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Employers in region added 7,500 jobs in October, jobless rate falls

| Thursday, Dec. 4, 2014, 10:12 a.m.

The region's unemployment rate fell to a six-year low in October and employers expanded their payrolls, sparking debate about how close Pittsburgh's job market has come to being declared fully recovered.

Unemployment has approached a threshold at which economists expect wages to rise as employers compete for talent that is in greater demand — a sign that would provide greater comfort about the job market's health.

Still, it's difficult to say whether the Pittsburgh area is at full employment, economists said, because of nuances such as how many people have settled for part-time jobs but would rather work full time. Concerns remain about weakness in higher-paying sectors, such as manufacturing.

Nonfarm employers in the seven-county region added 7,500 jobs in October, and the unemployment rate fell two-tenths of a percentage point to 5 percent, the lowest it has been since June 2008, according to preliminary figures the Department of Labor and Industry released Thursday.

“With more people having jobs, businesses are going to have to offer higher wages to incentivize people to switch jobs,” said Kurt Rankin, an economist at PNC Financial Services Group. “The bottom line is that 5 percent unemployment rate marks the point at which we should see stronger wage growth.”

Pittsburgh's jobless rate in October is lower than the national rate of 5.8 percent. Continued improvement in the national economy will be important to feed growth in the area's manufacturing base, which provides higher paying jobs and relies on demand from elsewhere for steel and other products made here, Rankin said.

Manufacturing makes Thursday's report a “mixed bag,” said Frank Gamrat, an economist at the Allegheny Institute for Public Policy. Pittsburgh manufacturers added an unimpressive 700 jobs in October and were 1,900 workers below a year ago.

“Locally, our manufacturers are not doing well, which is not a good thing,” Gamrat said.

Still, Gamrat allowed that even slow growth was positive and will eventually push employers to raise wages, which have been stagnant throughout the national economic recovery and have been closely watched by Federal Reserve policymakers as they consider when to raise interest rates. The jobs figures for Pittsburgh were announced a day before the U.S. employment report for November is released, in which economists expect at least 200,000 jobs to be added. The report will be used by the Fed when it meets Dec. 16 and 17 to consider monetary policy.

Service industries led the job gains in Pittsburgh, accounting for 7,900 additional jobs in October. Education and health-related employers added 4,400 workers as colleges returned for the fall semester. Retailers provided a big boost, adding 3,800 to payrolls as stores ramped up hiring for the holidays. Still, a lot of that gain may be auto sales, Gamrat said, as hiring in department stores and clothing retailers was up only slightly for the month and is below what it was a year ago.

Meanwhile, construction companies lost 1,000 jobs in October with the end of the building season. Employment in that sector declined 1,300 from a year ago.

Restaurants and hotels shed workers in October as well, as the leisure and hospitality sector lost 2,900 people. However, that sector gained 5,700 employees from a year ago.

The retail expansion in October, amid declines in leisure hiring, suggests that consumers are choosing to shop more but spend less money eating out and on recreation.

If wages rise next year, that could change, Rankin said.

“Consumers are choosing one or the other,” he said. “With wages rising in 2015 ... the need to decide one or the other could be not as much of a necessity.”

Chris Fleisher is a staff writer for Trib Total Media. He can be reached at 412-320-7854 or cfleisher@tribweb.com.

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