The state economy is expected to grow slowly during the next 10 years, according to the latest long-term economic forecast from the West Virginia University Bureau of Business and Economic Research.

Sustained by national growth, the state should begin generating more new jobs later this year,said George W. Hammond, director of the West Virginia Economic Outlook project.

While state job growth improves later this year, it is forecast to average just 0.6 percent per year during the next decade. This is far below the expected national growth rate of 1.2 percent per year.

Most net job growth in the state is expected to come in service-providing sectors, such as health care, professional and business services (including call centers and some high-tech sectors, such as biometrics and medical research), and leisure and hospitality. These sectors together are forecast to add 3,600 net new jobs per year during the next 10 years.

In contrast, the state is forecast to continue losing jobs in the goods-producing sector, with both manufacturing and coal mining jobs declining during the forecast.

However, coal mining is forecast to generate 2,000 net new jobs during the next two years, as the recent spike in coal prices spurs some additional activity,Hammond said.

The forecast calls for coal production and jobs to begin declining later this decade in response to more stringent air pollution restrictions.

Manufacturing job losses are paced by continued declines in the chemical and steel sectors, which are both struggling to cope with intense competitive pressures from domestic and foreign rivals. Revived worldwide growth and a gradually declining value of the U.S. dollar are expected to help slow, but not stop, job loss during the next decade. Employment in wood products and transportation equipment (auto parts and aircraft) is forecast to rise during the next 10 years.

Moderate rates of job growth generate slow real per capita income growth during the forecast, with the state growth rate of 2 percent per year well below expected national growth of 2.5 percent per year. This sets the stage for state per capita personal income to fall further behind the national average, with the income gap rising from 22.7 percent in 2004 to 26.2 percent in 2014.

With state job and income growth rates expected to fall below the national rate, the forecast calls for West Virginia to lose about as many domestic migrants as it gains during the next decade. With little or no natural increase during the next decade, that implies that the states population will stabilize at around 1.8 million residents.

However, this masks the continuing aging of the West Virginia population. The forecast calls for the population under age 17 to fall by 23,000 by 2014 and for the population age 18-44 to drop by 33,000. Population gains are expected to be concentrated in the 45-64 age group, with strong increases in the 65-and-older age group beginning in 2011.

Risks to the forecast are primarily concentrated in the mining and manufacturing sectors. If the economic performance of these sectors turns out to be significantly worse than expected, the state could easily linger in recession for an extended period. Further, the aging of the states population poses challenges for the state in terms of funding retirement programs and restructuring government programs to accommodate an increasing share of older residents. Forecast available free of charge on the Net:http://www.bber.wvu.edu