Inflation up, job growth down, says economist

Nevada's unemployment rate for January was 5.5 percent, one percentage point higher than last year, said Chief Economist Bill Anderson with the Nevada Department of Employment, Training and Rehabilitation

(DETR) last week. The national rate was 4.9 percent.

The unemployment rate rose to 6.6 percent in the Reno-Sparks area and 7.5 percent in the Carson City area. Both rates are more than a percentage point above year-ago levels.

"January unemployment rates reflected the soft economy," Anderson said. "Employment data for January followed the typical seasonal patterns."

Retail employment fell by 4,700 statewide as the holiday shopping season came to an end.

The construction industry, reflecting the usual winter lull and the ongoing housing slump, lost 4,600 jobs in January.

When the economy is slowing, as it was in the second half of 2006 and throughout 2007, the benchmark process typically results in a downward revision to employment" Anderson said. "This year was no exception.

The original employment estimate for December 2007 indicated there were 1,315,800 jobs in the state. The benchmark revision placed December employment at 1,301,000, a difference of 14,800 jobs.

Nevada's statewide job growth averaged a modest 1.0 percent in 2007. Since Nevada recorded its last annual job loss in 1982, the state has produced new jobs at a slower pace than it did in 2007 only twice: 0.4 percent in 1983 and 0.1 percent in 2002."

It should come as no surprise that the construction industry had the largest revision, Anderson said.

December construction employment was lowered by 5,200. The industry has seen its employment decline from a peak of 148,800 in June 2006 to 123,700 in January 2008, a loss of 25,000 jobs. About half of those job losses occurred in the second half of 2006 when the housing market correction began. However, employment in the industry is still up by more than 30,000 in the past five years.

"The Nevada economy will continue to face challenges in 2008," Anderson said. Housing market problems are proving to be more persistent than expected, and an end is not yet in sight.

Inflation is on the rise, as consumer prices rose 4.3 percent from January 2007 to January 2008. And, says Anderson, $100 per barrel oil and $3-plus per gallon gasoline could put a damper on domestic travel.

The greater Reno/Tahoe area gaming markets have not fared well in recent months, he adds, and California recently authorized 17,000 new slot machines at tribal casinos.

Only in the state's mining regions is the outlook rosy. With gold and copper prices at or near record highs, Nevada's mining industry should continue to flourish."