Pittsburgh unemployment rises for 3rd straight month, to 5.8% |
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Pittsburgh unemployment rises for 3rd straight month, to 5.8%

The Pittsburgh region’s unemployment rate shot up for the third consecutive month in April to reach its highest point in two years, signaling a potential drag on the local economy heading into summer.

The unemployment rate for the seven-county metro area increased three-tenths of a percentage point to 5.8 percent in April as fewer people reported having jobs, the state Department of Labor & Industry reported Wednesday. That is up a full percentage point since January and the highest since April 2014.

“This economy is about as stuck in neutral as you’re going to find,” said Frank Gamrat, an economist at the Allegheny Institute for Public Policy. “You’re just not gaining traction anywhere.”

A hiring slowdown could bode poorly for local restaurants and entertainment venues if it causes consumers to curtail spending this summer, typically a busy time of year for leisure businesses.

The unemployment data, which are based on a survey of households, conflicted with a separate survey of employers. Companies in the region said they expanded payrolls by 16,100 jobs, largely in construction and the leisure and hospitality sectors.

The household survey is adjusted to smooth out seasonal variations in employment — such as when retailers hire temporary workers over the holidays — while the employer survey is not seasonally adjusted.

And the employer survey is notorious for overlooking small businesses and likely miscalculated the gains, said Kurt Rankin, an economist at PNC Financial Services Group.

Annual revisions to the payroll counts often show that fewer jobs were added than originally reported. When the 2015 revisions came out in March, the original job counts were lowered by 15,500, Rankin said.

Even if April’s employer survey is to be believed, Pittsburgh’s annual job growth has been a paltry 0.3 percent.

The region is feeling the effects of its struggling natural gas industry, which has curtailed drilling and capital projects amid a decline in natural gas prices, economists said. The industry provides less than 1 percent of the region’s jobs but impacts other industries that include steel manufacturers, construction contractors and the truckers who haul fracking water.

The Marcellus shale fracking boom that sparked Pittsburgh’s economy to an earlier recovery from the Great Recession can no longer be relied on to drive growth, Rankin said. Nothing has come along to replace it, especially if consumers — who are responsible for two-thirds of economic output — pull back spending.

“There’s not another sector that’s going to take up that slack if consumers fall flat during the summer months in Pittsburgh,” Rankin said.

The job figures were released as a Federal Reserve survey of business owners showed the region’s economy grew modestly in the six-week period that ended May 23. However, that periodic survey, known as the Beige Book, pointed to slowing consumer spending, with retailers reporting disappointing sales in March and April. The report covers the Fed’s Fourth District, which is based in Cleveland and includes Pittsburgh.

Construction companies and the leisure and hospitality sector led the April gains, adding 4,400 each, according to the state Labor Department’s report. The biggest losses were in transportation and warehousing, which shed 600 workers. The mining and logging sector, which includes natural gas companies, cut 200 people from payrolls and was down 1,700 from a year ago.

The city’s unemployment rate is above both the state and national rates. Pennsylvania’s unemployment rate in April was 5.3 percent, and the national rate was 5 percent.

The U.S. jobs report for May is scheduled to be released Friday.

Chris Fleisher is a Tribune-Review staff writer. Reach him at 412-320-7854 or [email protected].

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