Courtesy of Decon First
Data through January, 2014 for Delaware employment and the labor market has just been released and the state’s economy continues to look good. The year over year gain in jobs exceeded 8,000, registering a healthy annual growth rate of 2%.
The resident unemployment rate moved down from 6.2% in December to 6.1%, well below the 7% rate registered in January of 2013. From the recession peak, the total number of Delawareans unemployed has dropped by 9,500. Inflation in the region is rising yet only registering around 1.0%.
In absolute terms, using 12 month moving averages, the gains in jobs came from professional and business services (2,300), retail trade (1,600 with revised benchmarked data), financial services (1,400) and healthcare (1,000) and leisure and hospitality (700). Modest losses continued in construction, manufacturing and government.
Delaware professional and business services continue to be anchored by a steadily advancing legal services industry and gains in computer programming and systems design. Employment growth in Delaware legal services has out-paced legal services across the nation by 45% over the past two decades. Most of this growth comes from national and international firms setting up offices in Delaware to be in closer contact with the Delaware Chancery Court.
As noted previously by DECON First, the net annual gains in Delaware’s healthcare industry have been declining since 2010 and DECON First expects the healthcare job gain to fall to below 1,000 during 2014. Construction jobs have been hit by a recent drop off in residential permits and the harsh winter weather. With strong existing home sales in March, DECON First expects residential permits to revive with the onset of spring.
In 2014 the total number of jobs created by Delaware businesses will continue to rise, but at a slower rate than during 2013. Based upon more than 20 years of data, the current Delaware job growth rate occurs less than 5% of the time. And the impact of the job growth is muted by the number of new positions that go to out of state residents who commute into New Castle County to work. Delaware’s labor force is still 3,000 persons below the pre-recession peak and employment of residents is 12,000 below. This restrains the growth in the wages component of Delaware personal income and sustains the demand for transfer payments.
For businesses in New Castle County that are faced with an annual loss of $2.7 billion in wage earnings from out-of-state commuters, DECON First recommend these business take the following steps to tap into this market:
• Target these shoppers with “Tax Free” shopping promotions.
• Strategic partnerships with the state’s largest employers.
• Lunch time and happy hour promotions
• Loyalty & Referral Programs
DECON First Expects positive but slower job growth in 2014 with a return to pre-recession employment by early 2016. The large gains from INDICATORS:
Of the more than 60 indicators followed by DECON First the most notable changes have occurred in the following: Inflation is increasing driven primarily by higher food prices
Mortgage interest rates are falling modestly and banks began, once again, issuing adjustable rate mortgages The proportion of non-accrual home equity loans held by banks in Delaware is on the rise
Sales of existing housing were disappointing during first months of year – bad weather played a role Delaware’s labor force participation rate continues to fall
DECON First uses economics to strengthen Delaware business. This is accomplished by providing accurate, objective, and relevant analysis of the economy, coupled with best practice recommendations that deliver new customers. The detailed analysis for the Indicators above is found in the DECON First quarterly Delaware Economic Review (www.deconfirst.com).
Direct questions to info@deconfirst.com.
