By Uric Dufrene
Sanders Chair in Business
Indiana University Southeast
(Oct. 30, 2012) — The latest Bureau of Labor Statistics report out on metro employment and unemployment showed the metro unemployment rate declining to 7.6 percent, down from 8.2 percent in August. The region’s labor force declined by approximately 2,000, and the number of unemployed dropped by approximately 4,000. The decline in the unemployment rate is very favorable for Louisville Metro and matches the strong year-over-year payroll job growth.
Non-farm payrolls increased by approximately 2,000 from August to September, with non-seasonally adjusted data. Year-over-year, the change in jobs is around 17,000, with a corresponding percentage change of 3 percent. This 3 percent year-over-year change exceeds both Indiana and Kentucky, and the nation. Using seasonally adjusted data available on the Bureau of Labor Statistics website, the change in non-farm payrolls from August to September was flat.
The most recent job total for the metro area stands at 620,800, still down from the 627,000 pre-recession peak. As we close out the year, we will get close to the 627,000 number, but will now not likely exceed the number. Earlier expectations were for job growth to surpass pre-recession totals. We may just miss the mark.
Two metro areas in Indiana, Columbus and Elkhart Goshen, saw year-over-year percent changes that were among the highest in the nation. Both had changes exceeding 8 percent. The payroll growth in these metropolitan areas will probably decelerate for the rest of the year, and into 2013, reflecting a national slowdown in manufacturing and weak domestic and global demand.
Across Kentucky, Louisville Metro job gains of 3 percent exceed all other metro regions. The closest is Lexington-Fayette metro region, with job gains at 1.7 percent. Bowling Green is now seeing a slight negative change in year over year job growth. The latest reading is a decline of 0.7 percent. Additionally, job growth for the Owensboro area has also slowed, with year over year gains at only 0.2 percent.
For Louisville Metro, three sectors that contributed mostly to year-over-year growth were professional and business services, manufacturing, and leisure and hospitality. These three sectors account for more than 12,000 jobs combined. The PBS sector was the largest, but the jobs added here are beginning to slow somewhat, still positive, but slower than earlier in the year. The strong growth in these three job sectors has implications for overall job growth next year.
These year-over-year changes in payrolls for Louisville Metro are the highest since the 1990s. An important question is whether these strong gains can be sustained into 2013. One of the problems is weak domestic and global demand. At some point, this continued weak demand will show up locally in slower job growth.
Unless we see a significant pick-up nationally, the numbers for Louisville Metro will not significantly improve. A deceleration in overall job growth may be in the cards. A couple of early indicators are the flat change in seasonally adjusted jobs this month, and the deceleration in the professional and business services sector.
During our Outlook program last year, I indicated that job growth for Louisville Metro would exceed expectations, and the outlook was “surprisingly optimistic.” Expectations have been exceeded, and the metro region is faring better than Indiana, Kentucky and the nation.
Our next Economic Outlook program will be Nov. 15. Hope you can attend.
For information, click here.