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Report signals the growth in economy is revving up

The July labor report provided yet another sign that local economic growth is shifting into higher gear.

The Rochester area private-sector job count reached 455,400—the highest reading for July in 15 years and 9,700 (2.2 percent) above the year-ago total. Job creation exceeded 2 percent for the second consecutive month, nearly matching the U.S. average increase (Figure 1).

Employment gains were widespread, led by the usual service sector categories—health care and education, up 5,400, or 4.7 percent; professional and business services, up 3,900, or 5.8 percent; and leisure and hospitality, up 2,400 or 5 percent.

The transportation and warehouse sector added 500 jobs, a 6.1 percent increase, while construction employment rose by 300, or 1.4 percent. The retail trade and finance and insurance sectors recorded minor losses of 500 and 100 jobs, respectively.

Topline growth would have been even more impressive if not for one key factor—the recent re-acceleration in manufacturing payroll cutbacks, with local industrial employment falling by 1,200, or 2 percent, over the past year (Figure 2).

Indeed, excluding manufacturing, local private-sector employment rose by a stunning 2.8 percent over the last 12 months—topping the 2.6 percent average gains in neighboring Buffalo-Niagara and the U.S. overall.

The decline in local industrial employment is doubly discouraging given its relative inconsistency with national and statewide trends.

U.S. factory employment rose by 1.2 percent over the past year. Upstate New York manufacturers added 5,600 jobs, a 2 percent increase, while Buffalo area payrolls rose by 1,900, or 3.7 percent.

The sharp divergence in labor demand between industrial and non-industrial employers will bear close scrutiny in the months ahead. Still, overall payroll employment and consumer spending power are moving higher, setting the stage for a solid second half of 2015.

Gary Keith is vice president and regional economist at M&T Bank Corp.

8/28/15 (c) 2015 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or email rbj@rbj.net.

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