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Tag: state economy

Va. labor market stayed strong in February

Virginia’s labor market remained strong in February, although growth is slowing, according to employment data from the Federal Reserve Bank of Richmond.

Virginia had a net gain of 3,200 jobs in February. The Virginia state government employment was previously 12,000 jobs below the February 2020 level, but the state government nearly halved that deficit last month by adding 6,200 jobs becoming the sector with the largest employment increase. Total private employment fell by about 3,000 jobs, however.

The data pointed to slowed job growth. Virginia had stronger job gains in January, with more than 16,000 jobs added that month.

“The gain in February is considerably less than we saw in January, but it may not be altogether a bad thing for the overall economy and the inflation situation,” Richmond Fed Regional Economist Joe Mengedoth said Friday. “Slower job growth and less turnover should help ease pressure on wages, and then in turn, overall inflation.”

Two private sectors added jobs: Health care added 2,200 jobs, and transportation and warehousing added 1,000, according to Mengedoth. The Virginia Employment Commission adds utilities to its categorization of the transportation sector and counted 1,100 new jobs in trade, transportation and utilities.

The professional and business services, leisure and hospitality, and construction industries shed jobs last month. The administrative and support subsector accounted for most of the 2,600 jobs lost in the professional and business services sector.

In January, the quits rate in Virginia fell to 2.3%, according to preliminary data from the U.S. Bureau of Labor Statistics’ Job Openings and Labor Turnover Survey. That’s the lowest level since February 2021, close to the pre-pandemic rate, Mengedoth said.

Although Virginia employers saw less turnover in January, the labor market remains tight, Mengedoth said. Job openings haven’t dropped significantly, and there are more than two job openings per unemployed person seeking a job.

In February, Virginia’s seasonally adjusted unemployment rate was 3.2%, according to VEC data released Friday.

The Virginia labor force participation rate — the proportion of the civilian population ages 16 and older that is employed or actively looking for work — ticked up in January and February and is almost equal to the pre-pandemic rate, Mengedoth said. In February, Virginia’s labor force participation rate stood at 65.6%, according to the VEC.

Rising inflation doesn’t seem to be having much effect on employment in Virginia, Mengedoth said: “There’s a lot of talk about a possible slowdown, but we haven’t really seen any sort of indicators that are pointing to any kind of recession,” and that seems to hold in the labor market.

Businesses don’t seem to have a large appetite to cut employment, even if business slows, because of the difficulty of recruitment, he added.

Richmond Fed: Va. gained 8,000 jobs in Sept.

Virginia employers added 8,000 net jobs in September, marking the first month in which total employment has exceeded pre-pandemic levels, representatives from the Federal Reserve Bank of Richmond said Friday.

While that’s good news, job recovery continues to be uneven across sectors, with employment in the transportation and warehousing sector exceeding pre-pandemic levels by 10.5% while accommodations and food services are down about 5.5% from before the pandemic, said Joe Mengedoth, a Virginia regional economist for the Richmond Fed.

Recovery also is uneven across the state. Blacksburg and Winchester are the only two metropolitan statistical areas in the state with jobs exceeding pre-pandemic levels. Richmond and Virginia Beach are experiencing “significant gaps” of about 10,000 to 14,000 jobs below that February 2020 levels, Mengedoth said.

Fridays’ Fed update was based on unemployment and nonfarm payroll data released by the U.S. Bureau of Labor Statistics showing that the state’s 2.6% unemployment rate remained unchanged from August to September, outpacing the national rate of 3.5%.

“Very little changed in September,” Virginia Gov. Glenn Youngkin said in a statement. “We remain focused on returning Virginians to the workforce and implementing policies that get Virginians off the sidelines. We will continue our efforts to build our workforce to meet the many opportunities for great jobs in the commonwealth.”

Virginia Secretary of Commerce and Trade Caren Merrick said, “With 113,220 unemployed residents, Virginia is approaching numbers we haven’t seen since June of 2001. With a strong job market in Virginia, our top priority is getting more Virginians into the labor force.”

