By James Clary, Economist

Seasonally adjusted payroll employment in Hampton Roads expanded by 3,100 jobs in March (+ 0.42%). This was the best single month for growth since January 2007. The metropolitan employment report, released Wednesday May 2nd, also revised the payroll estimate for February, increasing it by 1,200. This combination indicates an improved labor market and gives hope for a strong period of regional recovery. Employment still requires significant gains before returning to prerecession levels; payrolls remain 40,100 jobs below the prerecession peak of July 2007. Using reasonable estimates for recovery, the region might not return to previous levels of employment until October 2018.

The unemployment rate in the region has declined significantly over the past 6 months; declining from 7.32% in October 2011 to 6.45% in March 2012 on a seasonally adjusted basis. This decrease has been driven by growth in the number of employed persons, and unlike the nation, Hampton Roads’ civilian labor force has expanded over the past year, and now stands at 848,954. The number of unemployed persons has declined by 2,800 since March of last year, and by 6,100 since October, indicating that recovery might be accelerating in the region.
 
Industry and Employment

The construction industry still continues to be weak in the region declining by 16,200 over the past five years and by 2,700 jobs over the last year alone. Several industries have grown throughout the recession in this region including federal employment as well as healthcare and social assistance. Other industries saw declines during the recession but have begun to recover; including cyclical industries like retail sales (still down 5,600 jobs since 2007, but gained 3,800 since Mar 2011). This indicates that the recovery might have taken hold in Hampton Roads.

By James Clary, Economist
(All numbers adjusted for seasonal effects)

The unemployment rate in Hampton Roads declined for the third consecutive month, decreasing to  6.8% in January 2012. The region’s unemployment rate peaked at 7.5% in January of 2010, with a subsequent peak at 7.3% in October of 2011. The region’s unemployment rate temporarily dropped to 6.7% in May of 2011, which was brought about by declining labor force participation rates rather than more individuals finding employment.  The January 2012 improvement in the unemployment rate was accompanied by both strong labor force growth (+6,908) and an even stronger improvement in the number of employed persons (+9,116). The labor force has been expanding for eight of the last nine months, indicating that the labor market situation improved regionally during that period, even as Hampton Roads’ unemployment rate increased over 7%. The improving unemployment data supports the recent upward revision in payroll employment (+7,800) in the region (see the Mar 26, 2012 Special Report: http://hrpdcva.gov/Documents/Economics/2012/SR14_Employment_Revision.pdf).

The January unemployment rate also represents a relative improvement in the region’s unemployment rate, as the gap between Hampton Roads’ unemployment rate and the nation’s fell from 2.65 percentage points in October 2009 to 1.35 percentage points in December of 2011 and was back up to 1.42 percentage points this January; the region’s unemployment rate has averaged 1.65 percentage points below the nation’s since 2000.

Nationally, 345 out of the 372 total metropolitan areas experienced declining unemployment rates, but only 83 areas had unemployment rates lower than 7%. During normal economic conditions, the natural rate of unemployment is approximately 5%. This report confirms U.S. unemployment data indicating improving economic conditions, but an economy that still operates far below potential.

By James Clary, Economist

The Weldon Cooper Center released its annual population estimates for Virginia localities, and the release indicates that Hampton Roads total population grew by 13,427 in 2011, a rate of 0.81%. This rate of population growth is higher than the annualized regional population growth rates in both the 90’s (+0.80%) and the 00’s (+0.56%). The region still grows more slowly than the state as a whole however.

 
Most of the population growth occurred in the larger cities of the region, including Virginia Beach and Chesapeake, but there was also strong growth in Suffolk and James City County. Portsmouth also grew more quickly than the region, which represents a change from a two decade trend of declining population.

By James Clary
Economist

HRPDC economics staff tracks employment data and other economic indicators to better provide technical analysis and forecasting of the Hampton Roads economy.

National payrolls expanded by 200,000 in December 2011, resulting from an increase of 215,000 private sector jobs and a decrease of 15,000 government jobs. The U.S. has gained jobs for 15 consecutive months, capping a year that had a 1.64 million increase in payrolls, and December’s employment growth was 50% above the 2011 average of 137,000 added each month to payrolls. The 200,000 number beat the consensus estimate of 155,000 jobs (Dow Jones Newswire). To compare, Hampton Roads lost 3,200 jobs in 2011 through the month of November.

The seasonally adjusted U.S. unemployment rate also continued its decline, falling to 8.51% from 8.65% in November and 9.37% in December 2010. (the consensus estimate for December 2011 was 8.7%). This decline came as the labor force participation rate remained constant, indicating that an improved employment situation drove the entire decline in the unemployment rate. This was further demonstrated by the U6 unemployment rate falling to 15.2% from 15.6% in November and 16.2% one year ago (U6 is the broadest measure of unemployment and includes disaffected workerss and those who are part-time for economic reasons).

The University of Michigan survey of Consumer Sentiment also improved, increasing to 69.9% in December from 64.1% in November. This survey correlates strongly to both gas prices and a stronger U.S. labor market. Higher national levels of consumer confidence indicate a better outlook for the Hampton Roads tourism industry.

While accelerating employment gains show an improving economy that will build on itself, it is important to put the employment and unemployment situation into context. If the nation continues to add 200,000 jobs per month, it will close the employment gap created by the past recession at some point in 2024. The unemployment rate reflects the approximately 31,000,000 people who have left the labor force, and the labor force participation rate stands at 64.0%, well below the historic norm of between 66-67%.