|
|
|
Economists Plead For Patience
Construction, mining, manufacturing and wholesale and retail are hardest-hit segments in latest round of unemployment statistics
|
Business New Haven
5/13/2002
By: Susan Cornell
|
In March Connecticut's unemployment rate remained steady at 3.5 percent while jobs decreased by 3,300. That figure is higher than some economists anticipated - and a reminder that the recovery from the downturn will be slow.
The March unemployment rate was 2.2 points below the national rate of 5.7 percent. Nonfarm jobs in the state totaled 1,672,5000, down 15,300 from one year ago.
Says the Department of Labor's March Labor Situation report, in the New Haven labor market area, the unemployment rate for March was 3.4 percent (not seasonally adjusted), or a total of 9,300 individuals, up 0.4 percent (or 1,100 individuals) from March 2001. The data are preliminary, with previous months' data revised.
The state's 3,300 job losses, combined with the revised decline of 1,000 in February, erase nearly all of the 4,700-job gain Connecticut posted in January.
Job losses in March occurred across all major industry groups. The largest was in construction and mining, down by 700; followed by manufacturing (down 600), and wholesale and retail trade (also down 600).
These were followed by transportation, communications and utilities (down 500 jobs); government (including Native American tribal government employment, down 400); finance, insurance and real estate (down 300); and services (down 200). With the March data, the state's net job loss since July 2000, at which time employment levels peaked at 1.7 million, stands at 28,500.
Peter M. Gioia, director of research for the Connecticut Business & Industry Association (CBIA), says that job growth is one of the last things to pick up at the end of a recession since employers don't want to add staff until they're confident business is improving. He says employers want to see profits rise before hiring.
Says Gioia: “I don't see this as a tremendously negative report. We have a slow recovery going on and job growth is a lagging factor - not a surprise. We are definitely in recovery, but it's not a robust recovery.”
Gioia adds: “It's a subdued recovery because we didn't get hit as hard [as some other regions]. When you don't fall hard, you don't get up that fast. When you look at our [numbers] versus the national, it won't take long before the bodies are hired. If we were in a strong recovery, we'd be in big trouble by June finding people to hire - 3.5 percent isn't bad.”
Explains Don Klepper-Smith, chief economist and director of research at Scillia, Dowling & Natarelli Advisors in New Haven: “Right now, in the national economy, we've lost 1.4, a one-percent erosion in the employment base. The national employment figures are holding up pretty well.
“If we go to Connecticut, new numbers show that to date we peaked out in the middle of 2000 and right now we've lost 28,500 jobs, which represents an erosion of a little over 1.7 percent. We've had a slightly greater erosion than nationally.”
“My expectation when we started the recession was that we'd be losing in the 30,000 to 50,000 range. We're approaching the range that I had established. Job growth is one of the last [recovery indicators] to come back. We're in the early stages of recovery. We won't see tangible signs of job growth until the second half of the year. The increased productivity really needs to be seen. Late this year there will be tangible signs of employment growth. Until then it will be kind of spotty.”
The data reveal some bright spots, as average weekly unemployment claims for first-time filers decreased by 78 to 4,764. The average for the month was virtually unchanged from the same month in 2001.
“The unemployment rate has held at 3.5 percent throughout the first quarter of 2002 while the number of new unemployment claims has steadily declined,” explains Salvatore DiPillo, DOL labor statistics supervisor.
“At the same time, non-farm employment has remained at a level not much different from the end of last year,” he adds. “This suggests that employers are still exercising caution in hiring.”
DiPillo says that employment is flattening after January's upward spike, which was caused by an unusually low number of layoffs after lackluster holiday hiring. Retailers in particular did not beef up staffs as much as they might in a normal holiday season. The warm winter also helped to boost employment. If hiring had been normal in December, DiPillo says, there would have been more layoffs in January and likely fewer in February and March.
The manufacturing production workweek (not seasonally adjusted) averaged 42.5 hours according to the DOL's March job report. This figure is up 0.2 hours from the revised February figure, but down 0.4 hours from March 2001. Average hourly earnings, at $16.23 (also not seasonally adjusted) were up five cents from February's figure and up 23 cents over the year. The resulting average weekly wage, $689.78, was up $5.37 cents from the prior month and up $3.38 from March 2001.
Based on a survey of Connecticut workplaces a month ago, much of March's decline might be attributed to previously announced layoffs and attrition now going into effect. Gioia says employers are not creating jobs to make up for those losses.
Edward J. Deak, head of the economics department at Fairfield University. specializes in employment forecasts. “There's two ways to look at the set of numbers,” he says. “One is the broad view. As far as Connecticut is concerned, the brief period of job losses in 2000 and '01 we suffered is most likely over. Certainly the number of new claims is shrinking.”
Adds Deak: “We weren't losing jobs at the same pace that we were before 9/11. We should see steady but modest job growth, consistent with the recovery of the downturns.
“Companies are reluctant to hire until they see a sound and discernable trend. The modest pace is not unusual for the early stages of recovery. And the icing on the cake is that unemployment is 3.5 percent, up from the low of over two percent in 2000 and indicative of a strong job market in the state.”
“The narrow view,” adds Deak, “is, 'What the hell happened last month?'”
The consensus view is that “back in November and December the retail sector hired fewer people than they normally would for the holiday season,” says Deak. “Usually they hire and then lay off in January. Instead, we hired only 11,000 last year. This tended to somewhat artificially boost the numbers up more than might otherwise be in January.
“In March, we gave it all back so we're about even with the employment levels of November and December last year. This tells you we're no worse off,” Deak says. “Given the continued low interest rates and modest positive information in some sectors and the GDP numbers that are going to show growth north of four percent, this shows that the national economy is moving forward. Connecticut is pulled along by national events.”
|
Go FirstGo PreviousGo
NextGo LastGo
to Index
|
|