In terms of supply and demand, the state is lagging the nation when it comes to job openings. There are about three jobs open for every unemployed person in Virginia; nationally, that number has fallen to less than two openings.

Mengedoth said, “There’s a lot of demand, there’s a lot of opportunities for those who are looking for work in Virginia.”

While the state added 8,000 jobs in September, that was significantly down from the 17,000 positions added in August, and 18,000 added in July, Mengadoth said. But he’s not necessarily worried by that decrease. In February, the state added 24,000 jobs, followed by 6,000 in March, for example. “Overall, my read of the most recent data is that it’s positive,” he said. “Again, the job growth was spread across many sectors and industries in the state.”

Of the positions added in September, construction accounted for about 3,300 jobs, followed by 2,40o jobs in trade, transportation and utilities and 1,600 jobs in professional business services.

The leisure and hospitality industries took the biggest hit, losing 3,500 jobs. “It’s typically the time of year where the summer season comes to a close and many of those businesses tend to employ younger adults to return to their education,” Mengedoth said, adding “nevertheless, this was a job loss and an industry that has been struggling to return to its pre-pandemic employment.”

Renee Haltom, a vice president and regional executive for the Richmond Fed, talks with CEOs across Virginia to track the economy. She said Friday that the biggest slowdown she’s seen statewide is in the housing sector, which she attributes to rising interest rates. With regard to supply chains, she noted that lead times are falling and there have been slow, general improvements, with exceptions for “random disruptions.”

In some areas of the economy, including for consumer durable goods, price pressures are starting to come down, including for consumer durables where availability has increased, she added.

While it’s possible inflation has peaked, Haltom said, it’s still difficult to determine, because the data varies greatly.

“It’s no longer the case that you can just pass along any price increase. [Businesses are] now getting customers kind of pushing back and saying, ‘No, we won’t accept this price increase,’ and so, that’s a positive sign for inflation. But then there’s other places, especially where labor is a really big input, where it’s a labor-intensive firm or sector, those tend to be places where we’re not seeing a whole lot of letup of price pressure, and that’s because labor is still incredibly tight.”

While higher inflation has driven some workers back to the labor market, especially for lesser skilled, lower wage jobs, employers seeking to fill higher skilled jobs, especially for skilled trades, continue to see challenges, Haltom said.

Virginia ranks 3rd in CNBC’s Top States for Business

After two consecutive years at the top, Virginia slipped to third place in CNBC’s 2022 America’s Top States for Business rankings, the business news channel announced Wednesday morning. North Carolina achieved the coveted No. 1 ranking this year. 

“A great education system is building a smart workforce,” CNBC said about Virginia this year. “But migration has slowed to a state where living costs are high.”

In 2021, Virginia took the top spot in the annual rankings of business-friendly states for a second, consecutive time. Virginia also won in 2019, 2011, 2009 and 2007. CNBC did not rank the states in 2020 due to the COVID-19 pandemic.

In announcing North Carolina’s win this year, CNBC praised North Carolina, saying, “Political leaders in the Tar Heel State keep managing to put partisanship aside to build the nation’s strongest economy.” North Carolina, which ranked second last year, also had some major economic development wins this year, including the $2 billion VinFast electric vehicle factory announcement in March. Apple announced last year that it will locate its East Coast hub in North Carolina’s Research Triangle region.

Speaking on CNBC’s “Squawk Box” Wednesday, North Carolina Gov. Roy Cooper said, “We’ve pulled together in a bipartisan way to make sure that businesses know that we’ve got the most talented, educated workforce in the country.”

Washington state ranked second in this year’s Top State rankings, with Colorado coming in fourth and Texas fifth.

