Nevada hit the gas pedal on job growth in April, but there are caution signs ahead.
Strong job growth pushed the state’s unemployment rate down by its biggest month-to-month drop in more than 30 years, and private-sector job formation in the first part of 2014 was the state’s best since the bubble era, the state Department of Employment, Training and Rehabilitation reported Friday.
Overall, trends “are impressive as of late. Job formation has been accelerating in recent months, and there are signals that businesses are investing more in their human capital than they were just one, two or three years ago,” said Brian Gordon, a principal in the local research firm Applied Analysis.
Still, the jobs market is stuck in middle gear, with roughly half of jobs lost in the recession still gone. And other issues could keep a lid on big increases in coming months.
“Clouds loom on the horizon. We still remain near the top of the nation in terms of mortgage delinquencies and properties in foreclosure, and we lead the nation in negative (home) equity,” Gordon said. “While they have improved, those factors remain concerning, and there are still challenges for this economy to overcome before we can begin to suggest the market has recovered.”
None of that cancels out a strong start to 2014.
The state added 42,700 private-sector jobs in the first four months of 2014, up 4.3 percent from the same period in 2013, the employment department reported. You have to go back to the state’s headiest bubble days of 2006 to find private job growth that strong. Overall, the job base gained 3.8 percent year-over-year in April, good for No. 2 in the nation, behind North Dakota.
New jobs helped cut statewide unemployment from 8.5 percent in March to 8 percent in April, the biggest decline since 1983. Local rates fell even more, from 8.8 percent to 7.4 percent, though local joblessness isn’t seasonally adjusted and is difficult to compare to the state’s rate.
In Las Vegas, job creation happened in pretty much every sector: Leisure and hospitality added 5,300 jobs, for a 2 percent increase. Retail hiring soared by 5,800 jobs, or 6 percent. Professional and business services, including administrative support, accounting firms and law firms, added 5,400 jobs, or 4.8 percent. Construction employment was up 1,900, or 4.7 percent.
Credit a number of factors for the hiring.
Some of the improvements came from stability in real estate, Gordon said. Rising home equity helps consumers feel better about spending, and higher prices encourage residential and commercial construction.
There’s also simple catch-up. The state’s job base over-corrected in the downturn as “businesses hunkered down for the devastation that unfolded, and they remained as efficient as ever to survive the storm,” Gordon said.
Those survivors now see better sales but lack staff to meet growing demand. They have to hire.
California — a top feeder market for tourists and new residents — is faring better as well, Brown said. California’s jobless rate fell below 8 percent for the first time in six years, to 7.8 percent, the state’s Employment Development Department said Friday. California has added more than 1.3 million jobs since February 2010. While Southern Nevada’s visitor volume hasn’t jumped much from 2013 to 2014, tourists are finally spending more on gaming, Brown said.
Those contributors mean today’s growth rate is probably sustainable in the near term, experts said.
But don’t expect half-a-percentage-point drops in joblessness from month to month. Some months will look better than others, especially as more people respond to better conditions and seek to re-enter the labor force, Brown said.
What is sustainable is annual job growth in the 3 percent to 4 percent range. The fact that job creation averaged 4.3 percent in the first four months of the year shows today’s numbers aren’t a one-month statistical blip, Gordon said. In fact, Nevada’s job base has been growing faster than the rest of the country’s for 21 months, and has expanded 3.4 percent. The Las Vegas Valley’s jobs pool grew 2.9 percent. Nationally, the average was 1.7 percent.
The city also has strong economic drivers ahead.
The market will have roughly 2,000 more hotel rooms by the end of 2014, mostly because of the fall opening of SLS Las Vegas on the former Sahara site. Include the hotel industry’s jobs-multiplier effect, and you’re looking at 5,000 more jobs in Las Vegas from those new rooms alone, Brown said, though the additions could also make it tougher for competitors to raise rates.
The construction industry will get more help from new projects yet to kick into high gear, including a $350 million, 20,000-seat arena that MGM Resorts International and AEG are building behind New York-New York, and Resorts World Las Vegas, a mega-resort Genting Group of Malaysia will develop on the former Stardust/Echelon site.
Nevada has restored just 55 percent of the 170,000 jobs it lost in the downturn, but Anderson said it’s inevitable those jobs will all come back, especially if the state keeps adding at least 30,000 to 35,000 jobs a year. He wouldn’t hazard a guess on when the comeback will be complete.
The employment department is revising its unemployment forecast for the rest of 2014, and will unveil new projections at the June 3 meeting of the state’s Economic Forum, a nonpartisan panel that predicts tax revenue for state budgeting.
But Brown said he wouldn’t be surprised if joblessness statewide approached 7 percent by the end of 2014.
The Associated Press contributed to this report. Contact reporter Jennifer Robison at firstname.lastname@example.org. Follow @J_Robison1 on Twitter.