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Pa. unemployment rate rises to 5.7%

| Friday, Sept. 16, 2016, 9:36 a.m.

Pennsylvania's job market lost momentum in August as manufacturers, contractors and energy companies cut workers.

Companies shed 900 workers from payrolls last month, driven by steep losses in goods-producing industries that offset slight gains in the service sector, according to figures released Friday by the state Department of Labor and Industry.

The unemployment rate ticked up a tenth of a percentage point to 5.7 percent, continuing its steady climb from a year ago when it was 4.9 percent.

“There's very little here to be happy about,” said Jake Haulk, an economist at the Allegheny Institute for Public Policy.

There are signs of growing pessimism among job seekers. The civilian labor force shrank by 7,000 people in August, as job seekers stopped looking for work amid dimming employment prospects.

The state is heading in the opposite direction compared with the rest of the nation. The United States continues to add jobs and has had an expansion of the labor force even while the unemployment rate has declined to 4.9 percent, down from 5.1 percent in August 2015.

Some weakening in Pennsylvania's labor force was to be expected eventually following rapid growth in the first half of the year, said Mark Price, an economist at the Keystone Research Center in Harrisburg. The Pennsylvania labor force grew by 20,000 people a month from December 2015 to May 2016, a pace that was unsustainable, Price said.

August's employment report was disappointing, but the weakness was isolated to a few industries and there is no evidence of a broader slowdown, he said.

“This looks to me like persistent weakness in energy and manufacturing,” Price said. “Those two things in and of themselves aren't large enough to tip Pennsylvania's economy into recession.”

Mining and logging companies employ 32,600 Pennsylvanians, or less than one percent of the workforce. However, there are ancillary impacts on other industries that provide services to them, such as law firms and engineers. The struggles of manufacturers are partly tied to the decline in business from energy companies that have cut spending on drilling equipment as low natural gas prices crimp revenue.

The fracking boom helped Pennsylvania get off to a faster recovery than other states after the recession. Some economic development officials have pinned hopes for a turnaround on Royal Dutch Shell's plans to build a multibillion-dollar petrochemical plant in Beaver County. Shell officials said about 6,000 construction workers will be needed to build the ethane cracker when it breaks ground in the next 18 months, with that work lasting several years. Once operational, it will employ about 600 workers.

That project alone won't be enough to reignite Pennsylvania's job market, Haulk said.

“When the region is putting its hopes on the shale plant as a savior, it's a sign that they don't see much good going on out there,” he said.

Chris Fleisher is a Tribune-Review staff writer. Reach him at 412-320-7854 or cfleisher@tribweb.com.

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