During his run for office last year, Republican Virginia Gov. Glenn Youngkin downplayed the state’s two-year top ranking under his Democratic predecessor, Gov. Ralph Northam, telling Virginia Business, “I am thrilled to death that Virginia gets accolades. I am a proud, proud Virginian, and I want Virginia to get accolades. Unfortunately, Virginia isn’t performing like the No. 1 state to do business in. It’s not. In fact, some of the underpinnings to that ranking actually shine a bright light on the challenge as why we’re not performing. The cost of living in Virginia — gosh, we’re ranked 32nd, and the cost of doing business, where we’re ranked 26th, and the quality of our infrastructure, where we’re ranked 24th.”

In a statement Wednesday, a Youngkin spokesperson said, “Like the governor said last year, being acknowledged as a top state to do business is great for the commonwealth, but accolades and rankings haven’t always translated into growth in Virginia.” The statement also said that he is committed to lowering the cost of living and making Virginia more competitive.

One of Youngkin’s main priorities as governor is to get more large plots of industrial-zoned land “shovel-ready” to be able to better compete with other states for large projects, a need cited by economic developers statewide. “I recommended that we include up to $200 million out of the American Rescue Plan money to be put forth to site readiness across Virginia so that companies can move here,” he said last year before the election.

He also pointed Wednesday to some positives since he took office in January, including major economic development announcements and the expected addition of 80,000 more jobs promised by companies expanding and coming to Virginia.

The state has seen some big development news this year, with aerospace and defense contractors Raytheon Technologies Corp. and The Boeing Co. moving their global headquarters to Arlington. Additionally, the Lego Group said in June that it will be bringing a $1 billion toy manufacturing plant to Chesterfield County. But economic development wins are just one component of an array of considerations that go into the Top States list.

Virginia might not be No. 1 in CNBC rankings but can still be competitive, Virginia Chamber of Commerce President and CEO Barry DuVal said in a statement: “The state remains a favored location for business and has made great strides over the past few years to restore our competitive position. … Unfortunately, the cost of doing business continues to rise in the commonwealth, making it harder to compete against other states which have aggressively cut taxes and streamlined regulations.”

CNBC based this year’s rankings on 88 metrics — up from 85 last year — across 10 categories: workforce; infrastructure; cost of doing business; economy; life, health and inclusion; technology and innovation; business friendliness; education; access to capital; and cost of living. Workforce is the most heavily weighted category and considers a state’s concentration of science, technology, engineering and math (STEM) workers, the percentage of workers with college degrees, and new this year, workers with associate degrees and industry-recognized certificates.

Virginia ranked No. 11 in workforce this year, down from No. 3 last year, but retained its No. 2 rank in education, which considers the number of colleges and universities in each state, including historically Black colleges and universities (HBCUs).

Youngkin has been critical of the running of the Virginia Community College System, which is viewed as the state’s biggest pipeline for future specialized workers in tech, manufacturing, wind energy and other industries. Enrollment, already falling at many community colleges, declined significantly during the pandemic — a harbinger of skilled jobs continuing to go unfilled.  

The governor, saying he wants the 23-college system to do better, has used his bully pulpit to influence the hiring of the next chancellor. At the end of June, longtime VCCS Chancellor Glenn DuBois retired, and a previously hired candidate withdrew amid the controversy surrounding the job. 

In June, the VCCS board, which hires the chancellor, agreed to allow a member of Youngkin’s administration to be a nonvoting member of its search committee. 

Virginia jumped up in the infrastructure category ranking, from 24th last year to ninth this year. For this category, CNBC measures the value and volumes of goods shipped by air, waterways, roads and rail. In April, Stephen Edwards, CEO and executive director of the Virginia Port Authority, said that the port had grown about 25% in container volume it had moved in calendar year 2021 vs. 2020 and had about $1.3 billion in investments. Other metrics include the condition of highways and bridges, commute time, broadband access, utility infrastructure and available office, industrial and vacant space.

Virginia performed its worst in the cost of living category, which is weighted the lowest. The commonwealth rose from 32nd last year to No. 30 this year.

North Carolina received 1,580 out of 2,500 points. Virginia received 1,553 points.