West Virginias jobs recession is finally dead, according to the latest state forecast from the West Virginia University College of Business and Economics.
The Bureau of Business and Economic Research report shows that after losing 8,300 seasonally adjusted jobs from the first quarter of 2001 to the fourth quarter of 2003, the state has subsequently added 12,400 jobs by the first quarter of 2005.
The state is once again breaking new ground in employment, and the states unemployment rate is down to 5 percent,said George Hammond, director of the West Virginia Economic Outlook project.
Resurgent job growth was fueled by the energy sector, construction, health care, and leisure and hospitality activity. Mining jobs in the state have risen with production, as high coal and natural gas prices have spurred activity.
Construction employment has risen by 3,400 since the last quarter of 2003, as surging residential and infrastructure building have driven demand for additional workers.
Residential construction in the state is responding to low mortgage interest rates, with 30-year fixed mortgage rates hitting 5.84 percent in 2004, well below their 2000 level of 8.06 percent,Hammond said.
Further, West Virginia single-family home prices surged by 6.9 percent in 2004, but that increase was well below the national average of 10.8 percent.
The outlook calls for the state to add 5,600 jobs per year during the next five years, which translates into an average annual growth rate of 0.7 percent. This is far better than the 0.3 percent per year rate of the 1999-2004 period but is below the expected national job growth rate of 1.1 percent.
Most of the net job growth is forecast to come in health care; leisure and hospitality; and professional and business services. Mining jobs are forecast to grow, as energy prices remain high. Manufacturing employment losses continue, with chemicals accounting for the bulk of the expected job loss. Wood products, transportation equipment, other durables, and plastics will add jobs, the forecast shows.
Steady job gains are forecast to translate into solid income gains during the forecast period (2005-2009),Hammond said.
Overall steady improvement in the state economy will stabilize population in the neighborhood of 1.8 million residents. However, the demographic aging of the state will continue, with population losses in the younger age groups balanced by population gains in the older age groups.
Risks to the outlook include a significantly slower national growth during the forecast. This could arise if the inflation outlook worsens, which would likely cause the Federal Reserve to raise interest rates to cool growth.
That would slow national growth and, by extension, growth in the states energy, manufacturing, and professional and business services sectors,Hammond said.It would also reduce the level of construction activity.