Pittsburgh Area Jobs Data Still Weak

Pittsburgh Area Jobs Data Still Weak

The Department of Labor and Industry has released the preliminary employment data for February 2014 and it does not look good for the region.  For the third consecutive month both total nonfarm and total private employment fell from their year earlier totals.  This comes on the heels of data revisions of 2013’s employer survey that severely reduced the original numbers turning what appeared to be strong monthly year-over-year gains into weak ones lowering both the annual average number of total nonfarm jobs (-13,400) and total private jobs (-14,400) significantly.

 

Most will cheer the fall in the unemployment rate from a seasonally adjusted 6.3 percent in December 2013 to 6.0 percent in January to 5.8 percent in February.  However, the reason for the decline has more to do with a drop in the labor force than it does people moving into the employed category.  For example, the number of unemployed in February fell 22,900 people from February 2013’s count.  However, the number claiming to be employed only increased 4,000—a negligible amount considering there are more than 1.17 million people employed in the area—while the number in the labor force declined by 18,900.  Thus, more than 80 percent of the reduction in the number unemployed is due to them dropping out of the labor force.  Not a ringing endorsement of the area’s economy.

 

This weakness is corroborated with the employer survey.  The preliminary count of total nonfarm jobs in February came behind that of a year earlier by more than 5,000 jobs.  Total private also fell short of last year’s total (-2,900).  This continues the trend from December, where the rebenchmarked data showed a decline in the year-over-year total nonfarm jobs (-2,900) and total private jobs (-1,500).  January’s final numbers likewise revealed a year-over-year loss of 3,900 total nonfarm jobs and 3,300 total private jobs.

 

The sectors posting job losses were spread throughout both the goods producing and service providing super sectors.  In the goods providing super sector the only area of growth is in mining and logging, posting year-over-year gains of a couple of hundred jobs for the last three months.  In fact it hasn’t experienced a year-over-year decline since midway through 2007.  Keep in mind that this sector, a beneficiary of the Marcellus Shale drilling boom, only accounts for a small percentage of the area’s job market—less than one percent of total nonfarm jobs.  Both the construction and manufacturing sectors have had slides over the last three months with manufacturing’s streak stretching back to August 2013.

 

Perhaps the biggest surprise happened in the private service providing super sector—specifically in the education and health sector.  Long an area of growth for the Pittsburgh region, the preliminary February data show no growth from the year earlier totals.  This sector has seen its year-over-year job numbers decline for the entirety of 2013 and into January 2014.  And if the final February data are revised downward—a distinct possibility—the losses will have extended to fourteen straight months.

 

For the first two months of 2014 the sector with the most growth has been leisure and hospitality with year-over-year increases of more than 1,000 in each month.  This growth extends back through all of 2013 as well.  Oddly enough the largest subsector, accommodation and food services, has not been the source of growth as they have been experiencing large year-over-year decreases.  This subsector accounts for about 80 percent of the leisure and hospitality sector with arts, recreation, and entertainment comprising the other 20 percent.  The latter must be the source of this growth, but with so little data at the regional level, it’s difficult to say where the jobs truly are.

 

All-in-all the February jobs report shows a continued softness in the Pittsburgh area labor market.  This is showing up in both the household data, despite the falling unemployment rate, and the employer survey with falling total nonfarm and private jobs numbers.  The Pittsburgh area may be a victim of a malaise in the national and state economies, but there are some things that leaders can do to help boost these numbers.   That entails making the business climate more inviting through lower tax rates and fewer regulations that tie the entrepreneurial spirit.