs and caused the unemployment rate to almost double to 9.5 percent.

“To put that in perspective, the recovery in New York state has been more robust than it has been in the nation as a whole,” Jack said.

The state has added on average 7,700 private-sector jobs per month since December 2009, Jack said. He added that the state should regain all of the lost private-sector jobs by 2013, or about 5 /2 years from the beginning of the economic downturn. Jack said this rate of recovery is slightly longer than the average over the past five business cycles.

The state’s recovery is sluggish because of turbulence in the national and international markets, Jack said. “A lot of American companies sell to Europe. So if Europe is having economic problems, that will affect the local markets,” he said.

Economic changes

Jack said the state’s economy is undergoing a fundamental shift as it recovers. The fastest-growing sectors of the economy are those involving the provision of a service, while those shrinking are traditional manufacturing and government.

“The trend is away from producing goods and more toward producing services,” he said.

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“Approximately 65 percent to 70 percent of the economy is consumer-driven, involving the purchase of goods and services. The other parts are investments, government purchases and net exports,” he added.

Jack said that since the recovery began, four nonfarm job sectors have seen a net loss, six have seen increases and one has remained fl at. The data cover November 2009 through November 2011, the most recent available. They show:

Educational and health services are up 4.1 percent, or by 68,000 jobs to 1.7 million jobs. Professional and business services are up 6.2 percent, or by 67,000 jobs to 1.1 million jobs. Leisure and hospitality are up 6.8 percent, or by 49,000 jobs to 765,000 jobs. Trade, transportation and utilities are up 1.6 percent, or by 23,000 jobs to 1.5 million jobs. Financial activities are up 1.7 percent, or by 11,600 jobs to 676,000 jobs. Construction is up 0.4 percent, or by 1,300 jobs to 313,900 jobs. Natural resources and mining are down 0.9 percent, or by 3,300 jobs to 360,300 jobs. Other services showed no change with 5,300 jobs. Information is down 2 percent, or by 5,200 jobs to 249,000. Manufacturing is down 1.9 percent, or by 8,900 jobs to 459,800. Government is down 2.3 percent, or by 34,500 to 1.5 million.

Jack said a closer look at the numbers shows some interesting trends. The health and education job sectors, for example, tend not to follow business cycles but fol- low demographic cycles. He said the health segment of this sector is growing because demand is increasing for medical services as the baby boomer generation (the cohort of people born between 1946 and 1964) begins to retire. The education segment of the sector, on the other hand, is not growing, as the number of school-age children continues to decline.

Losses and gains

The decline in manufacturing jobs may appear slight, but these jobs tend to be found in upstate New York communities, so their losses are felt more keenly, Jack said.

The strong growth in the professional and business services sector is encouraging, Jack said. “Those are jobs that are a good barometer of the overall private sector because most of their sales are made to other companies — companies selling to other companies. These are high-tech services, research and development, engineering, legal, architectural services, all high-paying jobs,” he said. “It means corporate profits are up and people are willing to hire those services. During the recession, this job sector went down.”

The growth in the hospitality and leisure sectors reflects the appearance of more discretionary money for entertainment, tourism and dining, again a reflection of a recovering economy, Jack said. At the same time, these types of jobs tend to be low-paying and parttime, he said.

“Tourism is a big industry in New York state. It is another barometer of recovery and an indicator that people are spending money,” Jack said.

The decline in government jobs is occurring at all levels: state, county, city, town and school district.

“It could be partially due to the end of federal stimulus money and to the fact that a lot of local governments are feeling budget pressures,” Jack said.

In the Capital Region, the job outlook looks solid, said James Ross, a labor department analyst who monitors the employment market in the eight-county area. “I am very optimistic about the overall growth rate in the Capital Region,” he said.

The Capital Region has traditionally done better than many others parts of the state during a recession, Ross said. He attributes this to the three legs of the local economy: state government, health care and education. He has now added a fourth leg: high-technology companies, as witnessed by the introduction and growth of Global-Foundries and Albany NanoTech to the region.

The fourth leg may prove to be the more dynamic of the legs in future years in terms of job growth and contraction, especially in the short term, Ross said. The reason is that the high-tech sector is demand-driven.

Government shrinks

The fourth leg may also grow to include more jobs than one or more of the other sectors in the long term, Ross said. This is in light of the current trend involving the decline of jobs in the government sector.

“Historically, we have done better during recessions, and one of the strengths is state government. This time around, state government has not provided stability and is one of the areas that is declining,” Ross said.

Current state government employment is at its lowest level since 1990, Ross said. “There has been this contraction in state government employment. It is a long-term trend,” he said.

At the same time, “Government is not going to go away. We will see consolidation due to pressures to reduce government spending, and we will continue to see declines at all levels,” Ross said. “But there will be jobs. It is not in a free-fall,” he added.

Ross said the private sector in the Capital Region lost 11,000 jobs during the recession but has added back 2,400. There were 337,400 jobs as of November 2011, down from the peak of 346,100 in 2007 and up slightly from the low of 335,000 in November 2009.

“We have seen growth in the private sector, and that has been occurring for the past year. I think the private sector will continue to go up,” Ross said. He added that at some point there will be a shortage of workers in selected job areas in the region, particularly in high-tech fi elds.

“We have more people retiring than we have youth coming of age to replace them; the size of the labor force is starting to shrink,” he said.

Other areas of growth in the Capital Region include construction and manufacturing; retail continues to decline.

Mark Barbano, a state labor market analyst, said Fulton and Montgomery counties continue to see job losses during the state’s recovery. “It will take a couple of years for the counties to recover,” he said.

Data shows that 2006 and 2007 were the peak years of employment for Fulton and Montgomery counties, respectively. In 2006, Fulton County employed 14,500 people in private-sector jobs, while Montgomery in 2007 employed 17,000. During the recession, Fulton lost 1,300 private-sector jobs and Montgomery lost 1,000 private-sector jobs. Of these numbers, 700 and 800 were manufacturing jobs in Fulton and Montgomery counties, respectively.

“You will probably never see those jobs come back,” Barbano said.

Since 2009, the counties have continued to lose jobs, Barbano said. Fulton County had 13,900 jobs and Montgomery County had 16,100 as of November 2010, the most recent data available. The only area showing growth is the health care sector, as the population continues to age in both counties. Barbano said data for Schoharie County are difficult to obtain, as they are not broken out specifically.

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