The Atlanta Monitor

The Georgia Department of Labor released recently job market data for January 2013. Although this blog focused more on the significant 2012 benchmark revisions in the same report, let’s take a moment to focus on what happened in January.

As a disclaimer, detailed data from the last year are not yet available yet, so it’s a bit tough to speak authoritatively about the January data. For that reason, I’ll just focus on the basics.

• One of the most basic metrics to look at in January is the December-to-January employment change. Typically, the metro loses between 40,000 and 60,000 jobs during the month, as the holiday shopping season comes to a close. This year, Atlanta seems to have performed far better, losing only 25,000 jobs over the month. I’m not sure exactly why this is without the benefit of detailed data for the last year.
• Instead, we’ll have to rely on the year-over-year employment change, which stands at an impressive 63,400 jobs added since January 2012. For the last year or so, we have normally seen annual job growth between 30,000 and 40,000 jobs. Again, without detailed data I’m hesitant to proclaim that Atlanta’s year-over-year job growth trend moving forward will be in the 60,000-job range (despite how I wish it were so). Over the coming weeks, the release of 2012 detailed data (which will occur Friday the 22nd) and the release of February’s job market data will shed light on whether we’re looking at sustained year-over-year gains of 60,000 jobs, or whether this is a statistical blip.

Given the new revisions, we can take a look at what sectors are hot and what are not.

What’s hot

• Trade, Transportation, and Utilities. The sector has added 13,600 jobs year-over-year–among the metro’s best performing sectors (2.6% growth). Although more than half of these jobs are retail positions, the sector as a whole, including warehousing and wholesaling, is performing strongly. This is reflective of strong consumer demand both in metro Atlanta and in the surrounding states, which metro Atlanta’s logistics business serves.
• Professional & Business Services. This sector is broadly adding jobs among nearly all of this subsectors, with 18,000 jobs added year-over-year in total (4.5% growth). Particularly robust are temporary employment services, which account for almost half of the growth (9.7% growth). On a negative note, Computer Systems Design–those ever-coveted tech jobs–only added 1,800 jobs over the last year (3.8% growth). Not a slow rate by any means, but far slower than the rate seen over previous months, which was 3,000 to 5,000 jobs per year.
• Accommodation & Food Services. In another sign that Atlantans themselves are feeling brighter about the economy, this subsector has added 9,500 jobs over the last year (4.8%).
• Health Care. The sector, which nearly always shows job growth despite economic conditions, added a stronger-than-normal 10,700 jobs compared with last January (4.7%).
• Insurance. Here’s an unexpected bright sport. Insurance, which has stagnated throughout the recession, added 3,200 jobs over the last year, which represents 6.2% growth in that small subsector.
• Information. Like Insurance, this sector unexpectedly gained jobs. The 4,800-job gain amounts to 6.0% growth in the sector, although the breakdown of what types of jobs account for this growth is unclear.
• Construction. Although year-over-year job growth of 2,200 jobs (2.6% growth) is normally nothing to get too excited over, in the case of metro Atlanta’s construction sector it is good news. The sector has been crushed by the recession, and, as I have said over and over, the recession won’t “feel” over until real estate-related sectors see a turnaround.

What’s not

• Private Education. The subsector, which normally grows despite economic conditions, shed 900 jobs compared with January 2012 (1.9% contraction).
• Government. Government, which has been among Atlanta’s worst performers in the last couple years, continued to shed jobs. It lost 3,200 jobs compared with January 2012 (1.0% contraction).
• Manufacturing. The sector managed to eke out growth of 1,500 jobs (1.0% growth), but this is far slower than recent trends. Politicians are counting on Manufacturing to be a source of economic recovery, so this slow rate of growth is a setback. However, the silver lining is that the rest of Georgia excluding Atlanta had stronger manufacturing growth of 4,300 jobs (2.1% growth). Recovery in the rest of Georgia means more tax revenue, as well as greater demand for goods and services produced here in Atlanta.

Next, look forward to household survey (unemployment rate) data, due for release tomorrow.

Big news, folks: the Georgia Department of Labor released its January 2013 job market data, which includes revisions to the 2012 labor market data. As I discussed, the revisions are a key data release: they are the government’s latest-and-greatest gauge of the local economy, and businesses and investors make decisions based on the results.

Atlanta fared quite well this year, with the economy 20,000 jobs larger in the revised December 2012 release (2,392,000 jobs) compared to the preliminary December data (2,371,500 jobs).

The recent release isn’t anywhere near as positive as last year’s revision, when Atlanta’s economy was revised upwards by a whopping 75,000 jobs. But a 20,000-job boost is still major.

There was a surprising amount of fluctuation among individual sectors. The notable winners were Leisure & Hospitality and, especially, Financial Activities. The latter saw its employment estimate increase by a startling 15%. Financial Activities includes, in addition to banking and insurance, real estate sectors that were hard-hit during the recession. The ever-beleaguered Government sector saw an 8,200-job positive revision, but is still showing year-over-year declines as of January 2013. Information, which has shed jobs during the recession, saw a healthy boost of about 5%.

Three sectors lost big. Trade, Transportation, and Utilities was revised downward by about 17,000 jobs, mainly on the heels of big downward revisions in retail employment. Sadly, Manufacturing employment estimates were revised downwards by about 2%, wiping out much of the growth I have been talking about in the industry over the last year.

Which brings us to Education & Health–the real head-scratcher of this release. As the chart shows, the sector was revised downwards by about 10,000 jobs. But the subsectors are really confusing me here. The Health side of the sector actually was revised upwards by 10,000 jobs, while the much smaller Education side of the sector was revised downwards by a whopping 20,000 jobs, or 30% of the sector’s employment! I don’t see how this is possible unless a significant change was made to the sector’s definition or something. I’ll make sure to review this once the detailed 2012 data set is released in a couple weeks.

At any rate, this is definitely a good day for metro Atlanta. Not only is the job growth I have been discussing for the last 12 months real, but it was actually considerably underestimated. Atlanta’s journey towards a full economic recovery has been handed a considerable boost.

The job market is still below the high-water mark of the pre-recession era. In December 2007, the economy had 2,480,000 jobs; we’re still about 90,000 below that level.

According to the Case Shiller Home Price Index, metro Atlanta’s house prices increased 0.87% in the month of December. It is the latest in a string of positive reports, as the metro area tries to recover from an unprecedented collapse in housing prices that occurred in late 2011.

Atlanta house prices are now 13.9% higher than they were in their March 2012 bottom, in a rebound that has turned out far swifter than anyone could have anticipated. However, it will take at least six more months of brisk appreciation to reach Summer 2011 levels.

As the chart shows, metro housing prices have regained about two-thirds of the value lost during the late-2011 collapse. Notably, even prior to the late-2011 collapse, metro housing values were down 30% compared with pre-recession highs. Even if housing prices recover to mid-2011 levels–which is still a significant if–the market will remain hard-hit in comparison with the rest of the country.

Looking at the metric that most newspapers report, Atlanta’s housing market appears to be recovering with rocket-like speed: we are now looking at double-digit year-over-year appreciation. In all likelihood, year-over-year growth will top out at about 14% in the coming months, level off during the Spring, and recede back into single-digits during the summer.

As the chart shows, the year-over-year appreciation I am predicting of 14%, while hardly lackluster, is slower than the pace of the late-2011 plunge, which was at one point in excess of 17%, and was sustained in double-digits for about a year. In other words, as strong as this recovery has been, the 2011 collapse was ever more severe. Remember that vital context as the sentiment builds in the coming months that Atlanta is a “hot” real estate market.