By Uric Dufrene
The Bureau of Labor Statistics released the monthly Metropolitan Area Employment and Unemployment this past week, and the news was very encouraging for Louisville Metro.
Louisville Metro’s unemployment rate for March declined to 9%, down from 9.6% in February. Last year at the same time, Louisville’s unemployment rate was 10.2%. The region continues to see improvement in the labor market situation, and this week’s report was further evidence of positive gains.
The decline in the unemployment rate occurred with a favorable combination of the region’s labor force and the number of unemployed. The labor force increased showed a modest gain of almost 5,000 from February to March. Over the year, the area’s labor force increased by almost 9,000.
Gains in the labor force were also accompanied by a reduction in the number of unemployed. The region’s unemployed declined by approximately 3,500 from February to March. Over the year, unemployment declined by approximately 7,000. While this does represent an improvement in the number of unemployed, the number of unemployed continues to remain elevated. Approximately 57,000 remain unemployed, an improvement from last year’s number of 64,000. Prior to the recession however, the number of unemployed was in the 30,000 range.
Comparing the month over month gains to the year over year gains suggest s that the labor market improved significantly for Louisville Metro in the month of March. These numbers are only preliminary and subject to revision, but the initial read is very positive. The monthly gains are almost one half of the year over year gains, implying acceleration in labor market activity for the Louisville Metro region.
The improvement in the region’s labor market situation can also be seen with the nonfarm payroll growth, as evidenced in the report. Louisville Metro added 11,000 jobs month over month, non-seasonally adjusted, the largest month over month gain in 20 years.
Additionally, when you observe year over year growth, to control for the non-seasonality, Louisville Metro nonfarm payrolls are up by 21,200 or a 3.6% gain. The strength of these gains is evident by comparing Louisville Metro to other metro areas in Kentucky and Indiana. Louisville Metro led all metro areas in Kentucky, and of the 13 metro areas in Indiana, Louisville’s year over year percent gain would rank fourth overall. As a comparison, the year over year change in Indiana nonfarm payrolls stand at 42,600. Louisville Metro job gains are about ½ of total payroll changes in Indiana, and higher than Indianapolis gains of 13,000.
On a year over year basis, the change for Louisville is the highest since 1998. In 1998, Louisville saw a year over year change of 21,500 jobs in August of that year. On a percentage basis, the 3.6% change for Louisville Metro is also the highest since August 1998. As the graph below shows, Louisville payroll growth is now clearly exceeding U.S. nonfarm payrolls growth.
While this week’s metro report was quite impressive for Louisville Metro, we may be seeing another soft patch in the economy. Indicators are beginning to flash caution lights, and we may see this in a deceleration of labor market activity for the next quarter or so. Today’s national report was weaker than expected, and this will show up in subsequent metropolitan numbers. Additional data will be necessary, but this impressive pace in metro labor market gains will be tough to sustain.