EconSouth - Fourth Quarter 2007
The Southeastern Economy in 2008
Employment Slows From Its Robust Growth
The Sunshine State clouds over
Importantly, for the last several years Florida has been a leader not only in regional employment growth but national employment growth as well. From the fourth quarter of 2003 through the fourth quarter of 2006, the state added new jobs at twice the national rate.
Only California added more jobs than Florida's 754,000 over that time period, and only Arizona, Idaho, Nevada, Utah, and Wyoming added jobs at a faster rate than Florida's 10.3 percent. But that growth rate is in the past. The average rate at which Florida added jobs dropped to just a third of a percentage point in the first three quarters of 2007. Another telling statistic illustrates Florida's employment slowdown: Between the fourth quarter of 2003 and the fourth quarter of 2006, one out of every 10 net new jobs created in the United States was in Florida, but in the third quarter of 2007, that ratio had slipped to one out of every 20.
The slowdown in payroll employment growth is widespread throughout Florida. All large metro areas in the state have seen a marked weakening in job growth. The pain has also spread across sectors. While construction employment growth slowed the most, manufacturing employment growth has also turned negative. In addition, the rate of growth in services employment has shrunk to about half its rate of two years ago.
The rest of the region holds its own
In all Southeastern states except Georgia and Alabama, the rate of growth slipped during 2007 (see chart 2). In Georgia, services employment has grown modestly, offsetting a dropoff in construction and the ongoing decline in manufacturing jobs, and Alabama's rate of job creation has leveled off.
Louisiana and Mississippi's payroll employment recoveries have abated. Tennessee's rate of payroll employment growth has moderated, largely because of ongoing declines in manufacturing jobs and a slowdown in services employment growth. The deceleration in services stems from a drop in retail trade employment and a slowdown in net job creation in transportation and business services.
Unemployment rates for the Southeast states largely reflect trends in payroll employment. Although Florida's unemployment rate has increased notably since the beginning of 2007, Alabama and Georgia have experienced relatively steady rates of unemployment, with only a slight uptick in the third quarter of 2007. Louisiana and Mississippi have witnessed a marked decline in their unemployment rates; they are down from Katrina-related highs in 2005 and have been relatively steady in 2007.
Tennessee, despite a slowing of payroll employment growth, saw its unemployment rate decline in 2007. A coincident decline in the unemployment rate and glowing payroll growth can be attributed to a decline in the state's labor force. Tennessee experienced another such decline in the second and third quarters of 2007, which offset increases in the number of unemployed.
Looking ahead to 2008
For other Southeastern states, initial unemployment insurance claims accelerated in the third quarter of 2007 after dipping over the summer (see chart 3). Should this trend continue, it could indicate that labor markets outside of Florida are softening as well.