The Alaska Department of Labor and Workforce Development released preliminary July job numbers on Friday. The general takeaway is that things aren’t better yet, but they are no longer getting worse.
We have talked before about how the general health of the economy appears to be nearing the end of the recession. These numbers confirm that assertion.
To get a sense of the numbers, here are the changes in seasonally adjusted job counts going back a few years:
Clearly, the number of job losses is shrinking every month. That implies that we are nearing the point where the economy will stabilize or possibly even begin growing again.
Industry Specific Job Counts
To really get a handle on what is going on, we need to dissect these data a little more. Let’s look at the industry specific data and trends.
Natural resource jobs include oil, gas, mining, logging, and seafood processing jobs. As you can see, this sector took the hardest hit from the recent recession. When you dig in deeper, you find that most of those job losses came from companies that provide support services to oil and gas companies.
While July 2018 did post another small loss, it appears that the Natural Resource sector has largely stabilized. Looking forward, we expect to see this sector start to post gains over the next few months.
Government jobs include Local, State, and Federal jobs (not including military). This sector has been shrinking since 2011, shedding jobs in almost every month. However, the number of job losses has not been sudden or severe.
Breaking the government jobs apart is also enlightening.
Federal jobs were being cut prior to the recession, but began adding jobs again around the time the recession hit. Recently, it appears that these job counts are stable.
State jobs were severely impacted by the recession. Local jobs moved in the opposite direction.
We believe that the July data suggests this sector is now close to stable. We don’t expect to see further losses, but also don’t expect to see big gains (other than the arrival of the F-35s).
Trade, Transportation, and Utilities
This sector includes all retail and wholesale trade; all air, water, and ground transportation; and all power, heating, and water companies.
While other sectors bring money into the State or produce the things that leave the State, this sector largely represents those jobs that support the people who live in Alaska.
As you can see, this sector was impacted by the recession, but on a delay. That is due to the fact that it took time for the lost wages in the Natural Resource and Government sectors to trickle through the rest of the economy.
That is also why we are still seeing losses in the current data. It will take time for the stabilization of those sectors to reach this one. However, we expect to stop seeing losses in this sector before the end of the year.
This sector includes all the lawyers, accountants, engineers, architects, economists, bookkeepers, massage therapists, and the like.
Note that this sector was the first to be hit by the recession, and was one of the most impacted. I believe that is because it is easier to fire your engineering consultant than it is to fire your engineer employee.
That makes this sector a canary in the coal mine for the rest of the economy. So far this year, this sector is still losing jobs. But it does appear that those job losses are slowing down.
I am a little surprised that the July numbers were not better. But I still expect this sector to stabilize before the end of 2018 and to post job growth in 2019.
This sector is made up of all the construction workers. From constructing roads, to commercial buildings, to residential homes, they are all captured here.
Notice that this sector was also one of the first impacted by the recession. That is because the construction sector relies heavily upon the perception of the future.
There is no need to build new roads and buildings unless someone is going to use them. And that implies that there is not enough room in the current state of being. In other words, construction implies growth.
So, the construction industry is the very best leading indicator of where the economy is heading. It also numerically demonstrates how people perceive the economy’s future.
Those last 3 months of growth are what give me the most optimism about where our economy is headed.
This sector includes all the people who work at hotels, bars, restaurants, and entertainment venues. Technically, tourism also reaches into the retail and transportation sectors, but I’m calling this tourism for convenience.
The tourism sector has been a growth sector in Alaska for years. Despite a small dip over the last winter, the tourism industry was largely unaffected by the recession.
We expect to see this sector continue to add jobs over the summer and into next year.
The Healthcare sector includes all the doctors and nurses across the state. They work in hospitals, nursing homes, hospice care, clinics, and specialty practices.
This sector has been growing steadily for years and was largely unaffected by the recession. Although there was a dip in 2014-2015 (I can’t quite put my finger on why), the healthcare industry continues to grow. That growth offset losses elsewhere, which helped us weather the recession.
I expect this industry to keep growing for 10 more years. That is because the baby boomers will continue to age and demand more healthcare. The data released last week show that this trend is continuing.
The employment numbers for July are not great, but they do represent good news. I believe they signal that we are near the end of job losses and on the way to recovery. The only major losses that are continuing are coming from the sector that lags the rest of the economy the most.
The economy has already started increasing in terms of GDP and wages, so this last statistic will solidify the end of the recession when job losses stop.
It may be the case that revisions to the data, and the additions of workers not captured by it, will show that job losses have already ended. But, in any event, I expect these numbers to improve over the next few months.