Published January 2005

Signs of job growth
hint at stronger economy

By John Wolcott
SCBJ Editor

Washington state employment is rebounding — finally.

According to recent government figures, Washington ranks ninth in job gains among 47 states with improved job levels, including Boeing employment, U.S. Bank economist John Mitchell recently told the Northwest Construction Consumer Council.

“The state’s 2 percent employment growth in the first nine months of 2004 included increases of 9,500 construction jobs, more than 10,000 jobs in professional and business services, and 5,000 jobs for the information technology sector,” Mitchell said.

“Aerospace employment is rising after a long decline; Microsoft continues in a hiring mode; and leisure-and-hospitality-sector jobs have increased by more than 3,000 jobs,” he said. “Job growth in all sectors in Seattle was up 1.8 percent — some 23,700 jobs — in the first three quarters.”

Overall, a stronger economy in the Pacific Northwest also is contributing to growth in many areas of the construction industry, but real, long-term growth ultimately will be driven by employment increases, which are still sluggish in Washington state, he said.

There are, however, more hopeful signs of job growth and economic improvement than in recent months, which can only hint at a stronger economy in 2005, Mitchell said, noting that Census Bureau figures released in November for the Pacific Northwest showed upward trends in several sectors of the industry this year through September, compared to construction levels in 2003.

For put-in-place construction, he said, home building was up 12.7 percent in 2003 over 2002 activity and up 14.5 percent through September 2004 compared to the same nine-month period in 2003, reflecting an increasingly stronger market as the demand for housing continues unabated.

Other sector comparisons showed construction of health-care facilities grew 6.6 percent in 2003 over 2002 and another 9.4 percent through September this year over 2003 levels; office construction was up 9.8 percent in 2003 and 7.4 percent this year through September.

Comparative numbers for other sectors included manufacturing facilities, which improved from a 13.7 percent loss in 2003 over 2002 to being down only 1.1 percent in the first three quarters of 2004 compared to the first nine months of 2003.

Education facility construction was up 0.9 percent in 2003 and 1.7 percent in 2004; sewage and waste disposal facilities construction grew only 0.6 percent in 2003 but gained 9 percent through September over figures of the year before.

Lodging projects increased only 1.3 percent in 2003, but total activity was up by 8 percent in the first nine months of 2004 over the same period in 2003; along with commercial construction, up 1.7 percent in 2003 over 2002 and up 4.2 percent through September 2004 over the prior year.

Highway and street projects that were up 2.3 percent in 2003 over 2002 were up 6.2 percent through September 2004 over the prior year.

“Nonresidential construction is still relatively weak and has been since late 2000,” Mitchell said. “Commercial building activity is clearly better but still not particularly strong.”

“According to the National Bureau of Economic Research, we are in the fourth year of output growth in our economy, but that’s been due to improved productivity. We are in only the second year of employment growth. And it’s employment, not productivity, that is a major driver of construction for new facilities, such as more office or manufacturing space,”

Mitchell said. Mitchell said there is an “absolutely critical need for more (higher) education funding” to bring more skilled and qualified workers into the labor force.

“Basically, we have a positive economic environment with continued (anticipated) growth (into 2005),” Mitchell said.

However, he cautioned that there still are major factors that could affect the economy negatively, including energy prices and supplies, another major terrorist attack, a housing bubble burst, any slowing of economic growth in the United States or China, weakened business and consumer spending, or reduced employment growth.

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