Saturday, September 6, 2008

09-06-08 -- Idaho jobless rate hits 4-year high

BY DAVID KENNARD - dkennard@idahostatesman.com

A rise in Idaho's jobless rate is tied directly to high fuel prices and continuing fallout from the housing slump and tight credit, experts said Friday.

The state's seasonally adjusted unemployment rate rose to a four-year high of 4.6 percent in August, according to the Idaho Department of Labor. In Ada County, 4.3 percent of workers were unemployed, and in Canyon County 6.1 percent were jobless.

Department spokesman Bob Fick said employers like consumers alike are pumping more of their dollars into their gas tanks, and they're spending less on wages.

"When people make only so much money, they have much less to spend on other things," Fick said.

That translates into fewer goods leaving warehouse shelves.

"When people aren't buying, there is no need to move goods," Fick said.

Boise economist John Church said Friday's announcement confirms a trend suspected for some time - that the slowdown in the state's economy is accelerating.

"I think gas prices affect (the economy) across the country," Church said. "People are being squeezed by gas prices, and travel, tourism, even the trucking industry, are really getting hammered."

While jobless numbers are up in Idaho, they fall below the national average. The U.S. unemployment rate rose to a five-year high of 6.1 percent from 5.7 percent. Economists had expected it to inch up to 5.8 percent from July's 5.7 percent,

The rate is likely to go even higher in the months ahead, possibly throwing the economy into a tailspin as Americans pick a new president. So far this year, 605,000 jobs have vanished - slightly less than the population of Alaska.

The unemployment increase means many companies will feel pressure to reduce their business investments - either in capital projects or hiring - for the rest of the year, experts say.

"Mix business caution with consumer exhaustion and you have a recipe for a real recession," said Terry Connelly, dean of Golden Gate University's Ageno School of Business.

August was the 83rd straight month that Idaho has been below the national rate, but the sixth straight month unemployment has risen.

Employment in Idaho peaked during the first nine months of 2007, with the jobless rate a mere 2.7 percent.

Church said he expects Idaho unemployment to remain high but it is hard to say for how long.

He said Idaho's employment diversity helps insulate workers to some degree, but the state has become less diverse over the last few years, and that could make it more vulnerable to national economic downturns.

Although Idaho's labor force has grown substantially in the past two decades, more Idaho workers were off the job in August - 34,600 - than during any other month since August 1987, when the state was finally pulling out of the recession of the mid-1980s.

"The last time, we came out of it a little slower than the rest of the nation," Church said.

Fick said that overall, 16,400 fewer people were working in Idaho in August than in August 2007, and two of every three of that number were in the Boise-Nampa metropolitan area.

He said 29 of the 44 counties saw employment drop from the year-earlier level as total employment fell to 720,200.

Fick said manufacturing and construction job losses were the biggest contributors, with more than 4,500 each since August 2007. The service sector gained just 1,500, a fraction of its typical performance.

"The construction thing is the biggest contributor to this," Fick said. "Those guys made pretty good wages. And to lose more than 4,000 jobs is a big impact."

David Kennard: 377-6436 The Associated Press contributed.

WHAT HAPPENED TO IDAHO'S JOBS?
Idaho's jobless rate increase to 4.6 percent - a four-year high - was the second time this year Idaho's unemployment rate jumped a half point, as employment continued a steady decline that begun in February.

The last half-point jump was in May, when the rate rose from 3.1 percent to 3.6 percent.

Here's why the number is so high:

- Idaho's economy failed to generate the seasonal increase in nonfarm jobs normally expected in August ahead of students returning to school.

- Decline in manufacturing came as food processors staged seasonal shutdowns in advance of the new harvest.

- Retail trade, which typically adds jobs in August, shed more than 500 jobs statewide.

- Construction added a little more than 100 jobs in August, a third of what typically occurs.

Source: Idaho Department of Labor

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