New jobs numbers show Nevada’s economy faring better than early estimates suggested, but state and local markets still face a long road to full recovery.
Monday figures from the state Department of Employment, Training and Rehabilitation reveal that Las Vegas added more jobs than stated in earlier reports. Unemployment statewide fell from 13 percent in December to 12.7 percent in January, and in the Las Vegas Valley it fell from 13.3 percent to 13.1 percent.
Experts pointed to other positive signs for state and local economies, most notably a jump in wages and hours worked.
Yet national economic headwinds will make for a long slog back to single-digit unemployment, experts said.
Start with those recent improvements.
Early estimates showed the Las Vegas Valley created 4,300 jobs last year. Monday’s revised numbers show the market actually added 9,500 jobs last year, a "very different, much better picture" of the economy than previously thought, said Steve Brown, director of the Center for Business and Economic Research at the University of Nevada, Las Vegas.
"Looking at the revised data, I think the local economy was a little bit stronger than anyone realized," Brown said.
Plus, the revisions show the size of the state’s labor force was relatively flat in 2011, rather than declining significantly as first estimates showed. With the labor force staying steady, recent unemployment declines are all the more noteworthy because they mean job growth was partly behind lower joblessness. On top of the month-to-month unemployment dip, the rate fell 1.1 percentage points year over year statewide and 1.3 percentage points locally. The state also posted population growth of 0.6 percent from July 2010 to July 2011, the state demographer reported Monday.
"There were more consumers and residents entering the market, and actual job growth is positive," said Brian Gordon, a principal in local research firm Applied Analysis. "All signs are that the economy is entering the recovery side of the cycle."
What’s more, the employment department reported gains in hourly wages and weekly hours worked. Average hourly earnings for all employees on private, nonfarm payrolls rose 31 cents, or 1.6 percent, to $19.67 from December to January. Average hourly earnings grew by 2.9 percent year over year.
And that’s perhaps the most important sign that Nevada’s employers may soon be ready to hire more.
Companies that cut hours and wages during downturns typically restore hours and earnings before adding new jobs, while they determine if true recovery has taken hold. Once they’re reasonably certain revival is real, they’ll bring on new workers.
Brown said the lag between improving hours or wages and better hiring can be short — as little as two months — as long as businesses believe renewal will stick. A survey the center conducted in December found positive business attitudes about employment growth in 2012, he added.
Gordon warned that some of the city’s 134,000 recession-era job losses may be permanent, as businesses have learned to keep output high with lower staff counts.
Experts agreed the Nevada and Las Vegas economies have turned a corner. On top of jobless numbers, indicators such as state taxable sales and local visitor volumes recently posted their best showings since before the recession, said Nevada state economist Bill Anderson.
Still, don’t expect to see state and local unemployment rates return to single-digit territory for a while.
To see faster job growth, either other sectors need to start growing as quickly as gaming, or the market needs a big pickup in construction — unlikely given oversupplies of hotel rooms, homes and commercial parks, Brown said.
And recent national job gains of about 230,000 positions a month may not be sustainable, Brown added. He said he thinks U.S. job growth could retreat to 170,000 new positions a month in coming months. That would hold back state and local improvements, because slower national job growth means fewer people coming here to visit, and less discretionary income among those who do travel here.
So it will probably be mid-2014 before joblessness in Nevada and Las Vegas retreats below 10 percent, Brown said.
"I think the economy is in pretty good shape for a slow recovery," he said. "We’re not jumping out of the chute."
Gordon agreed, calling recovery a "tedious" process that would require business owners to see several straight quarters of improved economic activity before they make substantial hiring decisions.
Added Anderson: "We’re likely to see the unemployment rate trend down, but not drop dramatically. We entered into this recession very quickly, but it’s going to take us a while to dig our way out of it."
Nevada’s January jobless rate remained 4.4 percentage points higher than the nation’s 8.3 percent rate. Nevada has led the nation in unemployment since May 2010.