Surprise: Chicago's job market outpacing the U.S.

by https://www.chicagobusiness.com/staff/ghinz/Greg-Hinz
July 30, 2019

The metro area now is gaining employment faster than the country as a whole, and faster than New York, L.A. and Denver. Is it a real shift or just a seasonal blip?

Has metropolitan Chicago’s long-lagging economy finally turned a corner?

By Greg Hinz on Politic

After years in which the job growth rate here lagged not only hot spots such as Houston and Atlanta but the nation as a whole, new federal employment data indicates the Chicago metropolitan area now is growing faster than the nation—in fact, gaining more jobs in the first six months of the year than any other metro area in the country except New York City. 

Some of the data is preliminary and subject to change, and Chicago traditionally does well in the spring when construction, hospitality and other weather-related industries add staff. Economists and other experts I’ve spoken with here are somewhat divided on what the data means.

But the 12-month data is almost as good as the six-month figures. At a minimum, it suggests metro Chicago is showing signs of pulling out of its long funk.

The data comes from the U.S. Bureau of Labor Statistics, which surveys households and employers each month. One set of figures, which I reported on last week, indicated that Illinois as a whole gained nearly 100,000 jobs from June 2018 to June 2019, the best 12-month growth in the state in several years.

With less fanfare, BLS also released figures on metropolitan areas, and they suggest Chicago not only is continuing to power the state’s growth but now is matching and exceeding national figures.

For instance, the data indicates that between January and July of this year, Chicago added 164,000 non-farm jobs. That’s numerically more than any other metro area except New York, which added 349,000.

But likely a more reliable measure is the 12-month data, which somewhat smooths out seasonal variations. You can get the figures for each metropolitan area by clicking on the state, then the city.

In Chicago’s case, the year-to-year June-to-June job-growth gain was 1.8 percent, about 90,000. In comparison, national growth in that period was 1.5 percent.

Chicago’s 1.8 percent lags booming Texas cities such as Dallas/Fort Worth and Houston, up 3.2 percent and 2.7 percent, respectively. But it tops New York and Los Angeles at 1.2 percent and 1.4 percent, respectively; Philadelphia (1.2 percent), Boston (1.5 percent) and Washington (0.8 percent); and matches Atlanta (1.8 percent).

Beyond that, the growth in the past year here tops other large Midwest cities such as Cleveland and Indianapolis (each at 1 percent), Minneapolis/St. Paul (0.4 percent), and Milwaukee (1 percent). It matched the growth in St. Louis, at 1.8 percent year to year.

So what does the data mean?

Federal Reserve Bank of Chicago economists have suggested for years that Chicago generally is late to enter and late to come out of recessions, a trend that the peculiarities of its industrial mix may have accentuated in the subprime mortgage recovery. If so, the recovery now tends to prove that theory.

The fed nationally is in a “quiet period” before its expected decision to raise interest rate guidelines, and its economists here were unable to comment now.

Other researchers had plenty to say.

The Chicago Metropolitan Agency for Planning was somewhat skeptical, noting that growth rates in the key sector of professional and business services have slowed a bit. "Because our economic cycles tend to lag slightly behind national and peer averages, we may still see slight upticks in monthly jobs data that don’t signal any abrupt changes in metropolitan Chicago’s overall trajectory. It remains to be seen,” CMAP said in a statement.

Orphe Divounguy, chief economist at the Illinois Policy Institute, a libertarian think tank, took some cheer from the figures.

“Chicago's labor market has been performing strongly despite the rest of the state still lagging the rest of the nation,” he emailed me. “It is promising and refreshing to receive some glimmer of hope."

 

Divounguy said he’d have more confidence in the longevity of the employment trends if there was any evidence of a recovery in the still-sagging local home-purchase market.

But the Illinois Department of Employment Security saw good news in the data.

“Chicago is leading other cities we’re usually compared to—including Midwestern Rust Belt and East Coast cities,” a spokesman told me in an email. “I think it’s also notable we’re beating—or on par with—destination cities like San Diego (1.7) and Denver (1.6).”

Economists rarely agree on anything. But I suspect that, after these figures, they’d all like to see the numbers from the next few months to decipher whether something significant really has occurred.

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