Like thunder clouds threatening to spoil a Fourth of July picnic, the Rochester area’s latest monthly employment report is something to keep a watchful eye on.
In May, the local private-sector job count contracted by 2,400, or 0.5 percent—the fifth consecutive month in which employment trailed year-ago levels (Figure 1).
Rochester’s negative labor market performance contrasts with the 1.7 percent U.S. gain—as well as the 1.1 percent average annual growth in local payrolls in 2015 and 2016.
Looking below the top-line figures, the picture remains equally cloudy.
While manufacturing cuts have been a steady drag on the Rochester area for many years, several other sectors are now contributing to the hiring malaise.
Over the first five months of 2017, administrative business services (back office) employment declined by an average of 2,000, or 6.6 percent. Similarly, employment in the leisure and hospitality, private education and retail trade sectors fell by more than 1,000 positions each versus year-ago levels (Figure 2).
Added to a 1,100 reduction in manufacturing jobs, these sectors combined for a 7,400 decrease in average private-sector employment—enough to easily offset solid gains in the health care, professional-scientific-technical and construction fields.
While Rochester’s eroding labor market momentum is worrisome, it does not yet appear to be weighing on overall payroll income.
Collectively, private-sector workers in the Rochester area earned approximately $1.5 billion in hourly wages last month, up 6.5 percent from year-ago levels. For the first five months of 2017, aggregate payroll earnings were 4.4 percent higher than in the corresponding 2016 period—on par with the 4.5 percent national average gain.
Labor market uncertainty will be a major story over the remainder of 2017. Forecasts remain mixed, so the best advice is to watch carefully for changes and carry an umbrella.
Gary Keith is vice president and regional economist at M&T Bank Corp.
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