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Solid December hiring caps best year for job growth since 1999

The Buffalo Niagara job market was on fire last year – the strongest it has been since 1999.

The region added 6,100 jobs during December, making 2015 the best year for local job growth in 25 years, the state Labor Department reported Thursday.

With big building projects, from SolarCity to the Buffalo Niagara Medical Campus, fueling a hiring boom for construction workers, the region’s job growth last year ran at an average pace of 1.6 percent, more than double the rate of hiring during 2014 and nearly three times stronger than the employment gains during both 2012 and 2013.

The growth was even stronger in the private sector, which excludes the decline in government jobs locally as schools and municipalities grapple with tight budgets. Private sector jobs grew by 2 percent last year, the strongest growth in hiring by non-government employers in at least 25 years.

“This was a very good year,” said John Slenker, the Labor Department’s regional economist in Buffalo.

As 2016 unfolds, positive signs are on the horizon for the local job market, such as a ramp-up of hiring at the SolarCity solar panel factory, which could add upwards of 500 new jobs this year, and the continuation of a strong construction market, with work continuing on major projects on the Buffalo Niagara Medical Campus and SolarCity.

Another area of job growth last year: education and health services jobs grew by 4 percent.

“Four thousand new jobs in eds and meds: That’s nothing to sneeze at,” said Gary Keith, M&T Bank’s regional economist in Buffalo.

But an unsettling threat lurks. The numbers show the beginning of softness in the local job market.

Job growth was strong by local standards throughout 2015, but it peaked during the summer, when the pace of hiring topped 2 percent. Growth rates have cooled steadily since August, running at 1.1 percent annual rates during both November and December, the Labor Department reported.

“It’s a deceleration trend,” Keith said.

The local job market, which largely avoided taking any big hits during 2015, already is facing some significant job cuts later in 2016, from the 600 jobs that will be lost when Ahold closes its local warehouses, to the shutdown of the 200-employee Chemours factory in Niagara Falls and the closing of the 120-person DialAmerica call center in Amherst.

The looming merger of KeyCorp and First Niagara Financial Group could cost the region hundreds of jobs once the deal closes, possibly by the end of September.

In addition, the steady weakening of the Canadian dollar, now worth about 70 U.S. cents, has been cutting into the flow of Canadians crossing the border locally, which cuts into sales at local malls, hotels and restaurants that depend on Canadian shoppers.

Same-day car trips by Canadians to the U.S. were down 24 percent through the first 11 months of last year, according to Statistics Canada.

“The impact of the Canadian dollar really didn’t help us in the fourth quarter,” Keith said. Hiring at local hotels, bars and restaurants was down 0.7 percent in December. Retail jobs were down 0.4 percent at the peak of the holiday shopping boom.

“Heading into 2016, that’s going to be a headwind,” Keith said.

Still, both Keith and Slenker think the region’s job market will continue to grow moderately – at least by local standards – in 2016. Over the past five years, the local economy has averaged job growth of just under 1 percent.

“I’m not going to be down on 2016 yet,” Keith said.

“We still have major growth going on at the medical campus, at the University at Buffalo, at SolarCity. IBM is coming downtown,” Slenker said.

“There’s always an ebb and flow. ... I don’t see this so much as one step forward, one step back,” he said. “This is not symptomatic of a bad economy. This is just the way an economy works.”

While the December job growth is strong by local standards, it is sluggish compared with the rest of New York and the country. Job growth across the United States averaged 1.9 percent during December and 1.7 percent across New York.

During December, almost a third of the job growth came from the red-hot construction market, which had 9 percent more jobs than it did a year ago, pushing employment within that sector to its highest level for any December in more than 25 years. Hiring also was robust in financial services.

Workers with technical skills, such as information technology and engineering, are in growing demand, said Scott Stenclik, the president of Superior Group, an Amherst employment agency.

“There’s much higher competition for candidates with higher skills and talent,” he said. “The transition to higher-skill, higher-paying positions in 2015 has continued, and I think it could accelerate in 2016.”

Those pockets of strength offset continued job losses by government agencies and local manufacturers. Hiring by local retailers during the holiday shopping season also was slower than it was during 2014.

Overall, though, hiring by the private sector, which excludes government jobs, remained robust, growing by 7,100 positions, or 1.5 percent, from December 2014 to December 2015 to hit another modern-day record for the month. Private-sector employment locally is at its highest point in at least the last 25 years.

The region’s slow but steady growth in its job market now has continued for 39 straight months – the longest period of uninterrupted growth since 1990, according to Labor Department data. The private sector, which excludes government jobs, has grown for 68 straight months.

Among the state’s 14 major metropolitan areas, Buffalo Niagara’s job growth was tied with Syracuse for fourth-strongest. Only New York City, Nassau-Suffolk counties and the Orange-Rockland-Westchester county area had faster job growth during November.