Friday, April 15, 2022

Georgia unemployment rate levels off in March, breaking previous trend

Georgia’s unemployment rate stood at 3.1% in March 2022. According to the U.S. Bureau of Labor Statistics, the change in the state’s unemployment rate over the month was within the sample error range, so speaking statistically, the rate remained stable from February to March. A  year ago, the state’s unemployment rate stood at 4.4%.

Nonfarm employment was little changed in March, but recorded a 5.2% rise compared to March 2021. In March 2022, the state’s nonfarm employment stood at 4,740,400, up 234,400 over the past 12 months.

Unemployment in Georgia

Because the household sample for the state is only a small subset of the national sample, it takes a much greater change in the state’s unemployment rate to be statistically significant as smaller samples are more subject to greater sampling and non-sampling errors.

This can cause confusion where a number that may look smaller than the previous month may actually reveal no change due to the error range of the smaller sample.

Throughout 2021 and into 2022, Georgia’s unemployment rate was consistently below the nation. This trend was broken in March when BLS noted that the state’s unemployment rate was not statistically significantly different than for the nation as the national rate fell faster than for the state.

It is possible that this change in the trend may indicate that the state is reaching the bottom of its current trend and that Georgia’s unemployment rate may begin to rise in future months, either due to people currently not in the labor force deciding to return to search for work, or because more people find themselves unemployed.

If a rise in the unemployment rate is due to people being drawn back into the labor force, that can be a positive development for Georgia’s economy, while more people moving from employed to unemployed would be seen as a negative development.

Future months will better reveal whether Georgia can regain its relative outperformance.

Nonfarm employment

Over the first quarter of 2022, Georgia saw the addition of 65,700 nonfarm job, of which 64,300 were in the private sector and 1,400 resided in governments.

All of the private sector’s job growth was concentrated in service-providing industries, which added 64,700 jobs, while the goods-producing sector, which includes manufacturing and construction, saw a decline of 400 jobs in the first three months of the year.

Within the goods-producing sector, the construction industries showed a net loss of 4,000 jobs, while manufacturing in the state recorded an increase of 3,400 jobs. 

Thursday, March 31, 2022

Office jobs dominate employment while physicians dominate wages in the Atlanta area in 2021

Workers in office and administrative support occupations were the largest major category by employment, while medical doctor occupations recorded the highest average pay among detailed occupations in the Atlanta area in May 2021, according to new information released by the U.S. Bureau of Labor Statistics, Occupational Employment and Wage Statistics survey.

Employment by major categories

Among the major categories, the largest percentage of workers were found in the office and administrative support occupations (13%) with sales and related fields and transportation and material moving occupations each containing approximately 10% of the area’s workforce.

Healthcare practitioners and technical occupations represented 5.3% of employment, while healthcare support occupations accounted for another 2.8%.

In contrast, workers employed in the life, physical, and social science occupations totaled only 0.6% of the area’s workforce, only two-thirds of the percentage of workers in this category nationally.

Highest paying occupations

Among the major categories, in the Atlanta area management occupations offered the highest average wages at $124,850 followed by legal occupations at $105,370.

For detailed occupations, obstetricians and gynecologists were at the top spot averaging $338,680 per year, followed by neurologists ($336,230), radiologists ($330,350), all other surgeons ($329,800), and anesthesiologists ($307,730).

Actuaries was the highest paying occupation outside the medical field, averaging $245,520. Among detailed occupations, 12.6% of workers were in occupations that averaged more than $100,000 per year.

Lowest paying occupations

Amusement and recreation attendants were the lowest paid detailed occupational group in the Atlanta area with wages averaging $21,570.

Other low paid occupations included cashiers ($23,260), fast food and counter workers ($24,120), and hosts and hostesses at restaurants, lounges, and coffee shops ($23,080).

Overall, average annual wages in the Atlanta area were $59,100 in May, 2021 with 61% of workers in occupations that fell below that average. Food preparation and serving related occupations were the lowest paid major category with average annual wages of $26,890. 

