As national jobless rate improves, LV sees signs of trouble

By Steve Green

Friday, Dec. 4, 2009 | 10:42 a.m.

Analysts say Southern Nevada's employment picture remains troubled, despite the surprising nationwide improvement announced today.

The U.S. unemployment rate fell in November to 10 percent from October's 10.2 percent, a development some observers say indicates the deep recession may be winding down. Many economists had expected the rate to remain at 10.2 percent.

Nevada's November unemployment statistics have not yet been released. Unemployment in the state stood at 13 percent in October.

While the unemployment rate in October in Nevada was down 0.3 of a percentage point from September, that was largely because a good number of workers left the Nevada labor force by moving out of state or gave up on finding employment.

Federal statistics showed that in October, total employment in the Las Vegas area was down 6.7 percent from October 2008 -- the third-worst showing in the nation among big cities behind the Phoenix (-7.3 percent) and Detroit (-7.2 percent) areas.

Brian Gordon, an analyst at Applied Analysis in Las Vegas, today said that despite the opening of CityCenter, employment in Southern Nevada is likely to continue to decline through late 2010 or early 2011.

The opening of the CityCenter megaresort complex on the Las Vegas Strip this month will bring with it some 12,000 jobs -- but Gordon said those gains will likely be offset by continued declines in the local construction and development industry.

"From a fundamental perspective, the number of jobs is continuing to decline,'' Gordon said.

The Las Vegas-area construction industry, with its high-paying jobs, has been hit hard by the recession.

No quick turnaround is likely because:

--There's an oversupply locally of office buildings, warehouses and retail space and few such projects are on the drawing boards.

--Construction has been halted indefinitely on the Echelon and Fontainebleau casino resorts, and there's little chance the gaming industry will launch new resorts in the short term.

--The homebuilding industry locally has slowed dramatically, with a high percentage of existing homeowners underwater in their mortgages and therefore unable to sell their homes so they can move up to new homes.

Statewide, construction employment peaked at nearly 150,000 jobs in mid 2006, state statistics show. Through October of this year, employment in the sector had tumbled to just 83,700 people.

The decline in construction employment tells just part of the story. The other troubling factor is the loss in local spending power as construction workers lose their jobs with the completion of projects and then can't find new ones.

Nevada construction workers in 2008 were paid an average of $1,108 weekly vs. the overall average wage of $827, according to the Nevada Department of Employment, Training and Rehabilitation.

Gordon said there may be a bit of good news for the tourism industry, including Nevada's, in today's U.S. jobs report.

With U.S. employers having shed 7.9 million jobs since the recession started in December 2007, companies are typically running as lean as ever and the remaining employees may remain more confident they won't be laid off, Gordon said.

"That may ultimately translate to consumers being more willing to travel,'' he said.

Another analyst, John Restrepo of Restrepo Consulting Group in Las Vegas, wasn't optimistic that today's U.S. jobs report would translate into an immediate boost to the Southern Nevada economy.

"It appears that the decline in the employment rate in November was largely due to the hiring of temporary and health care workers. The good news is that the hiring of temp workers may lead to the hiring of full-time employees," Restrepo said.

"In spite of the unemployment rate edging down a bit, the number of long-term unemployed persons rose moderately to 5.9 million, while forced part-time workers stayed about the same as October. Additionally, 'discouraged workers' increased by 42 percent from November 2008,'' he said. "Clearly, the signs of recovery at the national level remain mixed. This means that Southern Nevada will continue to lag the national recovery, because consumer confidence and spending remain weak."