[10/12/16] Local Economist Gives Report For August

Posted in Feature

Overview
This report provides an update on the Wenatchee MSA economy incorporating not seasonally adjusted, nonfarm employment and civilian labor force data. Analysis focuses on year-over-year (between August 2015 and August 2016) and average annual (between 2014 and 2015) changes in the labor market.
Unemployment rates
Civilian Labor Force (CLF) data show that Washington’s not seasonally adjusted average annual unemployment rate fell four-tenths of a point between 2014 and 2015, from 6.1 percent to 5.7 percent. Between the Augusts of 2015 and 2016 the rate stabilized at 5.4 percent.
In the Wenatchee MSA, the annual average unemployment rate fell from 6.3 to 5.7 percent between 2014 and 2015, a six-tenths percentage point drop. However, the rate increased seven-tenths of a percentage point this August to 5.6 percent from the 4.9 percent reading in August 2015 (see Figure 1). Although the number of residents in the CLF increased between the Augusts of 2015 and 2016, the number of unemployed residents grew more rapidly (see Figure 3) – hence the year-over-year unemployment rate rise.

Total nonfarm employment
Between 2014 and 2015, Washington’s labor market provided 86,200 new nonfarm jobs, an annual average increase of 2.8 percent. This August, businesses and government organizations across Washington supplied 3,255,900 nonfarm jobs (not seasonally adjusted), compared to 3,160,600 jobs in August 2015, a 3.0 percent year-over-year employment increase. The state’s economy has posted year-over-year nonfarm employment increases for the past 71 consecutive months (October 2010 through August 2016).
The Wenatchee MSA’s nonfarm labor market provided 1,900 new jobs between 2014 and 2015, an average annual increase of 4.7 percent, more robust than the 2.8 percent growth rate statewide during 2015. However, in August 2016 employment in the two-county MSA averaged only 44,400 jobs, a feeble 100 job and 0.2 percent upturn from the 44,300 recorded in August 2015 (see Figure 2). The pace of nonfarm growth in Chelan and Douglas counties has been weaker than the growth pace statewide for the past eleven months (October 2015 through August 2016). Clearly, the idling of Alcoa’s aluminum smelter in Chelan County is the main reason for this rather lethargic job growth rate in the Wenatchee MSA.
Figure 2. Nonfarm industry employment Wenatchee MSA, January 2013 through August 2016 Source: Employment Security Department/LMPA
Nonfarm employment in the Wenatchee MSA increased only 0.2 percent from August 2015 to August 2016.
Employment and unemployment
Washington’s Civilian Labor Force (CLF) expanded by 50,156 residents (a 1.4 percent upturn) from 2014 to 2015. The state’s labor force has increased, year over year, for the past 32 months (January 2014 through August 2016). In August 2016, Washington’s CLF tallied 3,645,713 residents versus 3,543,814 in August 2015 equating to 101,899 more Washingtonians in the labor force (up 2.9 percent).
The Wenatchee MSA’s CLF grew from 61,122 residents in 2014 to 62,791 in 2015, meaning that 1,669 more Chelan or Douglas counties’ residents were in the labor force in 2015 than in the 2014, an advance of 2.7 percent. On a monthly basis, the labor force has posted year-over-year growth for the past 13 months (from August 2015 through August 2016). It expanded by 2.9 percent between the Augusts of 2015 and 2016; from 65,483 to 67,379 respectively, equating to 1,896 more residents in the local labor force. It is likely that this expansion was due to job growth in the agricultural sector of the local economy since nonfarm job growth this August in the two-county area virtually stagnated. Hence, the size of the local labor force grew
August 2016 Wenatchee MSA Labor Area Summary
Employment Security Department Page 3
between the Augusts of 2015 and 2016, but the number of unemployed grew faster. Specifically, 3,200 residents were unemployed across the Wenatchee MSA in August 2015 versus 3,748 in August 2016 (i.e., 548 more residents were out of work, as shown in Figure 3). The bottom line: the unemployment rate in the Wenatchee MSA rose seven-tenths of a point between the Augusts of 2015 and 2016.