Saturday, March 26, 2022

Georgia shows strong job market continuing in February

Georgia added 24,700 new jobs in February following a revised increase of 25,000 jobs in January, according to new data released by the U.S. Bureau of Labor Statistics.

With these most recent two months, the state saw an over-the-year increase of 232,000 jobs or 5.2%, with 228,400 jobs created by the private sector.

February marked the fourth consecutive month where the total number of nonfarm jobs in the state recorded a new high, reaching the 4.7 million mark.

The state’s unemployment rate remained at 3.2%, the same as January, although the number of employed inched upwards, while the number of unemployed inched downward over the month.

Employment by industry sector

Most industry sectors in Georgia recorded increases over the month, with jobs in the professional and business services sector rising by 10,500 in February. Over the past 12 months, the sector has seen an increase of 52,500 jobs, or 7.3%.

Among private industry sectors, construction stood out as losing 4,300 jobs in February, after seasonal adjustment. With the February decrease, construction employment fell below its pre-Covid level.

The leisure and hospitality sector, hard hit by Covid-related shutdowns and cutbacks in 2020, saw an increase of 4,300 jobs in February. Over the past 12 months, the sector has recorded a net addition of 43,800 jobs, or 10.1%. Despite the gains, employment in this sector remains below its pre-Covid levels.

Another area still struggling to reach are state and local governments. State government lost 300 jobs in February. Over the past year, state government employment has shrunk by 3,100 jobs or -2%.

Employment in local governments fell by 100 jobs in February. Over the past 12 months, employment in this sector has risen by 7,100 or 1.8%.

Thursday, March 17, 2022

Number of job openings decline in Georgia even as state records record low unemployment rate

The number of job openings in Georgia declined by 39,000 at the end of January even as the state’s unemployment rate hit a record low 3.2%, according to new data from the U.S. Bureau of Labor Statistics.

Georgia's job openings rate dropped from 8.2 in December to 7.5 in January.  Georgia’s rate remained above the national average, which declined from 7.1 in December to 7.0 in January. In January 2021, the state recorded a job openings rate of 6.5. The one-month decline in the number of openings was the largest recorded for Georgia since March 2020, when coronavirus-related cutbacks by employers hit the state’s workforce. 

In Jaanuary, the number of hires and separations (including the number of people quitting their jobs) in the state were little changed over the month. The hires rate in the state stood at 5.5, and the total separations rate was 5.3. Within total separations, the quits rate remained 3.7, while the layoffs and discharges rate stood at 1.0.

In January, the state’s unemployment rate was 3.2%, the lowest since BLS began its current series in 1976. In January 2021, the state recorded an unemployment rate of 4.8%. Since that time, the state’s labor force has grown by 47,357 with the number of people employed rising by 128,308 and the number of unemployed declining by 80,951.

Georgia’s employment-population ratio has risen over the year from 59.0 to 59.8 but remains below its pre-Covid levels of 60+.

Thursday, March 10, 2022

Why inflation in services matters

 CPI-U, U.S. Services, 12-month percentage increase


February’s inflation rate for services rose 0.6%, just a touch below January’s increase of 0.7% with the two months’ combined increase moving towards levels last seen in 2008 before the recession saw a slowdown in costs. 

For the 12 months ending in February 2022, the CPI-U Services index rose 4.8%, the highest 12-month increase for the index since 1991. For the Atlanta area, the services index rose 7.8%. 

Unlike food and energy prices that tend to be more volatile, related to supply chain issues, and are more subject to global influences; costs for services are more influenced by domestic considerations. 

Energy prices may vary depending on global supply and demand considerations for items like gasoline and natural gas, food prices may vary depending on global supply and demand considerations for a host of products such as wheat, but costs for services are mostly dependent on demand and supply within the U.S. economy. 

As the New York Federal Reserve pointed out back in 2013, “While core services inflation depends on long-run inflation expectations and the degree of slack in the labor market, core goods inflation depends on short-run inflation expectations and import prices.” (https://www.newyorkfed.org/research/current_issues/ci19-7.html

What are services? 

In the most basic approach, the Consumer Price Index can be broken down into goods and services. BLS defines services as including   shelter, transportation services, medical care services, energy services, water and sewerage, maintenance, trash and garbage collection, household operations, education, and other services. 

