September 21, 2007
Jobless rate falls, but is it a mirage?
Seattle Times business reporter
THE SEATTLE TIMES
Unemployment in Washington state dropped unexpectedly in August, but the state's chief labor economist warned there may be less to the numbers than meets the eye.
The state's seasonally adjusted jobless rate fell from 4.9 percent in July to 4.6 percent last month, matching the national rate. Washington employers added 10,400 workers to their payrolls, on top of a 7,900-job gain in July.
Metropolitan Seattle, defined as King and Snohomish counties, was the epicenter of the job growth.
Of the 10,400 jobs added statewide, 9,000 were in the metro area, said Cristina Gonzalez, regional economist for the state Employment Security Department.
The seasonally adjusted local unemployment rate edged down to 3.8 percent from 3.9 percent.
The August report provided further evidence that Washington is one of the brighter spots in a darkening national economic picture. Nationally, nonfarm payrolls lost 4,000 jobs last month – the first decline in four years – rather than gaining the 100,000 or so jobs economists had predicted.
But many of the new Washington jobs came in local government, which Evelina Tainer, the ESD's chief labor economist, attributed to the primary election that was held in August instead of its traditional date this month.
Local governments (excluding schools) showed a 3,700-job increase in August, but that doesn't mean cities and counties added 3,700 poll workers. At least some of that gain may really be a statistical mirage.
When job gains or losses occur in different months than they normally do, the Employment Security Department's system for adjusting for seasonal variations can produce outsized up or down movements.
Tainer suspects that is what happened in August, and said she expects many of the reported gains in government jobs to be erased in the September or October jobs reports.
"When you're out of whack in a seasonal pattern, it blows up the [jobs] number even more than it's supposed to be," she said.
Between August 2006 and last month, nonfarm payrolls in Washington grew by 3.07 percent, compared with 1.17 percent for the nation as a whole.
Private-sector employers added 5,900 jobs last month, with service industries – particularly health services, education, and bars and restaurants – accounting for most of the gains.
Manufacturing statewide added 600 jobs, 400 of them in aerospace. The state's construction industry again defied the overall trend: While the nationwide housing recession contributed to a 29,000-job loss in that sector last month, in Washington construction companies added 400 jobs.
Software companies grew by 300 jobs in August, and the financial-services sector grew by 400 statewide.
Job growth in metro Seattle last month included 4,200 private-sector jobs and 4,800 government jobs, Gonzalez said, but the local government jobs figures likely will fall in the next month or two, for the same reasons the statewide numbers will.
Manufacturing locally added 1,000 jobs and construction added 600, offsetting lost jobs in both sectors elsewhere in the state.
The leisure and hospitality industries added 1,200 jobs, Gonzalez said, particularly in arts, entertainment and recreation, bars and restaurants; the education and health-services sector grew by 600 jobs.
Tuesday's half-point interest-rate cut by the Federal Reserve likely will have a positive impact on Washington's economy, Tainer predicted, but only a modest one – mainly because rate-sensitive sectors of the state's economy already are faring better than the nation as a whole.
"House prices in most of the state are still rising," she said. "People still are buying houses here. There still is construction going on."
Drew DeSilver: 206-464-3145 or firstname.lastname@example.org
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