Economic Update:  Job Losses Decelerate

Metropolitan Employment Report: Unemployment Rate Up Slightly, But Pace of Job Losses Decelerates

The latest Bureau of Labor Statistics report on Metropolitan Employment again showed mixed results. The unemployment rate increased slightly higher to 10.2% from 10% in February. While the unemployment rate increased by just a small amount, the increase was the smallest since November of 2008, when job losses really started to escalate.

We continue to see a deceleration in non-farm payroll losses. The March report indicates that non-farm payrolls decelerated by 300 jobs. In other words, February 2008 to February 2009 losses for Louisville were 18,600, and March 2008 to March 2009 losses were at 18,300. So we are not observing the accelerating losses that were characteristic of the last quarter of 2008 and the first month of 2009.

Since the beginning of the recession in December 2007, Louisville metro total job losses are approximately 20,000.

Specific Sectors

Manufacturing losses increased for March. We did see a slowing from January to February, but losses in March increased by another 400 jobs. We’ll likely see continued volatility in losses from month to month. Inventories are starting to come down. So this will help manufacturing in general. The GDP report out this week showed significant declines in inventory levels. The report also showed an increase in personal consumption expenditures. So taken together, an increase in consumption and a big decrease in inventories are exactly what the manufacturing sector needs to hear. Declines in exports continue, reflecting the global recession, and this will heighten the challenges faced by manufacturers.

We did see a moderation of losses in mining, logging, and construction. This sector experienced the greatest losses last month, and so a moderation in these losses is another positive sign.

We continue to see deceleration in the losses for trade, transportation, and utilities. While still negative, retail and wholesale trade job losses have softened. We are actually seeing an increase in employment associated with general merchandise stores.

We did see minor losses in financial activities and professional and business services, reversing the prior two months. However the PBS sector did show a small year over year increase in administrative and support services. A big component of this sector is temporary labor services. Increases in this sector will generally lead non-farm payrolls. Employers are willing to hire temporary labor during uncertainty, and then might hire a permanent employee once the economy stabilizes.

Gains in education and health services continue to accelerate.

The change in government employment was slightly higher.

Job losses in the leisure and hospitality sector slowed slightly. Arts, entertainment and recreation increased by a small amount, but food services and drinking places saw a larger decline in employment.

Other Items of Interest in the Report

The highest unemployment rate in the country is the El Centro, CA metro area with a jobless rate of 25.1%. Elkhart, IN is among the highest at 18.8%.

The lowest jobless rates in the country were the Houma-Thibodaux, LA and Iowa City, Iowa areas at 3.6%.

109 metro areas are reporting unemployment rates greater than 10%. 95 metro areas are reporting unemployment rates less than 7%.

Two reports released on Thursday, April 30, 2009

New claims for unemployment declined again yesterday, and the 4-week average appears to be on a declining trend. Indiana also reported 1,700 fewer unemployment claims in automotive and manufacturing industries.

The Chicago area Purchasing Managers Index increased far more than expected. New orders jumped significantly in the Chicago area. Remember our last analysis on the relationship between national inventories and manufacturing in Louisville. The Chicago report also showed a faster rate of inventory liquidation, a critical step to ramp up production later.

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This information is provided by

Uric Dufrene. 

Uric Dufrene, Ph.D. holds the Sanders Chair in Business in the School of Business at Indiana University Southeast.  He conducts research on local and regional economic trends, and teaches corporate finance at the undergraduate and graduate levels.   He previously served as dean of the School of Business.