By reviewing this list, one can see that services tend to be located within the borders of the U.S., and thus less subject to fluctuations in the global economy. At the same time, prices for services tend to move in a more even fashion with less volatility than the overall index. 

As a result, once prices for services move up, it makes it that much harder to bring down inflation as services inflation tends to embed in the economy. If the Federal Reserve’s policy is to maintain inflation at or about the 2% level, then inflation for services will need to drop by more than half to meet that goal.


Atlanta consumer prices rise more than 10% over the year; largest yearly increase in 4 decades

 

Consumer Prices in Atlanta Metro Area, 12-month Increase, February 1999-February 2022

Consumer prices in the metro Atlanta area rose 10.6% for the 12 months ending in February 2022, according to information from the U.S. Bureau of Labor Statistics. For the nation, prices increased 7.9% for the comparable period. 

The increase in the Consumer Price Index for All Urban Consumers for the Atlanta-Sandy Springs-Roswell, Ga., was the largest 12-month increase recorded since 1981.

Costs for food and beverages in the Atlanta area increased 6.5% as prices for food at home rose 5.9% and food away from home increased 7.6%.

Housing costs rose 8.6% as rents increased 8.5% and costs for household fuels and utilities rose 7.6%. Apparel prices in the metro Atlanta area were up 11.8%.

Transportation costs increased 11.8% with prices for new vehicles increasing 30.7% and prices for used cars and trucks rising 41.4% over the year. Gasoline prices rose 39.9% for the 12 months ending in February.

Recreation costs increased 5.5% and costs for education and communication were up 1.9% over the year.

The index for energy costs increased 22.3%, while prices for all items less food and energy rose 10.1%.

Costs for services increased 7.8% for the 12 months ending in February. The services index should be especially noted, as the index may indicate that inflation is becoming more embedded in consumer purchases.

Comparison with the nation

Overall, costs in the Atlanta area continue to grow at a faster pace than the nation, although this varied by item.

For the two months ending in February, consumer prices increased 2.3% in the Atlanta area, while they rose 1.8% nationally.

Housing, apparel, transportation, recreation, and education and communication costs all rose faster for the Atlanta area than for the nation as a whole.

Costs for services increased 7.8% in the Atlanta area compared to 4.8% nationwide.

Costs for food and beverages and energy rose at a slower rate for Atlanta than for the nation. Energy costs rose at a slower rate in the Atlanta area due to lower increases in household fuels and utilities despite gasoline prices rising faster.

The news release for the national CPI is available at Consumer Price Index Summary - 2022 M02 Results (bls.gov).


Tuesday, March 8, 2022

Last time oil prices peaked, Georgia fell into a recession. Can it happen again?

 With oil prices surging, it worth a look back at the last time Georgia’s economy faced this situation and how it unfolded. Georgia last faced a peak in oil prices and a decline in private sector employment in 2008, as the state and the nation fell into a recession that lasted 18 months from December 2007 to June 2009, according to the National Bureau of Economic Research.

After the 2001 recession

Private sector jobs fell from the onset of the recession in March 2001 until July 2003 (long after the recession officially ended) and then gained consistently until December 2007 nationally.

In Georgia, the turnaround began a couple of months earlier, in May 2003, and continued a steady climb up until January 2008. From May 2003 until January 2008, private sector employment grew by 262,000 jobs (8.16%). (All employment data are based on seasonally adjusted data supplied by the U.S. Bureau of Labor Statistics.)

As the economy recovered, so did oil prices, but the increases did not hurt the jobs recovery in the early stages. Oil rose from around $26 a barrel in January 2003 until it peaked in July 2008 at $147.50. (In today’s dollars, that would translate to $188.53 per barrel.)

2008 to 2010

For Georgia beginning in January 2008, the upward trend in job creation reversed long before oil prices peaked. Between January 2008 and December 2010, the state saw a loss of 286,600 (-8.25%) private sector jobs from employers’ payrolls.

