Oakland County—no job growth this year, but will avoid a recession ANN ARBOR—After averaging more than 20,000 job gains per year since 1992, Oakland County will have zero job growth this year before rebounding somewhat by adding 12,000 jobs in 2002, say University of Michigan economists.

The drop-off in job creation and subsequent moderate gains are due mostly to a loss of jobs in manufacturing, limits imposed upon growth by a tight labor market locally, and weaker growth in the national economy, they say.

“We believe that during this current downturn the number of private-sector jobs in Oakland County peaked in the fourth quarter of last year,” says George A. Fulton, an economic forecaster and senior research scientist at the U-M Institute of Labor and Industrial Relations (ILIR) and the Department of Economics. “We believe that in the first quarter of this year, the number of jobs declined at an annual rate of 1.6 percent, and we expect that in the second quarter this decline will continue at an annual rate of 1.5 percent.

“However, the county’s economy is forecast to rebound in the summer quarter, when the number of jobs is expected to grow at an annual rate of 3.3 percent. Consequently, we believe that the anticipated employment downturn will be too short and too mild to qualify as a recession. From the third quarter of 2001 through the end of 2002, the number of jobs is projected to grow at an average annual rate of 1.8 percent.”

According to their annual forecast of the Oakland County economy, Fulton and colleague Donald R. Grimes say that the county will lose 7,000 manufacturing jobs this year and another 3,000 in 2002. Motor vehicle manufacturing, in particular, is expected to lose 5,000 jobs this year, including about 3,000 jobs at DaimlerChrysler Corp. headquarters in Auburn Hills.

“Job losses in the auto industry are projected to continue in 2002 as productivity gains more than offset a small increase in auto sales,” says Grimes, an ILIR senior research associate. “The rest of the manufacturing sector is expected to lose a total of 4,000 jobs this year and next, with the anticipated job loss concentrated in auto suppliers and industrial machinery and computer equipment.” While manufacturing jobs in Oakland County will decline by 7 percent overall from last year through 2002, private non-manufacturing employment will add another 22,000 jobs during that period, the U-M economists say.

Over the next two years, the service industry once again will account for the greatest growth in non-manufacturing (about 14,000 jobs), with business services (ranging from higher-wage jobs in computer programming and advertising services to lower-paying positions in janitorial and temporary help services) leading the way with an additional 8,000 jobs.

In addition, engineering and management services is expected to gain 4,000 jobs in the next two years, due in part to continued outsourcing of professional services by large corporations. In other non-manufacturing sectors, retail stores will add 3,000 new jobs; wholesale trade, 2,000; health services, construction and transportation/utilities, 1,000 each; and financial services will remain flat.

While the overall rate of job growth will remain low through the end of next year, Fulton and Grimes say that unemployment will remain at an extremely low 2.5 percent this year and 2.4 percent in 2002, up slightly from last year’s record jobless rate of 2.1 percent. By comparison, the national unemployment rate is predicted to hover around 5 percent.

Despite the U-M forecasters’ prediction of no employment gains for the current year and moderate job growth of 1.6 percent in 2002, Oakland County still remains one of the most robust economies in Michigan and the nation.

In the past decade, private-sector employment in Oakland County has expanded more than one-and-a-half times as fast as Michigan as a whole. Further, the county has created more private-sector jobs than any other area in the state, accounting for about a quarter of the employment gains in Michigan throughout the 1990s.

In addition, its per capita income of $42,378 (in 1998 dollars) is more than 50 percent above the average for both Michigan and the nation and ranks within the top 1 percent of all counties in the United States.

Moreover, compared with 25 other large suburban counties in the United States from 1990 to 1998, Oakland County ranked first in per capita income growth and third in overall employment growth, as well as third in manufacturing and private non-manufacturing job gains.

The 16th annual U-M forecast of Oakland County’s economy was sponsored by 20 Oakland County organizations. Its presentation was hosted by the county’s Planning & Economic Development Services Division, Bank One and Oakland Community College.