Washington adds nearly 32,000 jobs in February, largest increase since last July.

As the economy continues to open up, people are showing up to fill the available jobs. That’s one message from the February Employment Report released today by the state Employment Security Department. The report draws on estimates from the U.S. Bureau of Labor Statistics.

From the press release:

Washington’s economy added 31,700 jobs in February. In February, the preliminary seasonally adjusted monthly unemployment rate fell slightly to 4.3%.

“The February increase in state employment was the largest monthly increase since last July,” said the Employment Security Department’s (ESD) Economist Paul Turek. “The gains were broad-based with just about every major industrial sector having increased its payrolls over the month.”

That’s solid good news in uncertain times. As the chart at the top of this post suggest, the employment recovery gained strength in the last quarter of 2021.

The report contains more. Here’s the year-over-year jobs growth by sector.

Based on a BLS survey of businesses and governments, Washington gained an estimated 191,900 jobs from February 2021 through February 2022.

  • Overall, all thirteen major industries expanded.

  • Private sector employment rose 6.4 percent, up an estimated 172,700 jobs.

  • Public sector employment rose 3.5 percent, up an estimated 19,200 jobs.

  • Employment in leisure and hospitality is up by 72,000, with food services and drinking places adding 52,700 jobs.

  • Professional and business services employment increased by 31,200, with 16,900 jobs added in administrative and support services.

  • Construction employment rose 13,700 overall, with 11,800 jobs added by specialty trade contractors.

  • Employment in retail trade is up 13,300 overall, led by an increase of 5,900 in other retail trade.

  • Information employment increased by 12,700, with 4,300 jobs added by software publishers.

The release summarizes: “Workers show more signs of stepping back into the job market.”

The state’s labor force in February was 3,982,400 – an increase of 22,000 people from the previous month. Labor force is defined as the total number of people, both employed and unemployed, over the age of 16. In the Seattle/Bellevue/Everett region, the labor force increased by 10,500 over the same period. From February 2021 to February 2022, the state’s labor force increased by 111,300 while the Seattle/Bellevue/Everett region increased by 43,000.

In all, a good trend.

Latest economic and revenue update shows continued strength of Washington economy; revenues 4.2% above February forecast.

Days after lawmakers adopted a budget that spent most of a $14 billion surplus, the latest update from the Economic and Revenue Forecast Council shows the state economy continued to outperform even the most recent projections.

Major General Fund-State (GF-S) revenue collections for the February 11 – March 10, 2022 collection period came in $72.3 million (4.2%) higher than forecasted in February. Revenue Act collections were $58.8 million (3.9%) higher than forecasted and all other tracked revenue came in $13.6 million (5.8%) higher than forecasted.

As the chart below shows, revenue growth has been – and continues to be – remarkable.

Employment has been recovering, as well. The ERFC reports,

We have two months of new Washington employment data since the February forecast was released. Total seasonally adjusted nonfarm payroll employment increased 35,300 in January and February which was 8,900 more than the increase of 26,400 expected in the forecast.

Washington employment is now 46,000 (1.3%) lower than at its February 2020 peak. Private services-providing sectors added 29,700 jobs in the two-month period of which 10,300 were in the socially-dense leisure and hospitality sector. The manufacturing sector added 2,500 jobs, including 300 jobs in aerospace manufacturing, and construction employment increased by 4,900 jobs. State and local government employment decreased by 1,800 jobs in January and February and the federal government lost 100 jobs.

Washington’s unemployment rate declined to 4.3% in February from 4.4% in January. February’s rate was the lowest rate since the pandemic hit.

All of this comes with a heightened level of uncertainty, as Washington Research Council economist Kriss Sjoblom writes.

…the economic activity driving this collections report predates the Russian invasion of Ukraine. Economists polled by the Initiative on Global Markets at the University of Chicago Booth School of Business expect the war to reduce global growth and raise global inflation over the next year (link here). It will take a month or two for these effects to show up in state collectio

Uncertain times.

Legislature adjourns after adopting transportation and operating budgets.

The Legislative session has ended. With more revenues available to them than most lawmakers have ever or will ever see, they passed transportation and operating budgets remarkable in a supplemental year. We wrote about the budget agreements here and here, relying heavily on the timely and thorough work of The Washington Research Council.

At the top of this post, we reproduce the WRC pie char showing how $14 billion is distributed – widely! – in the supplemental operating budget. (WRC post here.)

As we noted in our brief comparing the Senate- and House-passed operating budgets, the surplus in funds subject to the outlook (NGFO) is about $13.8 billion over the outlook period. That does not include the ending balance of the budget stabilization account (BSA, or the rainy day fund), the current balance of the Washington rescue plan transition account (WRPTA, the shadow reserve account), or the remaining general federal relief funds.

