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Revision of 2015 job numbers casts clouds over recovery

Where did all the jobs go?

It’s pretty clear that 2015 wasn’t the whiz-bang year for job growth that we thought it was as the year unfolded.

But was it really as bad as the revised numbers from the state Labor Department make it out to be?

Probably not. The truth is probably somewhere in between.

When the dust settles, and the final revisions to the 2015 job numbers are completed a year from now, it’s a pretty good bet that 2015 won’t go down as the region’s best year for job growth since 1999, as the original numbers suggested.

Nor will it be remembered as the worst year for the Buffalo Niagara job market since 2010, as the recently revised numbers indicate.

What they likely will show is that the Buffalo Niagara region’s job market is slowly and steadily gaining strength.

Maybe it’s growing a little faster than the relatively tepid growth rates we’ve seen coming out of the recession. Maybe not.

But there’s no question that the pace of hiring here is not growing nearly as fast as it is in the rest of the country.

In other words, all the talk – and the hope – of a Buffalo renaissance seems to have been a little too enthusiastic.

“We got a dose of reality,” said Gary Keith, M&T Bank’s regional economist in Buffalo.

“I sometimes wonder if we’re out front a bit in terms of the New Buffalo,” he said. “But this story about the New Buffalo has some solid underpinnings.”

The reason we are talking about this is because the job numbers are the most timely and relevant statistics that we can use to measure how the Buffalo Niagara economy is faring. A lot of the economic data that’s used to take the temperature of the national economy isn’t available locally. And the data that is available often is more than a year old, which is good for tracking the ebbs and flows in the local economy during 2014, but doesn’t help us understand how we’re doing today.

Here’s what the latest numbers are telling us.

The most sobering data looks at how many jobs are in the Buffalo Niagara region. Those statistics, which the labor department reports monthly, had been the statistical basis for much of the good feelings last year.

Those preliminary numbers said the region added 8,900 jobs last year – a 1.6 percent increase that would have been the strongest job growth the area had seen since 1999, and just a whisker away from being the best since 1989.

That’s heady stuff.

But when federal and state labor officials did their annual revision to the job numbers, using more detailed payroll and Census data, they got a vastly different result.

The revised figures showed that job growth in Buffalo Niagara – and across most of upstate – was far weaker than the original reports indicated.

With the stroke of a pen, the 6,100 new jobs turned into 2,900 new jobs. And the 1.6 percent job growth rate became a disappointing – and below average – 0.5 percent gain.

Economists like Keith and John Slenker, the labor department’s regional economist in Buffalo, immediately raised questions about how accurate the new numbers were.

While they had expected the revision to show that job growth was slower than the initial reports indicated, they were surprised by the size of the reduction, especially since it showed that hiring slowed markedly in October and November and actually saw a loss of jobs in December.

Slenker thinks that fourth-quarter slump is overstated, and those numbers will be revised again a year from now.

He notes that quarterly Census data, which is available through September 2015, show that the region’s job market grew at a pace of about 0.8 percent in the third quarter. He thinks that feels pretty reasonable, and it would be the strongest job growth the region has seen since 2011. Even so, it would be only a little better than the 0.7 percent growth we’ve averaged over the last five years and less than half of the national increase.

The more optimistic view also is backed up by local unemployment data, which shows that the Buffalo Niagara jobless rate has steadily declined for nearly four straight years since peaking at 9.4 percent in February 2012. It dropped to 5.7 percent in January.

If you go all the way back to 1990, you’ll only find two other Januaries – in 2000 and 2001 – that had an unemployment rate of less than 5.7 percent. That’s pretty encouraging.

Even more interestingly, the unemployment data, which is based on a different survey than the jobs report, survived the annual revision process with only minor changes.

“We’ve got two different surveys telling us two different things,” Slenker said.

So the sky may not be falling after all. It’s just a little cloudier than we first thought.