Economists see mixed signs in Md.’s jobs report
Maryland’s labor market recovered some ground in September after several months of little or no growth, but some economists worry hiring is likely to slow more in the months ahead.
Some even suggested the possibility of a recession as soon as next year, the first since the financial crisis and housing bust in 2008.
Yet the U.S. Labor Department’s September jobs report Friday showed employers in the state adding 3,400 jobs last month and the unemployment rate falling to 4.2 percent, below the 5 percent national rate.
Maryland’s labor market also looks stronger on an annual basis. The number of jobs in September was up about 1.7 percent from September 2015 — on par with the national growth rate and in line with previous months, according to the estimates, which were adjusted for seasonal variation.
But the September gain was offset by a sharp downward revision to previous estimates for August. Friday’s report found the state lost 4,400 jobs in August, instead of adding 700 as initially reported. Payrolls were about 1,000 lower than in July, according to the estimates.
Economists said the end-of-summer
fluctuation may be a statistical fluke, traced to the difficulties of estimating hiring at the start of the school year. But the bigger picture remains unclear. The most recent survey of Maryland firms by the Federal Reserve Bank of Richmond found hiring expectations dropped sharply in September. The state also cut its revenue forecast last month, citing slower growth and limited wage increases.
National growth picked up in the second quarter of this year, but at 1.4 percent, gross domestic product gains remained below historic rates. Other national indicators have been weak. Job openings and consumer spending declined in August, while housing starts continue to lag in the U.S. and in Maryland.
Economist Daraius Irani said the summer slowdown may be the first hint of even more moderate growth in the coming months, perhaps slipping the economy into a recession.
“We’re probably starting to see the beginning edges of it,” Irani said.
R. Andrew Bauer, a senior economist for the Federal Reserve Bank of Richmond, said he thinks concerns about a recession are overblown. With more people working, it makes sense that hiring would slow, as it takes businesses longer to find workers, he said.
Bauer said he hasn’t seen bubbles in the economy that would trigger a bigger slowdown.
“When I look at the data for the labor market for Maryland, there’s mixed results for the most recent period, but overall it’s very positive and signals an economy that’s growing in a very balanced way,” he said.
But economist Anirban Basu, CEO of Sage Policy Group, said he thinks the values of some assets, such as stocks and commercial real estate, have been pushed artificially high, as low interest rates lead investors to seek riskier, potentially higher-yield products
Maryland’s economy could be vulnerable if those values reset, since many of the state’s families rely on the stock market to bolster household income, he said.
“What will drag us down are not Maryland-specific factors but global and national factors,” said Basu, who said a recession could occur in the next two years.
The employment gains reported Friday were powered by the public sector, with the government adding 4,900 jobs. Payrolls in the financial sector increased by 1,500 jobs, while professional and business services firms added 700 positions.
Education and health services employment fell by 1,800, while jobs in the leisure and hospitality sector dropped by 1,600. Payrolls in the trade, transportation and utilities sector fell by 1,300.
“It’s a mixed message, a mixed bag,” Basu said. “Maryland’s economy is not booming but it does continue to progress.”
One problem for hiring is that job applicants don’t always have the skills employers are seeking.
The U.S. Department of Labor on Friday said it would give Maryland a $2 million grant to expand apprenticeships, which supporters say offer strong paths to employment. The state Department of Labor, Licensing and Regulation hopes to use the money to create 9,000 new apprenticeships over the next 18 months, targeting indus- tries such as health care, cybersecurity and manufacturing.
Hiring is shifting, as new technology and regulations ripple through different industries, said Scott Rifkin, CEO of Mid-Atlantic Health Care, which provides skilled nursing and rehabilitation services at facilities in Maryland and Pennsylvania.
That business has added workers, but much of the payroll growth is due to acquisitions, he said. By contrast, Rifkin said he’s also brought on more than 20 people in the last six months to staff recently started health insurance and data mining companies.
“It depends on where you work in the sector,” he said. .
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