Jobless rate in Md. stays at 3.8%

Job creation behind that of recent years

March 31, 2007|By Jamie Smith Hopkins | Jamie Smith Hopkins,Sun reporter

Maryland's unemployment rate remained at 3.8 percent last month as employers added 2,700 jobs, the federal government said yesterday.

It wasn't a poor showing, but overall job creation in the past 12 months has lagged behind the state's performance in recent years - hurt by a housing slowdown that has rippled into the bottom line of businesses as varied as mortgage brokers and home-furnishing stores.

The number of jobs rose by 25,600 over the past 12 months, according to preliminary estimates, compared with just over 40,000 from February 2005 through February 2006. Unlike the monthly data, the annual figures are not adjusted for seasonal variations.

Expect more of the same disappointing job-growth numbers, economists say. The state is suffering from the nationwide phenomenon of the sharp housing downturn and a related meltdown in subprime lending, and it's continuing to lose manufacturing jobs as well - two significant drags on growth.

"Companies are going to be more tentative, consumers are going to be more tentative, until we make our way past this stretch," said Rakesh Shankar, a senior economist at Moody's who tracks the Maryland economy.

"We're not really sure how this housing market collapse is going to play out."

Then there's the less obvious factor putting the brakes on growth, at least for now: too few workers.

The state's jobless rate, significantly better than the 4.5 percent nationwide, is well into territory dubbed "full employment." Even with the clouds hanging over housing and manufacturing, some employers in the state are battling worker shortages, Shankar said.

But he expects Maryland's unemployment rate will soon rise, averaging 4.1 percent this year, as the effects of housing and lending woes hit more businesses.

The state's initial unemployment claims, which can act as an early indicator of trouble, tripled last month compared with February 2006, the federal government said recently.

Shankar thinks the increase might be inflated because claims skewed low last year. Still, he believes the change suggests that more residential construction firms and similar employers are laying off employees.

Daraius Irani, director of applied economics at RESI, Towson University's research and consulting arm, also predicts a job-creation slowdown this year. He had originally anticipated a performance similar to last year's.

"We're probably going to go back and revise our estimates for the second half of 2007, given the new information and the continued weakening of the housing market," Irani said.

Neither economist thinks the state should brace for bad times, though. Irani said the federal government continues to pump money to contractors with local offices, and Shankar said he doesn't expect a recession.

Maryland's old reliables continued to produce the most employment. Education and health services added 8,300 jobs in the 12 months ending in February. Professional and business services added 7,400 jobs, while leisure and hospitality added 6,600.

Manufacturing remained the big problem spot, shedding 2,200 jobs in the 12 months ending in February. The trade, transportation and utilities sector dropped by 100 jobs, pressed downward by retailers, a sector hurt when consumers have less to spend.

The financial activities sector added no jobs - in part thanks to a 300-job loss among "credit intermediation" companies such as mortgage brokers.

Construction is still adding jobs - 1,900 year-over-year - but that's far below what the sector was producing this time last year.

Because it includes all construction work, not just residential, the number reflects the increase in commercial development in the area, particularly Baltimore.

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