Energy, Healthcare Remain Growth Drivers
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IRVINE, CA-The materials/natural resources segment will drive robust growth in certain areas of the country, and healthcare will expand secularly, says Chris Muoio, senior associate and economist with Auction.com. These two sectors will see growth employment-wise as well as economically.
As GlobeSt.com reported last week, the Bureau of Labor Statistics has released its November Employment Situation, which hints at an accelerating economy with data showing the lowest jobless rate in five years, according to Muoio. He says the BLS reported that 203,000 jobs were added, and last month’s strong gain was barely revised, now measuring 200,000 added.
“The materials/natural resources segment remains a growth driver and will continue to drive robust growth in Texas and North Dakota, the epicenters of the oil and gas boom,” Muoio says. “Logging was the strongest individual sector in the report, with a seasonally adjusted gain of 6.5% over the last three months that reflects increasing homebuilding activity, but oil and gas extraction and mining also saw solid growth of 1.4% and 0.7%, respectively. Pipeline transportation has also seen growth as the energy infrastructure expansion continues.”
In addition, the healthcare sector continues its steady secular expansion, Muoio adds. “Home healthcare services, outpatient care centers and ambulatory care services all continue to see solid gains. The sector is poised to continue its expansion and provide a baseline level of growth to the economy as the population continues to age and insurance enrollment increases under the Affordable Care Act, forcing more people into the formal healthcare system and out of clinics.”
One troubling fact in the report was the strength of temporary hiring, since temporary help services and employment services saw payrolls rise 1.9% and 1.8% respectively over the last three months, says Muoio. “This is still frustrating at this point in the cycle, as the jobs created should be permanent good ones, but with such slack in the labor market and still residual employer uncertainty over healthcare costs, it is not all too surprising.”
Also, government employment continues to diverge at the differing governmental levels, with state and local government continuing to decline. “This mirrors the recent GDP estimate that showed the government no longer acting as a net drag on the economy,” says Muoio. “State government excluding education saw payrolls rise a modest 0.2% over the last three months; while local government excluding education saw payrolls remain stable.”
With home equity on a jagged but upward trajectory, local government finances will continue to improve as property taxes rise with home values, potentially leading to improved ability to hire, though the pension crisis facing many cities remains a huge question mark on spending flexibility, Muoio points out. “The federal government remains a drag, however, with payrolls declining 0.9% over the last three months and 3.3% over the last year. The weak federal government and the reticence to increase spending in DC will be a large drag on the DC-area economies and will make growth there difficult.”
For an irreverent take on the macroeconomic environment, check out GlobeSt.com's Chief Economist authored by Dr. Sam Chandan.
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