Md. job growth surged in Feb. New employment hit 6% annual rate

more than 12,000 jobs

'Best this decade'

Construction workers were in demand amid mild winter weather

April 04, 1997|By Jay Hancock | Jay Hancock,SUN STAFF

Maryland added jobs at a blistering, 6 percent annual rate in February, new figures show. The result was exaggerated by mild weather but nevertheless indicates a strengthening state economy and may signal growth well into this year, analysts said.

Maryland had 2.237 million state-based jobs in February -- 12,000 more than in January, after adjustments for routine seasonal variations, according to the U.S. Bureau of Labor Statistics. It was the biggest one-month jump in state payrolls since February 1996, when Maryland regained the 30,000 jobs it temporarily lost in the January blizzards and budget fights of that year.

The state's seasonally adjusted unemployment rate for February was 4.5 percent, slightly less than the 4.6 percent rate in January.

"It really looks like the beginning of 1997 is going to be very strong," said Michael Funk, an economist who follows the state for the Regional Economic Studies Institute at Towson State University. "No question, this is the strongest employment growth we've seen in Maryland this decade."

Nobody expects Maryland jobs to expand by 6 percent for all of 1997. Only Sun Belt hot spots such as Nevada and Arizona are growing that fast.

Maryland's February result was padded by jobs that existed only by virtue of the month's balmy temperatures. Almost a third of the new jobs in January and February were construction jobs, noted Ann O. Franklin, chief economist for the state Board of Revenue Estimates. "Because of the mild winter, many of those projects went forward earlier than they otherwise might have," she said. "Many of the road projects just went right through the winter."

But not all the new jobs can be explained by better weather, and other evidence reinforces the idea that the Maryland economy accelerated last summer and continues to approach the national job-growth rate of about 2 percent.

Maryland had 1.4 percent more jobs, on average, during the fourth quarter of 1996 compared with the same period in 1995.

Since June, state sales-tax collections have grown at an annual rate of 5.5 percent, Franklin said. Income tax withholding has grown at close to a 6 percent rate. Tax collections closely reflect economic activity, and the state recently boosted its revenue estimate for this fiscal year by $50 million.

In the past, the Labor Department has generally underestimated Maryland's job growth in initial reports by a percentage point or so. If February's report is low, the state's actual performance might have been even better, Funk said.

"The job numbers are consistent with a healthy state economy," Franklin said. "Probably employment is growing at a 2 to 2.5 percent [annual] rate in the first quarter, which is very good."

Another analyst was more cautious, however. Weather extremes may have totally obscured Maryland's short-term performance, said Charles McMillion, chief economist for MBG Information Services, a Washington business and economics consultancy.

"Indications, anecdotal and otherwise, seem to be that growth continues slow but steady," McMillion said. "But it's very hard to sort it out, because of the difference between this winter and a year-ago winter."

Maryland's February results actually could have been doubly inflated.

Not only did warm weather this year add jobs that wouldn't have otherwise been there, but the severity of 1996's winter and the resulting job losses could also have swollen employment data for this year, economists said. The reason: Last year's depressed results got programmed into mathematical adjustments for "routine" seasonal variations -- even though they were far from routine.

However Maryland is doing, analysts agreed that growth will slow if the Federal Reserve keeps tightening the money supply by raising short-term interest rates. Last month the Fed increased a key short-term rate by a quarter percentage point.

"Our feeling is that one-quarter point movement isn't going to have a tremendous effect," Towson State's Funk said. "However, we think the Fed will tighten further during the year" to slow the economy and pre-empt inflation.

Hurt by federal cutbacks, defense downsizing and manufacturing shrinkage, Maryland's economy has struggled for most of the 1990s. Only last year did it surpass its pre-recession high of 2.191 million jobs, reached in September 1990. Since 1991, Maryland has added state-based jobs at about a 1 percent average annual rate.

Pub Date: 4/04/97

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