Jobs growth to be less torrid

More paychecks: Predictions vary on how much Maryland's employment will grow this year. The projections range from about 2 percent to 2.6 percent.

January 21, 2001|By Kristine Henry | Kristine Henry,SUN STAFF

Employment growth in Maryland will likely slow this year, but because the decline comes after extraordinary gains, economists say the state's job outlook should remain healthy.

"We're looking for slower growth - not a recession or job declines, just not the same kind of growth we had going into the first half of this year," said Michael Funk, senior economist at RESI, an economic institute at Towson University.

"I don't think it's something we should worry about."

RESI expects growth of about 2 percent while the state's Department of Business and Economic Development is projecting growth of about 1.5 percent.

Total employment in Maryland rose 2.7 percent between the first quarter of 1999 and the first quarter of 2000, the period for which the latest numbers are available from the state Department of Labor, Licensing and Regulation. The average employment in 1999's first quarter was 2.28 million and rose to 2.35 million in last year's first quarter.

During that period, employment grew in all areas except the finance, insurance and real estate sector, which declined 2.5 percent.

The contract and construction category saw the biggest jump, growing 5.2 percent to 147,500 jobs.

The average weekly wage per worker in Maryland rose 8.7 percent to $697, with the largest boost coming in the finance, insurance and real estate sector, which jumped 13.6 percent to $1,088.

All sectors saw gains in wages, but government workers saw the smallest advance - 6.8 percent - to $783 a week.

Business services is expected to be one of the biggest growth areas this year, while manufacturing is expected to be the state's weak spot.

"I don't think we're likely to see major losses in the manufacturing sector, but we're very unlikely to see any gains in 2001," said Mark Vitner, an economist who follows the area for First Union Corp., a Charlotte, N.C.-based banking company.

"We are seeing very strong growth in the information services industry - computer and data processing, businesses that are putting the Internet and new technologies to work in old-line businesses."

Mike Cohn is evidence of that. His Anne Arundel County company, Light Industries Inc., known as Panurgy Chesapeake until this month, is seeing strong gains in its consulting and customer relationship management technology. And Cohn said he expects to increase his professional staff by about 25 percent this year.

"We're optimistic about 2001 because we are continually reinventing the company to provide services that are in demand and those are not the same services as two or three years ago," said Cohn, who started the company 21 years ago.

"We are very positive about our prospects in 2001 in the areas of customer relationship management and software development and in business consulting."

Pradeep Ganguly, chief economist for the Maryland Department of Business and Economic Development, said employment prospects in the state for this year "look good, but if you think we can repeat 1999 and 2000 in job growth and income growth, you may be disappointed."

He noted that a potential greater rise in oil prices, a declining euro and growing trade deficit could all eat away at job growth in the state and the nation as a whole.

"If you look at the economy now, most of the sectors are showing a slowdown," he said. "And the slowdown is most noticeable in three factors: job growth, the housing market and [gross domestic product] growth." GDP grew only 2.4 percent in the third quarter of 2000, compared with 5.6 percent growth in the second quarter and 4 percent in all of 1999.

In Maryland, Ganguly said, the increasing popularity of electronic commerce could slow employment growth in the retail sector. He agreed that manufacturing employment would slow and could in fact decrease.

But he noted that from September 1999 to September 2000, Maryland ranked ninth in the nation in terms of the rate of job growth, growing 2.4 percent vs. the national average of 1.9 percent.

"We think that the rate of job growth in Maryland will slow in line with the national trend," he said.

Even with a slowing economy, many employers are having difficulty finding workers to fill positions, and that is not likely to change much in the coming year.

"Across the board, we're hearing about shortages in health care; finance has it, homebuilders have it ... it runs the gamut from unskilled to skilled workers," said Margaret Murphy, vice president of the Baltimore branch of the Federal Reserve Bank of Richmond, Va.

"It's broad-based and consistent ... and that's what you would expect when unemployment is low."

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