The conference committee’s operating budget would use 80.5% of the surplus on new spending. Under the proposal, NGFO appropriations would increase by a net of $5.071 billion. (I wrote about some of the major new policy items here.)

Revenue reductions would use 4.2% of the surplus, and transfers to other accounts would make up another 1.1%. Reserves (the unrestricted NGFO ending balance and the $1.6 billion transferred to the WRPTA under the proposal) would account for 14.1% of the surplus.

From the WRC post on the policy items:

Some major NGFO spending items include:

Not all of the policy items – notably the $2 billion for transportation – will have carry-forward consequences, mitigating sustainability concerns. Nonetheless, given the high degree of economic uncertainty attributable to Russia’s invasion of the Ukraine and domestic inflation, which was a problem before the invasion and will be exacerbated by it, sustainability concerns remain valid.

Paul Queary looks at the session’s winners here

Governor Inslee’s session review here

Seattle Times report on the transportation budget here.

More on all this as additional analysis emerges. 

National weekly initial unemployment claims rise 11,000, to 227,000.

Yesterday we reported the nation had 11.3 million unfilled jobs. Today, the U.S. Department of Labor reports an uptick in claims for unemployment benefits

In the week ending March 5, the advance figure for seasonally adjusted initial claims was 227,000, an increase of 11,000 from the previous week’s revised level. The previous week’s level was revised up by 1,000 from 215,000 to 216,000. The 4-week moving average was 231,250, an increase of 500 from the previous week’s revised average. The previous week’s average was revised up by 250 from 230,500 to 230,750.

The advance seasonally adjusted insured unemployment rate was 1.1 percent for the week ending February 26, unchanged from the previous week’s unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending February 26 was 1,494,000, an increase of 25,000 from the previous week’s revised level.

Calculated Risk writes that the number of new claims was above forecast.

Inflation climbs 7.9%, highest level since 1982.

Inflation continues to pose a risk to recovery, a threat to household budgets, and further reason to heed the pessimistic state revenue forecast.

The Bureau of Labor Statistics reports

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.8 percent in February on a seasonally adjusted basis after rising 0.6 percent in January, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 7.9 percent before seasonal adjustment.

Increases in the indexes for gasoline, shelter, and food were the largest contributors to the seasonally adjusted all items increase. The gasoline index rose 6.6 percent in February and accounted for almost a third of the all items monthly increase; other energy component indexes were mixed. The food index rose 1.0 percent as the food at home index rose 1.4 percent; both were the largest monthly increases since April 2020.

The Wall Street Journal writes price increases are likely to continue.

Rising energy prices, including higher gasoline prices, helped push up the inflation reading, along with increases for groceries, restaurant food, transportation services and apparel. Economists expect additional price increases related to the Ukraine crisis after crude oil prices in March hit their highest levels since 2008, and U.S. gasoline prices reached record highs.

Much more in the story, including an acknowledgment of uncertainty escalating about as rapidly as energy prices.

CNBC points out,

The February acceleration was the fastest pace since January1982, back when the U.S. economy confronted the twin threat of higher inflation and reduced economic growth.

Wages aren’t keeping up.

The rise in inflation meant worker paychecks fell further behind despite what otherwise would be considered strong increases.

Consider this additional pressure on the soon-to-be-adopted state budget.

House and Senate budget leaders reconcile their differences; operating budget compromise lifts spending 24.3%.

On the last day of the regular session, lawmakers will vote on a compromise supplemental operating budget that takes biennial spending up nearly 25% higher than the previous biennium. The Washington Research Council reports (we quote liberally below), 

The supplemental operating budget conference report would increase 2021–23 appropriations from funds subject to the outlook (NGFO) by $5.071 billion. Revised 2021–23 NGFO appropriations would be $64.138 billion. This is an increase of 8.6% over the enacted 2021–23 biennial budget and an increase of 24.3% over 2019–21 spending. Appropriations in the conference report are $503.9 million higher than in the Senate-passed budget and $1.170 billion lower than in the House-passed budget.

The WRC notes a little progress in reserve levels.

The conference report would leave an unrestricted NGFO ending balance of $348 million in 2023–25. It would make just the constitutionally-required 1% transfer to the budget stabilization account (BSA, or the rainy day fund). The BSA ending balance would be $1.246 billion in 2023–25.

