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11-month-long jobs recovery suddenly ends

So much for the recovery.

After the Buffalo Niagara region finally scratched and clawed its way out of the recession in 2004, the area lost its grip and slid back into decline again last year, revised data from the state Labor Department showed last week.

So while roughly 85 percent of the country's major metropolitan areas were enjoying job growth by the end of last year, the Buffalo Niagara region fell back into its own rather unique double-dip recession.

The recovery lasted for all of 11 months in 2004, only to see the region give back almost two-thirds of those gains in 2005 as the decline commenced anew with job losses in 11 of last year's 12 months.

"The longer-term patterns seem to indicate that things are relatively flat," says Richard Deitz, the regional economist for the Federal Reserve Bank of New York's Buffalo branch.

That hurts, especially when you consider that the country has been adding jobs for the better part of the last 2 1/2 years. Nationally, we've already gained back all of the jobs that were lost during the 2001 recession and tacked on more than 2.2 million new ones. It's not red-hot job growth by any means -- just shy of 1.7 percent -- but that looks mighty good compared with what's happening here.

After last year's backslide, the Buffalo Niagara region needs to create 11,600 jobs just to get back to where we were before the recession started, the revised statistics show. For a region that has lost jobs in four of the last five years, that's no easy task.

The sea change in the region's economic fortunes wasn't apparent until last week, when the labor department did its annual revision to its employment statistics, using more comprehensive data from unemployment insurance tax records. In the blink of an eye, the tiny job growth -- and the sputtering recovery -- that the old data had shown throughout 2005, turned into job losses.

And the region's struggling manufacturers, which had shown signs that their decades-long decline was beginning to slow under the old statistics, suddenly were shedding jobs at an accelerated pace under the new data.

John Slenker, the labor department's regional economist in Buffalo, says the 3.4 percent decline in factory jobs reflects the intense pressure that the U.S. auto industry is facing. "It used to be steel, but now autos are our big one. And that's causing us a lot of problems in our economy," he says. "That presence is magnified by all of the companies that support them."

It didn't get any better in January, either, with factory employment dropping to a modern-day low of 62,400, which is 2,700 fewer manufacturing jobs than we had in January 2005. Even more sobering: The region has lost factory jobs for 10 straight years. And over the last six years, one of every four factory jobs in the region has disappeared.

"Manufacturing continues to weigh on growth," says Lorna Wallace, a research fellow at the Milken Institute, a California think tank that studies regional economies.

For now, all of that growth is coming from private service-providing companies, which have been doing surprisingly well. Those service firms added jobs at a 3.8 percent pace last year as health care and education firms kept hiring, although that growth was less than the 5.8 percent growth in 2004.

"As we look to the future, most of the growth will be in the service sector," Slenker says. "We've got weakness in one sector. Other than that, we are showing some good numbers in most other sectors."

Sadly, that sector that's struggling is one of the region's most important, not only because factories provide almost 12 percent of the area's jobs but because those positions pay much better than the typical service job.

And with the auto industry under fire, that isn't likely to change anytime soon.


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