By John Clinkard, Reed Construction Data
Like the Dreamliner, Boeing’s new long-range mid-sized aircraft, Seattle’s economy seems to be spending more time on the runway than in the air.
A rapid take-off is unlikely, given that Seattle’s unemployment rate (8.2% in April), has only recently declined from the recent high of 9.5% that it averaged during the first two months of the year.
Moreover, despite strong industrial underpinnings in the form of Boeing and Microsoft, employment in the Emerald City continued to shrink, on a year-over-year basis, as it entered the second quarter.
The prospect for an extended recovery was underlined by recent developments in Seattle’s housing market, where pending home sales dropped 39% month over month (-20% year over year) in May following the expiry of federal credits of up to $8,000 in April.
Also, based on recent retail sales tax receipts, while there are signs that consumer spending is starting to regain strength, the pattern of the recovery to date is still quite tentative.
Looking ahead, evidence of strengthening activity in the information technology sector across the country should have a direct positive impact on Microsoft (Seattle’s second largest employer) and on the myriad smaller IT firms in the metro area, as well as on Amazon and Qwest Communication.
Assuming it wins the Air Force refueling tanker contract, Boeing should be adding staff either late in 2010 or in the first half of 2011.
The stronger outlook is reinforced by the latest Conference Board’s Help Wanted Online Series, which indicated that online help wanted ads in Seattle are up by 36.7% year over year in May.
There should be a gradual strengthening in both single-family and multi-family construction in Seattle late in 2010 and throughout 2011.
This will be the result of stronger job growth and increased net migration to Seattle owing to the area’s lower cost of living compared to most other major metro areas on the West Coast.
Employment growth – Seattle WA vs Total U.S.
*”Year over year” is each month versus the same month of the previous year.
Data source: U.S. Bureau of Labor Statistics (Department of Labor).
Chart: Reed Construction Data – CanaData.