Washington State Employment Situation Report for May 2009

Straight from the Department of Employment Security.......

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Washington State Employment Situation Report for May 2009

6/16/2009

Executive Summary

On a seasonally adjusted basis, Washington’s unemployment level increased by 18,200 in May resulting in an unemployment rate that inched upward to 9.4 percent. This change reflects a 0.4 percentage point increase over a revised April estimate of 9.0 percent. The U.S. unemployment rate reflected a similar increase, shifting upwards from 8.9 percent in April to 9.4 percent in May.

Seasonally adjusted, total nonfarm employment in Washington recorded a monthly loss of 6,700 jobs in May to reach a total of 2,854,500 (-0.2 percent). The best information available pertains to the largest industries. Therefore, this report focuses exclusively on changes in major industries and sectors.

For the year ending in May, job losses totaled 116,000 (-3.9 percent). Over a third of these losses (43.0 percent) occurred since January 2009. Over-the-year job losses in the goods-producing industries totaled 61,900, down 12.2 percent; and during the same period, services-providing industries shed 54,100 jobs (-2.2 percent). Transportation, warehousing, and utilities shed fewer jobs (-2,600) over the year than other major services-providing sectors, while education and health services added 9,600 jobs for a yearly gain of 2.7 percent.

Except for leisure and hospitality (+1,600) and education and health services (+700), all other major sectors shed jobs between April and May.

Industry Employment, seasonally adjusted (Table 1)

Nonfarm payroll employment fell to 2,854,500, a decline of 116,000 (-3.9 percent) since May 2008, and 6,700 since April 2009 (-0.2 percent).

Washington employment in goods-producing industries totaled 444,900 as of May. Over the year, employment in this group of industries was down by 61,900 (-12.2 percent); and the month-over-month employment declined by 4,700 (-1.0 percent). Except for November 2008 when striking aerospace workers returned to work, the last month that the goods-producing group added jobs was January 2008. The general trend over the last six months, however, shows that job losses on a monthly basis have diminished slightly (i.e., the three-month average number of jobs lost between November 2008 and February 2009 totaled 7,200 versus 6,400 jobs that were lost between February and May 2009).

The major sectors within the goods-producing industries are: construction (168,800 jobs), manufacturing (269,400 jobs), and mining and logging (6,700 jobs). During the past twelve months, employment declines in the construction sector accounted for more than half (57.2 percent) of the job losses within the goods-producing industry. Losses in April totaled 1,800, falling below the numbers for the previous two months; but then picked up in May for a loss of 3,100 jobs. May 2009 marked the 16^th consecutive month showing employment declines in this sector.

Until the latter half of 2008, the manufacturing sector had been the one goods-producing industry performing relatively well. Over the month it shed 1,600 jobs (- 0.6 percent); and over the year payrolls were down by 25,700 or 8.7 percent.

Employment in the mining and logging sector fell by 800 (-10.7 percent) over the year; but exhibited no job losses between April and May.

Washington’s employment in its services-providing sector totaled 2,409,600 in May reflecting year-over-year job losses of 54,100 (-2.2 percent). A six-month trend for this sector is not obvious from Figure 1 (see full report), but between November 2008 and February 2009, a three-month average job loss of 8,900 was substantially larger than the average loss of 3,500 jobs that occurred between February and May 2009.

The major sectors listed within services-providing industries and their May 2009 employment levels are: trade, transportation, and utilities (533,400 jobs); information (101,900 jobs); financial activities (144,900 jobs); professional and business services (325,700 jobs); education and health services (369,500 jobs); leisure and hospitality (276,800 jobs); other services (104,300 jobs); and government (553,100).

Over-the-year losses within the trade, transportation, and utilities sector totaled 23,300 (-4.2 percent); and over-the-month losses totaled 400 (-0.1 percent). The retail trade component that accounts for 59.0 percent of the trade, transportation, and utilities sector shed 14,400 jobs (-4.4 percent) for the year. The wholesale sector that makes up about a quarter of the jobs in the trade, transportation, and utilities group shed 6,300 jobs (-4.8 percent) for the year.

As with other sectors, information suffered employment declines: down 3,000 jobs (-2.9 percent) for the year and down 1,300 for May (-1.3 percent).

The financial activities industry lost 1,100 jobs in May (-0.8 percent) which offset a gain of 800 jobs in April, and year-over-year losses of 9,300 (-6.0 percent). The pattern of monthly job losses and gains strongly mirrors a similar pattern in the construction sector. However, there is no apparent trend over the last six months.

