WVU economic forecast calls for West Virginia employment to begin growing again in 2010

WVU forecast calls for employment rebound in 2010

CHARLESTON, W.Va. — The state economy should begin producing more jobs than it loses around the middle of 2010, West Virginia University predicted in its annual economic outlook Wednesday.

But the recovery is expected to be sluggish and centered on service industry jobs rather than energy. WVU is predicting employment to grow a modest 0.7 percent annually through 2014 as the economy struggles to replace 22,600 lost jobs.

“It takes until 2013 to replace the jobs that we lost during the recession,” said George Hammond, associate director of WVU’s Bureau of Business and Economic Research. “Essentially, there is light at the end of the tunnel. We’ve still got quite a bit of tunnel to get through.”

The forecast serves as an important tool for state government, which uses it to help formulate the budget and forecast revenue. Based on the latest revenue figures, the state has a $16 million shortfall, which is expected to grow to about $100 million by the end of the fiscal year June 30.

Hammond said coming job growth will be concentrated in professional and business services, as well as the health care, leisure and hospitality industries.

The forecast predicts the state’s employment picture will stabilize during the first six months of 2010. Growth should return by about June — if the U.S. economy recovers as well.

David Wyss, chief economist for Standard & Poor’s, said that should happen, though not quickly because the economy has hit bottom.

“At the bottom, it’s not that things start getting better. It’s that things stop getting worse,” Wyss said. “I do think it’s going to be a long and slow recovery.”

The service sector is expected to add 4,700 jobs annually over the next five years, with the biggest gains coming in professional and business services and education and health care.

The outlook for mining — the backbone of West Virginia’s tax base — and manufacturing is less rosy.

West Virginia lost 2,600 mining and natural resources jobs during the recession as coal production plummeted 13.3 percent, according to the forecast. Production is now running at an annual rate of 140 million tons, the lowest level since 2003, but should rebound to 148 million tons by 2014.

“Mining gradually loses jobs during the forecast,” Hammond said. “That’s tied to really sort of a slow rebound in overall coal production.”

The mining forecast does not, however, include any estimates of the impact of environmental legislation pending in Congress nor the U.S. Environmental Protection Agency’s efforts to curb surface mining in Appalachia.

Manufacturing was hit even harder, losing 5,900 manufacturing jobs in the chemical and durable goods sectors to the recession. But WVU expects world demand and the weak U.S. dollar to help manufacturers up exports.

“Manufacturing, I think, has a chance to stabilize,” Hammond said.