Buffalo Niagara region takes a step back in hiring

The region lost 900 jobs between April and May — the first decline in five months — at least temporarily interrupting what had been a strong and fairly steady hiring period that had lasted for more than a year, according to data released Thursday by the Labor State. Department.

Economists, however, cautioned against reading too much into May’s weakness.

“It was less than 1,000,” said Julie Anna Golebiewski, an economist at Canisius University. “If there were 3,000 or 4,000, I would say we could turn a corner to where we are losing.”

But the decline is not that sharp, which means it’s not time to jump to conclusions.

“These numbers are volatile,” said Timothy Glass, regional economist for the Department of Labor in Buffalo. “I’m not really worried. This is the first month we are down this year.

More telling, Glass said, will be a month or two’s worth of employment data and whether May’s weakness carries over into June and July. A weakness that extends into the summer would be more concerning than a one-month setback.

Even with the economic slowdown in May, the region still added jobs at an annualized rate of just over 2%. This is solid growth by Buffalo Niagara standards.

And the region is poised to finally regain all of the jobs it lost during the pandemic — job losses far more severe than those suffered by the rest of the country.

We still haven’t regained the 3,900 jobs we had before the pandemic, but if the job growth that was in place before last month resumes, that gap could be closed by the end of summer . Of course, the rest of the country has regained all the jobs it lost two summers ago, so we are still well behind in our recovery, since the country now has about 4% more jobs than before the pandemic.

There are, however, other signs that the region’s weakness in May may be a blip rather than the start of a downtrend.

“We’ve been growing steadily over the year,” Glass said. “This indicates an upward trend.”

Layoffs remain quite rare. The number of workers filing for unemployment benefits for the first time in the past two weeks fell to its lowest level since October, according to separate Labor Department data. And the four-week rolling average of jobless claims, which smooths out the sharp swings that can occur from week to week, has remained below 1,000 for four of the last five weeks — the first time since early November.

Buffalo Niagara’s unemployment rate rose steadily for most of last year, but it began to fall slightly again in February and continued to decline through April. On Tuesday, we will find out if unemployment levels have continued to fall, when the Department of Labor releases local unemployment rates for the month of May.

The Buffalo Niagara region’s seasonally adjusted unemployment rate in April was 4.1%, down from a recent high of 4.3% in January.

But there are signs that the upward trend that has been in place for much of the last year is starting to run into headwinds.

Over the past year, the number of people employed in the region has remained fairly stable. But about 5,000 additional workers joined the local labor pool — and the region’s labor market was unable to absorb them. As a result, the number of new workers roughly matches the increase in the number of unemployed – which explains why the unemployment rate increased from 3.3% in April 2023 to 4.1% in April 2024.

This means that businesses that a year ago were struggling to find workers when they had plenty of job openings now have more choices.

“I think we are now seeing a more normalized job market,” Glass said. “There are definitely still some shortages, but I think we’re seeing more of a let-up from last year in trying to find some of those people, particularly in the skilled trades area.

Still, two surveys released earlier this week showed that demand for workers remains strong in the service sector, while factory hiring remains weak, as it has been since last fall.

In the service sector, hiring has accelerated since the spring and employers say they don’t see that changing over the next six months, according to a survey by the Federal Reserve Bank of New York. Wages at service businesses in New York and the New York area are on the rise, and that’s not likely to stop over the next six months, either, despite a fairly gloomy outlook for their businesses.

Manufacturing executives took the opposite view. Employment in factories in the New York region and New York City has been declining since last fall and the average work week is getting shorter, according to a separate New York Fed survey .

But if service sector executives are not optimistic about the next six months, factory executives are more optimistic than they have been in the past two years, said Richard Deitz, an economist at the Fed from New York to Buffalo. And even though manufacturers say they expect to add jobs over the next six months, overall job growth is expected to be weak.

“We’re still at a pretty high employment level,” Golebiewski said. “Barring a notable slowdown in consumer activity, I don’t expect big changes.”