The Buffalo Niagara job market is stuck in the doldrums.
The region added 600 jobs during November, breaking a two-month skid that saw job losses in both September and October, although hiring remained weak in financial services, construction and at local bars, restaurants and hotels.
The sluggish hiring is a sobering turnaround for a region that, in 2015 and 2016, had its two strongest years of job growth in this century as a wave of high-profile projects, including several big construction projects, bolstered hiring.
But there was a glimmer of good news in the job report on Thursday: October's reported job loss was reduced by about 30 percent to a loss of 1,900 positions, confirming the belief by local economists that the monthly job numbers are overstating the slowdown in the region's job market. September's job losses also previously had been revised downward.
John Slenker, the state Labor Department’s regional economist in Buffalo, said he thinks the job data is underreporting employment in the financial services sector, as well as at local bars, hotels and restaurants.
He thinks the region's job market likely is growing by between 0.5 percent and 1 percent annually, which is more in line with its recent patterns.
Slenker also believes the slowdown in hiring, which began last winter, likely is the result of a tight labor market, where employers are having trouble finding qualified workers to fill open jobs.
"We're pressing up against the labor force," he said. "The working age people just aren't out there."
Traditionally, the region’s labor market has slumped when the overall economy weakened, causing companies to shut down or reduce their workforces in response to a drop in sales.
But this year, there haven't been waves of business closings or broad-based layoffs, which makes Slenker skeptical that the job numbers now are a sign of economic weakness, especially in the reported loss of 2,200 financial services job over the past year and the elimination of 2,300 positions in the leisure and hospitality sector.
Instead, he think that the slowdown in hiring could be the result of the region’s steadily shrinking pool of available workers – a decline that largely is due to a wave of older baby boomers retiring. Over the last five years, the Buffalo Niagara labor force, which includes everyone who has a job or is actively looking for one, has shrunk by 4 percent, or about 23,000 people.
During that same five-year period, the region has added nearly 19,000 jobs. Between those new positions and the shrinking labor pool, the Buffalo Niagara unemployment rate has dropped from a peak of 8.8 percent in June 2012 to 5.4 percent in October, according to seasonally adjusted data from the Labor Department.
Slenker thinks the job numbers could be revised upward once more detailed information is available, although even that data is likely to indicate a slowing in the pace of hiring.