The proposal would transfer $1.1 billion in 2021–23 from the NGFO to the Washington rescue plan transition account (WRPTA), and the outlook assumes that another $500.0 million would be transferred to the WRPTA in 2023–25. (The Senate-passed budget would have transferred $2.0 billion over four years to the WRPTA; the House would have transferred nothing.) As I wrote earlier today, it would be better to keep reserves in the BSA.

From The Seattle Times:

The supplement budget adds billions to the two-year $59 billion state operating budgetapproved last year. Washington’s operating budget funds a host of government programs, from prisons, schools, parks and public lands, to foster care and mental health services.

Perhaps the biggest move was a one-time transfer of $2 billion outside the budget — along with a smaller, ongoing amount planned in the years to come — to fund a new 16-year transportation package. Lawmakers Wednesday announced a final deal on that package, as well.

The final supplemental budget deal spends $261 million on raises to state workers, which for most workers will amount to a 3.25% raise in the fiscal year that starts July 1, and $236 million to account for inflation for K-12 worker salaries, school supplies, materials and operating costs.

More in the story and on this legislative page.

Regarding taxes, the ST reports,

Even with tax dollars pouring in, Democrats have resisted calls from Republicans — who are in the minority in the House and Senate — for broad tax cuts like reductions in taxes on property or retail sales.

Since the legislative session begin in January, Democratic lawmakers talked up a brief holiday from the sales tax, and funding for free admission to state parks and the Washington State Fair. But they ditched those proposals, which they said were too logistically difficult to enact….

The new budget does provide $13 million in relief for small businesses from the Business & Occupation tax. That’s enough to provide cuts for roughly 125,000 small business owners, or about 70% of businesses in the state, according to Rolfes, the chief Senate Democratic budget writer.

Starting Jan. 1, businesses making less than $125,000 won’t have to pay the Business & Occupation tax, Rolfes said. For businesses making more than that, and up to $250,000 annually, the existing tax burden is cut in half, she said.

All that remains is the voting today.

Compromise transportation budget nixes exported fuels tax, replaces it with transfers from other funds.

Negotiators have agreed to a transportation budget, about $17 billion over 16 years. The Washington Research Council provides some detail:

The transportation package that was proposed in February would have increased transportation revenues by $16.801 billion over 16 years. That included $2.053 billion in revenues from a new tax on exported fuel. The exported fuel tax provision was later stripped by the House.

The conference report for the transportation budget would increase revenues by $16.988 billion over 16 years. To partially make up the lost exported fuel tax revenue, the conference report for the transportation budget would transfer $57 million a year (FY 2024 through 2038) from the public works assistance account (PWAA) to the move ahead WA account and another $57 million a year (FY 2024 through 2038) from the general fund–state (GFS) to the move ahead WA flexible account. Together, these transfers would total $1.710 billion through 2038.

More at the WRC link. 

The Seattle Times reports,

If the package makes it to Inslee for his signature, it would be the fourth major transportation budget measure in Washington in the last 20 years. But while the previous three were passed with bipartisan support in odd years, when the Legislature is in session for longer, this year’s was a largely Democratic effort. Rather than raise taxes on gas, as previous measures have done, Democrats are leaning on money from a new carbon pricing system in the state, federal investment and the flush general fund.

The bill would make major investments in new or ongoing highway projects, including the Interstate 5 crossing into Oregon, Highway 520 into Seattle, Highway 18 and more. Road maintenance, bike and pedestrian infrastructure, fish culverts, the ferry system and transit service would also see significant windfalls.

Next up, the operating budget.

 

New report: 11.3 million open jobs nationally at the end of January; 0.6 unemployed people for each opening.

The search for employees continues apace. The U.S. Bureau of Labor Statistics reports that there were 11.3 million open jobs at the end of January. 

The number of job openings was little changed at 11.3 million on the last business day of January, the U.S. Bureau of Labor Statistics reported today. Hires and total separations were little changed at 6.5 million and 6.1 million, respectively. Within separations, the quits rate decreased to 2.8 percent. The layoffs and discharges rate was little changed at 0.9 percent.

The AP report on the story adds inflation context.

U.S. businesses posted a near-record level of open jobs in January, a trend that has pushed up worker’s pay and added to inflationary pressures in the U.S.

Employers posted 11.3 million jobs at the end of January, down slightly from a record of 11.4 million in December, the Labor Department said Wednesday.

The number of people quitting their jobs slipped but also remained far above pre-pandemic levels as more Americans take advantage of numerous opportunities to switch jobs, often for higher pay. The vast majority of those quitting do so to take another position.

The BLS also has a chart that shows how many unemployed people there are for each open position. As the graphic shows, it’s has dropped sharply since the pandemic high: to 0.6 from an April 2020 high of 4.9.