The West Virginia economy has lost steam during the last year, with a major deceleration in employment growth driven by weaker performance in goods-producing sectors. This overall job growth slowdown mirrors the national trend, according to the latest analysis of the state economy released by the WVU College of Business and Economics.

The state added just 3,500 jobs from the first quarter of 2006 to the first quarter of 2007, significantly below the 12,900 jobs added between the first quarter of 2005 and the same quarter of 2006,said George W. Hammond, research associate professor in the colleges Bureau of Business and Economics Research and author of the study.

The goods-producing sector, (natural resources and mining, construction and manufacturing) lost 1,000 jobs during the last four quarters. In addition, the service-providing sectors also slowed last year, adding just 4,500 jobs, with most of that growth coming in wholesale and retail trade.

West Virginias coal production has slowed during the past year, with coal production from the states southern coal fields dropping by 11 million tons from the first quarter of 2006 to the same quarter of 2007. Increasingly challenging geologic conditions, rising costs and falling spot pricescombined with regulatory uncertaintyare likely precursors of production decline. Production in the states northern coal fields is estimated to have risen by 700,000 tons during the year.

While construction job growth has slowed, activity has stabilized at relatively high level,Hammond commented. Much of the strength in 2007 is likely to be in infrastructure and nonresidential activity, driven primarily by power plant construction in Monongalia County. Residential construction activity is likely to be well below 2006 levels, reflecting rising mortgage interest rates and past house price increases.

House price appreciation has slowed in West Virginia during the past four quarters.The house price slowdown is particularly evident in the Eastern Panhandle metro areas, where year-to-year single-family house price appreciation has slowed from more than 20.0 percent to the low single digits in the first quarter of 2007,Hammond said.

The states unemployment rate hit 4.9 percent in 2006, near the national rate of 4.6 percent, but West Virginia retains significant numbers of residents not participating in formal labor market activities.This will be an important issue affecting the states labor market performance as demographic aging accelerates during the next decade,Hammond concluded.

Details of the report are contained in the Mid-Year Review 2007. This publication is available online at:www.bber.wvu.edu.