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    Alabama employment rate expected to rebound

    March 2015
    By David Zaslawsky
    Photography by Robert Fouts

    The Montgomery region has been somewhat resilient to the ups and downs of the economy because of a strong public sector foundation with Maxwell Air Force Base and Gunter Annex and the benefits of being a state capital.

    Yet, widespread layoffs in federal and state government have hindered the region’s recovery. Government employment accounts for fully one-quarter of the region’s workforce. The No. 2 sector behind government – trade, transportation, warehousing and utilities – is 17.8 percent of the workforce.

    Government employment is so key to the Montgomery region that the area’s largest employers are:

    > Federal government (12,280 employees).

    > State government (11,830 employees).

    > Montgomery Public Schools (4,524 employees).

    > The City of Montgomery is seventh on the list with about 2,500 employees.

    There are still layoffs at the federal level, but it is slowing from 2,000 (November 2012 to November 2013) to 800 (November 2013 to November 2014).

    State government jobs have been increasing during the same time periods. The state added 1,900 jobs from November 2012 to November 2013 and added another 1,400 jobs from November 2013 to November 2014.

    Meanwhile, local governments added 700 jobs from November 2013 to November 2014 after losing 1,300 from November 2012 to November 2013.

    Employment growth in Alabama has been muted with a 0.8 percent increase in 2012; 1.0 percent increase in 2013; and a 0.7 percent increase in 2014. This is different – very different. This year employment in Alabama is forecast to grow 1.8 percent, according to the Center for Business and Economic Research in the University of Alabama’s Culverhouse College of Commerce. The 1.8 percent increase is close to the center’s high range of 2.0 percent. The low mark is 0.8 percent growth. The center is expecting employment growth of 1.1 percent in 2016, including a 0.2 percent increase in federal government jobs, which would break five straight years of job losses.

    The state is finally adding 30,000-plus jobs a year, according to Ahmad Ijaz, associate director and director of economic forecasting for the Center for Business and Economic Research.

    Ijaz, speaking at the 27th annual Economic Outlook Conference at the Renaissance Montgomery Hotel & Spa at the Convention Center, said that 31,600 jobs were created from September 2013 to September 2014. Nearly 34,000 jobs were added from November 2013 to November 2014, including high-paying ones in manufacturing, construction and professional and business services.

    This year, Alabama will add between 30,000 and 35,000 jobs, Ijaz said. And Montgomery, which had a job growth increase of only 0.1 percent last year or 100 jobs, will pick up the pace this year with a 0.9 percent increase. The center is also forecasting Montgomery’s gross domestic product (GDP) to increase 1.4 percent in 2015. That’s a significant increase considering GDP grew 0.3 percent in 2013.

    The state’s GDP will increase 2.3 percent this year and 2.3 percent in 2016, according to the Center for Business and Economic Research. That forecast is on the low side of the center’s range of 2.0 percent to 3.5 percent. Ijaz said that the center may revise its GDP forecast to 3.0 percent this year.

    Alabama has still not regained the approximately 200,000 jobs lost during the Great Recession, which started in December 2007 and ended in June 2009. The state was still about 50,000 jobs shy of the pre-recession level through last November, Ijaz said, and almost 42,000 of those jobs are in the metro areas. Only four of the state’s metro areas have topped pre-recession levels. Montgomery is 8,300 jobs shy of its pre-recession level while Mobile is 11,200 behind and Birmingham-Hoover is 17,300 behind.

    During previous recessions from 1980-2001, the state regained lost jobs within 41 months, but now it’s been about 70 months since the Great Recession ended. The move to low-paying services jobs “takes longer and longer for us to get back to the previous recession level,” Ijaz said.

    The construction industry is beginning to rebound after six straight years of declining, employment in the sector rose 4.0 percent last year and is forecast to increase 1.2 percent in 2015.

    It’s the automotive industry that powers the economy, producing a record number of vehicles last year – almost 1 million. The Hyundai Motor Manufacturing Alabama facility in Montgomery accounted for nearly 400,000 of those vehicles (398,851). The three manufacturers – Hyundai, Honda and Mercedes-Benz – combined to produce 997,270 vehicles last year, breaking the previous record set in 2013 by about 80,000 units. Honda was second in production with 363,419 vehicles and Mercedes manufactured 235,000-plus vehicles. An exact figure was not available.

    The state is ranked fifth nationally in automotive production, but fourth in vehicle exports with $6.5 billion shipped in 2013. The state’s automotive exports per capita are twice as much as the U.S.

    Montgomery’s exports, sparked by Hyundai, were $1.7 billion in 2013, which was ranked No. 2 state behind Birmingham-Hoover ($1.9 billion) and $200 million more than Huntsville and Mobile. The state’s exports were $19.3 billion in 2013.

    The center is forecasting a healthy increase in total tax revenue – 2.4 percent growth (about $200 million) after an increase of just 1.3 percent in 2014. The range of the tax revenue forecast is 1.5 percent to 4.0 percent.