ANN ARBOR—After losing jobs last year for the first time in a decade, Oakland County will post modest job gains this year before employment growth takes off again in 2003, say University of Michigan economists.

Despite a loss of some 13,000 jobs last year—due largely to the national recession and the impact of the Sept. 11 attacks&#151Oakland County will add 5,000 jobs in 2002 and then surge upward with employment gains of 19,000 next year, they say.

“Job growth in 2003 is most of the way back to the county’s growth of 24,000 jobs per year recorded in the second half of the 1990s, when the U.S. economy was running much stronger,” 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. “In fact, this year’s annual average gain masks the accelerating job growth in the second half of the current year, when almost 13,000 jobs will be created.”

In their annual forecast of the Oakland County economy, Fulton and colleague Donald R. Grimes predict that the overall rate of job growth will move upward from a loss of 1.9 percent last year to gains of 0.8 percent this year and 2.8 percent in 2003. Unemployment in Oakland County will drift downward from 4.6 percent in the first half of this year to 3.7 percent by the end of next year.

Spurring Oakland’s economic growth will be strong employment gains in the wholesale trade and service industries, the U-M economists say. Wholesale trade is expected to regain 4,000 jobs over the next two years, following the loss of 5,000 such jobs in 2001, as inventories are rebuilt and business spending on capital equipment increases.

Service jobs are projected to increase by 8,000 in 2002 and 12,000 in 2003, thanks to strong growth in business services and engineering and management services, the forecast shows.

“Business services, which includes both higher-wage industries, such as computer programming and advertising services, and lower-wage industries, such as janitorial and temporary help services, is forecast to grow by 9,000 jobs over the next two years,” says Grimes, an ILIR senior research associate. “Engineering and management services, a relatively high-wage industry that fits well with ‘Automation Alley,’ is expected to add 5,000 jobs by the end of 2003.”

Employment growth in other non-manufacturing industries, such as finance, construction, and transportation and utilities, will remain flat, Fulton and Grimes say.

While manufacturing sector employment will continue to decline this year (a loss of 3,000 jobs in 2002) before ticking up next year, the number of jobs in motor vehicle and other manufacturing is still about the same as the number of jobs in retail trade.

After losing 2,000 jobs in 2001&#151in large part because of white-collar downsizing at DaimlerChrysler in Auburn Hills&#151the automobile industry is expected to lose another 2,000 jobs this year before gaining 1,000 jobs next year, the economists say. The rest of the manufacturing sector, which suffered 4,000 job losses last year, is projected to lose a more modest 1,000 jobs in 2002 and break even in 2003 as conditions for industrial equipment investment improve.

While the motor vehicle manufacturing industry still has a much more disproportionate presence in Oakland County, jobs at corporate headquarters and in high technology and pharmaceuticals are growing fast, the study shows. The latter industries now account for about one in every six jobs in the county, compared with one in 12 nationally.

Although many metropolitan areas around the country that are dominated by high technology have suffered large increases in unemployment in the past year or so, Oakland County has fared better, Fulton and Grimes say.

“Because of a more diversified mix of high-technology activities or better management of them, Oakland was less vulnerable to downward adjustments in these activities during the recession,” Fulton says. “This lends additional support to ‘Automation Alley’ as the correct approach in this area’s economic development initiatives.”

Despite last year’s job losses, Oakland County still remains one of the most robust economies in Michigan and the nation, the U-M economists say.

Since 1990, private-sector employment in Oakland County has grown 55 percent faster than it has in Michigan as a whole and 34 percent faster than it has in the nation. 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 during that time.

In addition, its per capita income of $44,146 (in 1999 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 around the country during the 1990s, Oakland County ranked third in per capita income growth and fourth in overall private-sector employment growth. Oakland ranks among the elite of these regional economies, along with the counties of Du Page in suburban Chicago, Fairfax in suburban Washington, D.C., and San Mateo in suburban San Francisco.

The 17th annual U-M forecast of Oakland County’s economy was sponsored by 17 Oakland County organizations. Its presentation was hosted by the county’s Planning & Economic Development Services Division; Bank One, Michigan; and Oakland Community College.

George A. FultonDonald R. GrimesPlanning & Economic Development Services Division