Small Jump In Holland Area Jobs

January 9, 2004
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HOLLAND — Riding renewed strength in the service sector, the Holland area will see a small increase in employment during 2004, even as job losses continue in manufacturing, according to a new employment outlook.

Overall, the area will experience a projected 0.6 percent gain in jobs on the year and double that growth rate in 2005, said economist George Erickcek of the W.E. Upjohn Institute for Employment Research.

In offering his local outlook last week during a Holland Area Chamber of Commerce breakfast, Erickcek offered both positives and negatives.

On the up side, the national and local economic conditions are improving, the U.S. gross domestic product is “way up” of late, business investment is returning, and the Holland-Zeeland area is doing as well as the rest of the nation.

On the down side, productivity gains are more than negating the need for new workers, creating what Erickcek terms a “job-loss” recovery in manufacturing, as opposed to the jobless recovery experienced in the early 1990s following the last recession.

 Area’s Outlook

 Here’s a look at economist

 George Erickcek’s employment 

 outlook for the Holland-Zeeland

 area for 2004 and 2005:

 Overall employment

 2004: 0.6%

 2005: 1.2%

 Goods-producing

 2004: -0.3%

 2005:  0.8%

 Service-producing

 2004: 1.6%

 2005: 1.9%

 Government

 2003: -0.8%

 2002: -0.9%

The big questions are whether renewed business investment in machinery and equipment will become enough to create new jobs in 2004.

“We know productivity is very, very good in the long run, but in the short run it will dampen job growth,” Erickcek said during his annual employment outlook that shows manufacturing employment continuing to fall through 2004, although at a far slower pace than last year.

“The direction is up but the pace is slow and a little bit uncertain,” he said. “The turnaround has come but we are still a little hesitant about hiring. That will pass in 2004 and 2005.”

Erickcek’s outlook foresees a 1.6 percent gain in service-sector jobs and a 0.3 percent decline in the goods-producing sector during 2004 in the Holland-Zeeland area, where the manufacturing employment base is twice that of the national average. Government employment will fall 0.8 percent this year, the result of the state’s continued fiscal crunch.

Erickcek believes the office furniture industry, spurred by renewed business investment, will fare better in 2004 than the 2.4 percent growth rate projected in the industry trade group BIFMA’s most recent outlook. He believes the industry could see growth as high as 6 percent to 8 percent this year, although that may not translate into job growth and office furniture makers “may not see another time again” like the boom years of the late 1990s.

Come 2005, the area will see overall job growth of 1.2 percent, as gains of 0.8 percent in the goods-producing sector and 1.9 percent in the service sector offset a projected 0.9 percent drop in government employment.

In 2003, the area fared worse in employment than Erickcek predicted a year ago.

Overall employment, which he forecast to grow 0.5 percent, actually deceased 1.0 percent last year, pushing the local unemployment rate to 6 percent. Driving overall employment downward was a sharp 3.9 percent decline in goods-producing employment, due largely to steep job losses in the sagging office furniture industry. Erickcek had forecast a 0.9 percent decline in goods-producing employment.

Regionally, Erickcek’s outlook sees a 0.5 percent gain in employment throughout West Michigan, with a projected 1.2 percent rise in service-sector jobs more than offsetting a 0.6 percent decline in the goods-producing sector and 1.1 percent decline in government employment.

Nationwide, overall employment will grow 1.0 percent in 2004, with a strong 1.6 percent gain in service-sector jobs and 0.4 percent decline in goods-producing jobs, according to a University of Michigan forecast.

While the overall job growth is welcomed, Erickcek notes that the new jobs the rebound is creating are in different industries from where they were lost. And employment levels have yet to return to where they were when the U.S. economic recession ended in November 2001, he said.

“Those industries that lost jobs in the recession continue to lose jobs in the expansion,” Erickcek said. “This is a job-loss recovery.”

Elsewhere, inflation should remain “totally flat” in 2004 and interest rates are forecast to stay stable, with the Federal Reserve virtually disappearing from the scene during the presidential election year, Erickcek said.

Erickcek will present his annual employment outlook for Muskegon County on Jan. 23 at the Muskegon Area Chamber of Commerce’s monthly Early Bird Breakfast.            

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