Among the major sectors, the construction industry saw the largest percentage decline in employment over that period, down by 32%, followed by manufacturing (-18%) and wholesale trade (-11.8%). In terms of net job losses, manufacturing carried the heaviest load, down 76,000 jobs over that period.

2010 to 2020

As the 2007-2009 recession eased, Georgia began again to regain jobs but again long after the recession had officially ended in June 2009. Between December 2010 and February 2020, the state added786,100 private sector jobs (24.67%), and sectors such as construction, which had shed so many jobs during and after the recession added back in 61,600 jobs (41.99%), although manufacturing employment recovery was much weaker, up by only 59,000 jobs (17.08%).

The largest net gain in jobs occurred in the professional and business services sector, which had lost a comparatively small 31,200 jobs during the recession only to gain 179,000 afterwards.

Equally impressive was the health care and educational services sector, which had actually added 27,100 jobs during the recessionary period, and then gained another 134,700 jobs in the recovery period.

2020 recession

In early 2020, layoffs and shutdowns related to the coronavirus slammed Georgia. Between February and April 2020, the state saw 592,800 jobs disappear (-14.92%).

Hardest hit was the leisure and hospitality sector, which had only suffered relatively minor layoffs during the previous recession. Over that two-month period in early 2020, 223,200 jobs in hospitality and leisure disappeared in Georgia. Other sectors with large losses included professional and business services (-80,100 jobs), heath care and educational services (-70,900 jobs), and retail (-67,600 jobs).

In comparison, construction, which had been so hard hit in the 2007-2009 recession, saw the loss of only 11,700 jobs (-5.62%), while manufacturing recorded 45,000 in job losses.

April 2020 to December 2021

After the devastating loss of so many jobs over only a few months, private sector jobs began a slow but significant recovery. From April 2020 to December 2021, Georgia saw 594,300 new jobs (17.58%) created in the private sector bringing the state back to where it stood pre-pandemic in February 2020.

Some sectors in the state have fully recovered to their pre-pandemic levels, including retail; transportation, warehousing, and utilities; information; financial activities; and professional and business services sectors.

Other sectors have not fully recovered their pre-pandemic employment levels with leisure and hospitality jobs 10% below and other services (which includes maintenance and repair jobs as well as personal care occupations) down 8% compared to February 2020.

Rising oil prices bringing on another recession?

It is too soon to judge whether another recession is on the horizon but a steady increase in oil prices beyond current levels, as happened in 2008, makes a recession a distinct possibility, especially if the oil prices continue to climb into the summer.

Whether a recession comes in 2022 depends on a combination of increasing oil prices plus higher interest rates plus some unforeseen variable that will cause people to become more pessimistic about the economic future.

At current inflation-adjusted prices, oil still sits far below its 2008 peak, and it will have to continue to move towards the $188 or above level to equal its impact in 2008.

This recession, if it comes, may be more driven by finances, as higher energy costs force people to cut back on more discretionary activities and higher interest rates makes borrowing prohibitively expensive. 

The 2007-2009 recession in Georgia saw the state lose in 35 months what it had taken 55 months to gain, as the state’s private sector employment rose by 262,000 jobs between 2003 and 2008 only to lose 286,600 jobs in the 2007-2009 recession.

If the state suffers the same percentage loss in the next recession, it will see a drop of 327,000 jobs, bringing it back to near its July 2020 levels. Better than its coronavirus-related 2020 recession but still a blow.

Related to the 2007-2009 recession, construction took the deepest percentage job loss, but that recession has been closely tied to overbuilding and easy mortgage financing prior to the downturn. In 2020, the leisure and hospitality sector received the most pain as people avoided travel and public contact in places such as restaurants, movies, and airlines.

As such,if a recession occurs, the recessionary impact on jobs may be more be more evenly spread out among the sectors with no sector losing more than 10% of its jobs. Of course, that will be of little comfort to the leisure and hospitality sector in the state, which has not yet fully recovered from the 2020 recession.

It pays to remain vigilant as higher oil prices and expected higher interest rates work their way through the economy and both consumers and businesses make decisions on how to allocate their resources to cover these higher costs along with the possibility of some unexpected variable that will cause people to change their opinion of their economic future.