Monday, February 6, 2017

Oregon Employment Forecast: Down Shifting from Full Throttle

Oregon’s economic expansion endures, albeit it at more subdued pace. This doesn’t come as a surprise, as the red hot job growth of recent years was unsustainable over the long run. Monthly growth decelerated from an average of about 5,000 jobs in 2015 to 3,000 in the final quarters of 2016 as Oregon’s economy approached full employment and felt the effects of a strong U.S. dollar and weak global economy, weighing down our export-dependent manufacturing sector.

The outlook calls for continued expansion with above average gains compared with the rest of the nation, but at a more moderate pace than in recent years according to the latest Oregon Economic and Revenue Forecast from the Oregon Office of Economic Analysis (OEA). They anticipate growth to slow from the full-throttle rates of 3 percent to 3.5 percent to about 2.5 percent this year, or roughly 3,500 jobs per month. OEA points out that these gains are still strong enough to accommodate anticipated population growth and hold down the jobless rate.

Growth will be dominated by service-sector industries such as the large and diverse professional and business services (e.g., company headquarters, temp help, computer systems design); leisure and hospitality (e.g., restaurants, golf courses); and private health care. These three sectors will account for nearly two-thirds of net new jobs.

Goods-producing industries, whose growth outpaced the overall economy since 2013, are expected to play a smaller role going forward. Notably manufacturing, which downshifted into neutral last year following six years of gains totaling 27,000 jobs. OEA points to a weak global economy, the strong dollar, and the cyclical nature of manufacturing as reasons behind the flat forecast. Construction will also slow, but still add thousands of jobs as the housing rebound continues, driven by new household formation and in-migration. OEA estimates that new home construction lags demand by about a year. Overall, 2017 will end up 2.4 percent over 2016 (43,400 jobs) with a similar pace forecasted for 2018. 

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