Courtesy of DECON First
For the third month in a row, Delaware total employment continues to rise at a healthy annual 12 month moving average growth rate of 2% The sustained job growth has pulled the state unemployment rate down below 6% (5.9%) for the first time since late 2008. This is no surprise as the number of Delaware residents with jobs is up 5,900 over the past 12 months while the state’s labor force has increased only 1,400. The rate of consumer price inflation in the region remains near 1%.
The Delaware leading economic index compiled by the Philadelphia Federal Reserve shows no indication of a recession in the state through the third quarter of 2014. Of the index components, initial claims for unemployment insurance are still falling. Contrarily, building permits and manufacturing back logs are declining as well. Although positive, this is the third month of decline in Delaware’s leading index.
There are numerous signs that Delaware’s hot employment growth has peaked and is beginning to return to earth. The 3 month moving average percentage change has fallen below the 12 month percentage change and will proceed to pull the 12 month growth rate down.
The primary recent Delaware growth industry, professional and business services, has seen its 3 month moving average growth rate fall from 7.7% to 4.9%. The growth rate in Delaware’s healthcare industry continues to drop and is down to 1.3%. Between February and March total employment dropped slightly.
As seen across the nation, there are troubling signs in Delaware’s labor force. Over the past year as resident population rose almost 1%, the state’s labor force grew just 0.3%. Since 2005 the state’s labor force participation rate has dropped from 67% to 64%. The greatest decline has been among young people ages 20 to 24. The labor force participation rate has dropped for both whites and blacks. And while the participation rate has also declined for Delawareans with less formal education (high school graduates and below), it has risen for residents with a college or graduate degree.
The jobs generated in Delaware since the trough of the recession show a continuing disturbing trend as well. Previous research by DECON First has clearly established that over the past decade Delaware has been gaining lower productivity jobs while losing higher productivity jobs. Data from the U.S. Bureau of Labor Statistics and the National Employment Law Project shows that since the recovery began in Delaware, only 20% of the net jobs gained fall in the higher wage category. The remaining jobs gained are split evenly between middle and low paying industries. The greatest gains among low paying industries have been concentrated in services to buildings, social services, and nursing and residential care facilities.
DECON First Expects positive but slower job growth for the remainder of 2014 with a return to pre-recession employment by the middle of 2015. The lagging labor market fortunes of residents with less formal education, confirms a continued increase in the bifurcation of the Delaware income distribution.
Dr. John E. Stapleford, Principal
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. Click here for the link.
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