Data show KC area doing somewhat better than U.S. as a whole in employment

April 04, 2008

Typically, from 20 to 25 unemployed job hunters attend the weekly job-transition support group meetings at Johnson County Community College.

This week the number swelled to 38.

'People are bleeding out from multiple industries around town,' said Laura Johannesmeyer, who convenes one of about a dozen such groups that meet in the Kansas City area.

'It's not just from Sprint. It's H&R Block, Hallmark, Cerner. ... All our big employers are laying off. We've been losing ground.'

The uptick in what Johannesmeyer described as job hunters who are 'highly skilled, trained workers' puts a local marker on a national jobs report released Friday that supported growing consensus that the economy is slipping into recession.

The U.S. Bureau of Labor Statistics reported that the total number of payroll jobs declined in March by 80,000 -- the biggest monthly job loss in five years.

In the last three months, U.S. employers have shed 232,000 payroll jobs. In March alone, the number of unemployed workers jumped by 434,000, to 7.8 million -- 1.1 million more than a year earlier.

'The economy has clearly slipped into a jobs recession, because the housing meltdown and credit market turmoil has spread to the broader economy,' said Steven Wood, chief economist at Insight Economics.

The bureau's separate household survey, used to calculate the unemployment rate, estimated joblessness increased from 4.8 percent in February to 5.1 percent in March.

That is the highest unemployment rate recorded since September 2005, when Gulf Coast jobs disappeared in the aftermath of Hurricane Katrina. The jobless rate now has risen 0.7 of a percentage point from its cyclical low of 4.4 percent reached in March 2007.

Although the unemployment rate remains relatively low historically speaking, Bear Stearns economists noted that the magnitude of the short-term swing 'has never occurred in the post-war period without the economy being in recession.'

Economists and labor market analysts predicted that the new data would force the Federal Reserve to cut its benchmark short-term rate by a quarter-point or a half-point when policymakers meet at the end of this month.

Although he remained circumspect about future rate cuts, even Fed Chairman Ben Bernanke acknowledged in congressional testimony this week that 'a recession is possible.'

Whether the economy is officially in recession -- a declaration ultimately left to a committee of economists at the National Bureau of Economic Research -- gloomy, even alarmist, statements continue about the financial markets and their effect on the economy.

Earlier this week, for example, Bloomberg News obtained an International Monetary Fund forecasting document that characterized recent turmoil in the subprime mortgage and credit markets as 'the largest financial crisis in the United States since the Great Depression.'

Most economists stop far short of such provocative statements. Notably, major stock indexes on Wall Street, which already have traded lower in anticipation of an economic slowdown, moved relatively little after Friday's jobs report.

By some measures, the Kansas City area job market has held up better than the nation as a whole.

Nonfarm employment in the Kansas City metropolitan area grew 2 percent from January 2007 to January 2008 -- from 988,300 to 1,008,500 jobs -- according to preliminary numbers recently released by the Bureau of Labor Statistics.

The study showed that the Kansas City area posted the seventh-largest year-over-year percentage increase in employment among 38 large U.S. metropolitan areas during the January-to-January period.

Better-than-national numbers in the Kansas City area are found in manufacturing and construction, said Frank Lenk, economist at the Mid-America Regional Council.

'Our manufacturing is basically stable, and our construction declines are nowhere near as steep as the national drop,' Lenk said. 'Part of the reason is that our nonresidential construction is substituting, in part, for our residential decline.'

In sum, Lenk said, the employment situation in Kansas City shows that 'we're doing a little better than the U.S.'

Buried in the payroll report was a clue that the job market slump may settle in for a while: Temporary help fell by 21,600 in March. Temporary staffing is a leading indicator that tends to blossom when employers need to 'staff up' to handle increased business.

In the Kansas City area, big businesses have pulled back, but midsize companies still are hiring temporary, or contract, employees, said Richard Carroll of Grafton Staffing in Overland Park.

'Overall, contract staffing is down, but there are pockets that are up -- scientific, IT, engineering

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