More on state employment and economic activity: Possible headwind coming?

Yesterday we posted on the mixed employment picture for our state: unemployment rate down along with labor force shrinking, and very uneven jobs picture among the 39 counties. The Washington Research Council’s economist, Kriss Sjoblom, added some useful and potentially troubling perspective

The estimated loss of 2,200 jobs in August is not in itself troubling. As I have noted often on this blog, initial estimates of job gains or losses are frequently revised when more complete information is available. (See this post.)

What does give me cause to worry is the fact that construction employment has been flat over the last 9 months…

He notes,

The big story is in the Seattle metro area. Since April construction there has fallen by 3,000, more than offsetting the 1,800 construction jobs added elsewhere in the state. If this downturn is not reversed, it is likely that the Economic and Revenue Forecast Council will need to reduce its forecast of state tax revenues.

In the September revenue forecast, the Economic and Revenue Forecast Council had this to say about construction activity in the state. 

We have four months of new Washington employment data since the June forecast was released. Total nonfarm payroll employment rose 23,900 (seasonally adjusted) from April through August, 100 more than the 23,800 expected in the June forecast. As is usually the case, most of the jobs created in the last four months were in private, service-providing sectors which added 22,000 jobs. The construction sector added 700 jobs in but the manufacturing sector lost 1,400 jobs of which 700 were in aerospace. Government payrolls expanded by 2,700 jobs in the last four months.

…The September economic forecast was slightly weaker than the June forecast in several regards, including personal income and housing construction. 

Because Washington is one of just a few states that impose a sales tax on construction labor, construction has a significant effect on tax collections. We’ll soon see if there’s cause for concern.