4.6% Workers in labor/management disputes 0.0 0.0 0.0 0.0 0.0 1Excludes proprietors, self-employed, members of the armed services, workers in private households and agriculture. Includes all full- and part-time wage and salary workers receiving pay during the pay period including the 12th of the month. Columns may not add due to rounding.
Between the Augusts of 2015 and 2016, the Wenatchee MSA nonfarm labor market added 100 jobs, a marginal 0.2 percent upturn.
Nonfarm industry employment
Not seasonally adjusted estimates indicate that Wenatchee MSA nonfarm employment rose to 44,400 in August 2016 from the 44,300 jobs tallied in August 2015, a nominal 100 job and 0.2 percent increase, considerably less robust than Washington’s 3.0 percent nonfarm job growth rate during this period. Highlights of year-over-year changes follow (as shown in Figure 3):
August 2016 Wenatchee MSA Labor Area Summary
Employment Security Department Page 4
 Mining, logging and construction employment in the Wenatchee MSA provided 2,400 jobs in August 2016 versus 2,500 jobs in August 2015, a 4.0 percent and 100 job decrease. Most jobs in the local “mining, logging and construction” category are in construction. Job growth in this industry has retrenched during each of the past twelve months. However, there has been an upturn in the number of home and condo sales (or closed sales) in the first eight months of this year compared with January through August of 2015 in the Wenatchee market (i.e., in Wenatchee, Malaga, East Wenatchee, Orondo and Rock Island, WA), according to the August 2016 Real Estate Snapshot newsletter published by Pacific Appraisal Associates. Specifically, the number of homes and condos sold from January through August 2016 was 708, which was 4.0 percent above the 681 sold during the first eight months of 2015. Median home prices in the Wenatchee Market rose from $249,250 year-to-date or YTD (i.e., January to August) in 2015 versus $267,750 YTD in 2016, a 7.4 percent increase. But, the number of active listings has declined 16.5 percent, from 254 in August 2015 to 212 listings this August.
 The local manufacturing sector lost 100 jobs, a 3.6 percent downturn, between August 2015 (2,800 jobs) and August 2016 (2,700 jobs). Following the idling of Alcoa’s smelter in Chelan County manufacturing employment has decreased, year over year, for the last seven months (February through August 2016). Statewide, manufacturing employment has dipped in each of the past six months (from March through August 2016).
 Year over year, the Wenatchee MSA’s private education and health services industry has added jobs for the past eight months (January through August 2016). Between the Augusts of 2015 and 2016 education and health services employment netted 300 new jobs, from 6,800 to 7,100 jobs, a 4.4 percent upturn. Statewide, this industry has been growing for the past 13 months.
 Local government organizations added 300 jobs, up 4.6 percent between August 2015 (6,500 jobs) and August 2016 (6,800 jobs). Year over year, local government in the Wenatchee MSA has expanded for 28 months (from May 2014 through August 2016). Statewide, local government has been expanding for 37 consecutive months (August 2013 through August 2016).
Agricultural employment/production
The Bureau of Labor Statistics’ Quarterly Census of Employment and Wage (QCEW) program, conducted by the Washington State Employment Security Department provides agricultural and nonagricultural employment and wages for firms, organizations and individuals whose employees are covered by the Washington State Employment Security Act. Frequently termed “covered” or “QCEW” data, this information provides a reliable data set for comparing employment and wage trends in major industries at the county level. In July 2016 preliminary annual average QCEW data for calendar year 2015 became available. An analysis of employment changes from 2004 through 2015 shows that in Chelan County:
 Total covered employment rose from 36,409 in 2004 to 42,834 in 2015, a 6,425 job and 17.6 percent upturn. The number of agricultural jobs (a subset of total covered employment) increased from 8,291 in 2004 to 10,269 in 2015, a 1,978 job and 23.9 percent uptrend. In 2004 Chelan County’s agricultural industry accounted for 22.8 percent of total covered employment. In 2015 agricultural employment accounted for 24.0 percent of total covered employment countywide. Hence, the agricultural share of employment rose 1.2 percentage points (from 22.8 to 24.0 percent) in Chelan County during this twelve-year (inclusive) period.
 Total covered wages rose from $984.7 million (in 2004) to $1.57 billion (in 2015) a $590.0 million and 59.9 percent upturn. The agricultural payroll (a subset of total covered wages) advanced from $132.7 million in 2004 to $239.9 million in 2015, a $107.2 million and 80.8 percent uptrend. In 2004 Chelan County’s agricultural industry accounted for 13.5 percent of total covered wages and by 2015 agricultural wages tallied 15.2 percent of total covered payroll. Hence, the agricultural share of wages rose 1.7 percentage points (from 13.5 to 15.2 percent) in Chelan County during this twelve-year (inclusive) period.