Robust Pennsylvania Job Growth in May But Long-Term Picture Little Changed

The Pennsylvania employment situation report, released today by the Bureau of Labor Statistics, showed that the number of “jobs” in Pennsylvania – nonfarm payroll employment as measured by a survey of employers – grew by a robust 24,700 in May, and the state unemployment rate fell by one-tenth of a percentage point to 5.6 percent. The job jump in May was enough to improve PA’s long-term job-growth ranking – but only by one place, to 48th out of the 50 states going back to January 2011.

Job growth of more than 24,000 in May, after a gain of 12,300 in April, is unusually strong for Pennsylvania. This raises the question of how much confidence we should put in it. Since it is only a month’s data, we can’t draw strong conclusions.

One particular puzzle about the May job growth data is that employment (technically, “resident employment”) measured by the household survey (rather than an employer survey) declined in May by 6,000 jobs.

While the employer and household surveys can be contradictory in any one month, they tend to move in the same direction over the long term – which doesn’t help us make sense of today’s numbers.

Turning to the details of job growth in May measured by the employer survey, job growth was broad-based across industries, with construction continuing its rebound, and manufacturing and the public sector adding jobs as well. Over a 12-month period, however, manufacturing is down 4,900 jobs, and the public sector down by 4,500 jobs.

The fall in the unemployment rate in May results from a decline in the labor force, down 12,000 this month and 43,000 since May 2013. Over the last 12 months, the unemployment rate has fallen by 1.9 percentage points, due to a combination of job growth (a good thing) and labor force decline (not usually a good thing because it indicates more people have become discouraged about being able to find a job).

While the April and May job gains are encouraging, we need to see continued employment increases over several more years to get back to the strong job market in December 2007, prior to the Great Recession. In fact, even with May’s bump up, Pennsylvania still has 18,000 fewer jobs than in December 2007. In addition, the population has grown 3.7% since December 2007, so we need another 212,200 jobs to keep pace with population growth. This makes for a total jobs deficit of 230,200.

How is Pennsylvania’s job growth ranking over the long term? In a brief we released earlier this week, we reported Pennsylvania’s 49th place job-growth ranking since January 2011. The strong May numbers improves Pennsylvania’s ranking to 48th.  Over a shorter 12-month period, the new May numbers made a bigger difference, improving the state’s ranking from 42nd to 33rd.  

One more detail: the PA Department of Labor & Industry points out in its release that private jobs are now at an all-time high, above the level of December 2007 (and every other month). That is factually true, but it doesn’t mean much given the increase in population of 3.7% since December 2007. For private job growth to reach the level of December 2007 plus the increase needed to keep pace with population growth would require another 164,900 jobs.

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