Columbia gets rosy employment forecast

Columbia’s unemployment rate dropped from 6.1 percent in March to 4.8 percent in April, according to the state Department of Labor. And that’s not the only encouraging news about the local economy.

Columbia is one of the only six metropolitan areas in the United States expected to return to pre-recession employment levels by the end of this year, according to a forecast from IHS Global Insight.

The other five cities predicted to have a 2009 rebound are: Anchorage, Alaska; Champaign-Urbana, Ill.; Coeur d’Alene, Idaho; Laredo, Texas; and the Houma-Bayou Cane-Thibodaux areas of Louisiana. Only five cities are expected to see a recovery in 2010, and three of them are in Texas.

IHS is an international forecasting firm with 700 employees and 25 offices. The analysis covered 325 metro areas and based its projections on previous employment data, employment growth, housing information, real gross state product and personal income. The report also looked at how the local economy reacted to recent incidents, such as natural disasters, the housing bubble and major business closings.

Although Columbia is expected to have a quick recovery, 286 out of 325 regions studied in the analysis are not projected to reach their pre-recession employment levels until at least 2012. Six million jobs have been lost nationally since the recession began 18 months ago.

The IHS report predicts Texas, Oklahoma, Utah and Alaska to be the first states recovering from the recession since their unemployment rates are lower than the national average, their economies are strongly tied to the energy industry as oil prices are rising and they have experienced relatively low job cuts.

The report states some of the upper Midwest states, such as Michigan, Ohio and Indiana, will have a harder time catching up to the rest of the country mainly due to the anemic automobile industry.

The forecasters used unemployment rates from March, which in Columbia rose to 6.1 percent from 4.2 percent and the number of unemployed workers rose 1,781 to 5,636. However, the overall labor force in the metro area – 92,600 – remained virtually unchanged.

The city’s leading economic indicators (see Page 6) show that the local labor force in April was down 340 from April 2008.

Part of that drop may be caused by layoffs in the local automotive parts industry – people are buying fewer cars and trucks, manufacturing companies are making fewer vehicles, and so they need fewer parts. A report in the Columbia Missourian last Wednesday said three of the four auto parts manufacturers have been forced to reduce labor costs. Dana Corp. laid off 186 of its 351 workers last year and Engineered Plastic Components reduced its workforce from 48 to 22 in February. Otscon Inc. has also reduced production but has avoided layoffs. Gates Corp. officials declined to comment.

The construction and housing segment of the local economy also remains anemic. In May of this year compared with the same month in 2008, the number of residential building permits is 60 percent lower, the number of commercial building permits is down 31 percent and the number of homes sold is down 30 percent.

The foreclosure rate has also gone down, but that’s good news of course. So far this year, there have been 110 foreclosures, down from 128 the same time last year.