Professional and business services shed 26,400 jobs since May 2008 (-7.5 percent). Roughly 22.0 percent of these losses occurred over the last three months; but during this period, monthly job losses have decelerated. Losses totaled 200 (-0.1 percent) in May.

Employment in education and health services exhibited monthly job growth of 700 in May; and year-over-year growth remained a solid 9,600 (+2.7 percent), making it the strongest sector during this period.

Leisure and hospitality services shed 7,600 jobs year-over-year (-2.7 percent). However, the sector was able to increase payrolls by 1,600 jobs between April and May 2009.

Government employment showed year-over-year growth of 9,200 jobs (+1.7 percent). Federal government which totaled 70,700 jobs as of May reflected a gain of 900 jobs (+1.3 percent) for the year. Employment in state government totaling 154,300 in May, gained 2,000 jobs for the year (+1.3 percent). Total local government employment reached 328,100 as of May, gaining 6,300 jobs for the year (+2.0 percent). However, the May estimates, compared to April, declined in government employment by 1,200 (-0.2 percent).

Conclusions. For the last six months, job losses in Washington have increased and spread to the majority of Washington’s industries. However, during this period, monthly job losses decelerated in both the goods-producing and the services-providing sectors. This trend was significantly stronger in the services-providing sector, however. The services-providing sector, which has a substantially larger number of employees than the goods-producing sector, also shed only 2.2 percent of its jobs over the year, relative to 12.2 percent of the jobs that were lost in the goods-producing sector.

Year-over-year, job losses in construction and financial services have continued to mount. Over the last six months, changes in monthly job losses exhibited a choppy trend in both industries; but there was no significant reduction in the average number of losses between the first three months and the last three months of this period. This choppy monthly pattern of job losses suggests that consumers and businesses are still uncertain about the condition of the economy; and they may be waiting for stronger signs of an economic recovery before they make major purchasing or hiring decisions. On a positive note, however, the Consumer Confidence Conference Board’s index doubled over the last three months which suggests that consumers are feeling more comfortable about their situation.

The major strong suit for Washington during the current recession continues to be education and health services which gained 9,600 jobs over the year. Professional and business services remained a relatively strong employment industry until the fourth quarter of 2008; but lost momentum during the first part of 2009.

Labor Force Unemployment Data, seasonally adjusted

Washington’s seasonally adjusted unemployment rate in May rose to 9.4 percent from April’s revised rate of 9.0. The April rate was initially pegged at 9.1 but had a downward revision. The May rate was 4.3 percentage points higher than last May’s 5.1 percent unemployment rate.

The seasonally adjusted civilian labor force rose 0.9 percent in May to 3,571,900. Seasonally adjusted employment was up by 13,800 over the month, but down by 44,200 from May 2008.

On a seasonally adjusted basis, total unemployment rose by 18,200 to reach 336,000. Over the year it registered a jump of 159,000 or 89.9 percent. It remains to be seen if this moderation in unemployment is sustainable or not.

Reconciling the Differences Between Nonfarm Payrolls and Household Employment

The chart (see page four of the full Employment Situation Report ) shows seasonally adjusted employment estimates from Current Employment Statistics (CES), Local Area Unemployment Statistics (LAUS) programs, and LAUS employment adjusted for CES definitions¹ for Washington state from January 2007 through May 2009.

As it was the case in May 2009, the employment changes for the two series: seasonally adjusted employment estimates from the CES program (nonfarm payrolls) and LAUS employment adjusted for CES definitions, pointed in opposite directions. According to adjusted LAUS employment estimations the job growth in May was about 12,900 jobs, while the CES employment estimations showed employment declines of 6,700 jobs. As a result, the difference between the April monthly employment estimates increased to a significant level of 2.3 percent (from 1.7 percent in the revised April numbers).

The comparable average monthly difference for the five months of 2009 is 1.7 percent, which was more than twice as large as the average of 0.7 percent for the last three years (2006 to 2008).

Over the year (from May 2008 to May 2009) adjusted LAUS employment estimations showed a drastically more positive picture with a drop in employment of about 44,200, while alternative CES estimations showed almost three times the employment losses (-116,000 jobs).

¹ For more details about such adjustments see Current Employment and Local Area Unemployment Statistics Employment Comparisons

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