Yet oil industry jobs still declining

Unemployment down in Alaska

Posted: Friday, June 13, 2003

More Alaskans held jobs during the first quarter of 2003 than state labor analysts anticipated, according to the latest employment figures from the Alaska Department of Labor and Workforce Devel-opment.

The state's unemployment rate during the first quarter was expected to rise over the same period last year. Instead, said labor economist Neal Fried, the jobless rate for the first quarter of 2003 was 8.4 percent, slightly lower than 2002's rate.

"This is good news for Alaska's job seekers," Fried said in an article in the June issue of Alaska Economic Trends, which is published monthly by the department.

However, Fried qualified his assessment saying the moderate unemployment rate still left many areas of the state with double-digit unemployment.

"The highest jobless rate in March was 19.9 percent in the Yakutat Borough," he said.

Here on the Kenai Peninsula, unemployment in March was 12.3 percent, down from 13.9 percent for the same month in 2002. The March 2003 figure represented a drop in unemployment from the 14.7 percent registered in February 2003.

Fried said the state's industrial sectors were still adding jobs, but with two notable exceptions important on the peninsula.

"The oil industry's decline of 600 jobs (statewide) in the first quarter of 2003 compared to one year ago was a major factor behind the decline in natural resources employment," he said. "This represents a second consecutive year of losses."

Fried said he expects 2003 to be "another weak year in the state's oil patch." Factors contributing to that were less exploration and a scarcity of large projects, he added.

More locally, 150 fewer oil jobs were filled this past March than were filled in March 2002 in the Gulf Coast Region, which includes the Kenai Peninsula Borough, the Kodiak Island Borough and Valdez-Cordova.

Fried said Tuesday that it would be another month or so before figures specific to the borough are calculated. The department regularly supplies municipalities with local figures, but they lag behind the figures cited for larger regions and the state as a whole cited in the Trends article.

As for the seafood industry, slow activity there, along with a similar sluggishness in the wood processing industry, have led to an employment falloff in the manufacturing sector.

However, Fried said the peak season for the seafood processing industry has yet to arrive, and June's figures easily could shift the overall picture quickly.

"What's more," he said in the article, "these slightly negative numbers in seafood processing mask a healthy crab and groundfish catch during the first quarter."

On Tuesday, Fried said processing employment rises and falls cyclically through the year, but there has been a downward drift over the past four or five years. The critical months for the fish processing industry are July and August. The department is just finishing up May figures.

"May doesn't tell us much," he said. "Salmon has not geared up yet."

One thing to watch will be the impact of layoffs at Agrium. The ammonia manufacturing plant expects to lay off some 65 workers by the end of June.

Unocal, which supplies natural gas to Agrium under a contract currently in litigation, announced last week it would cut gas supplies still further. Agrium may be forced to shut down some of its operations, perhaps cutting as many as 65 additional jobs.

Fried said it depends on just when Agrium workers are let go and how big the layoff is, but the effects could start to show up in department figures relatively quickly.

Education and Health Services provided the largest workforce gains in the first quarter, the Trends article said. Also contributing to the favorable labor numbers was the visitor-related Leisure and Hospitality sector, comprised of hotels, inns, RV parks, restaurants and other eating and drinking establishments. Eateries and bars contributed most to that sector's employment health, but the accommodations component remains positive, despite a weak visitor season last year, Fried said.

"This sector will be watched carefully this year because of the uncertainty that surrounds this visitor season," he said.

According to department figures, by March 2003 there were 50 more jobs in the accommodations component than had existed in March 2002. Part of that is due to a new hotel in Soldotna.

Government jobs increased 2,300 statewide over 2002 first-quarter figures. In the Gulf Coast Region, the federal government added 50 jobs, local governments added another 50, and tribal governments added 50 more.

Small gains registered in the retail trade sector could disappear when the 900 jobs lost by Big Kmart's departure are figured in. Fried said other retail areas might fill in the gap by year's end, however.

"New Fred Meyer stores are planned for Palmer and Homer, and Wal-Mart recently announced it would be opening a store in Fairbanks," he said.

Overall, unemployment figures for the peninsula are generally within the ballpark of past years' numbers. Where the action is, so to speak, is in Anchorage and the Matanuska and Susitna valley areas, where unemployment overall was just 6.1 percent at the end of March 2003. That compares to 6.5 in March 2002.

The state as a whole had a 7.8 percent unemployment rate in March. The national rate was 6.2 percent.

Employment figures help paint a picture of the general health of the state's economy. Cost-of-living figures also are contributing brush strokes.

According to labor department numbers, inflation (measured in Anchorage) has remained low. The cost of living in the state's largest city rose 1.9 percent, just a bit higher than the national rate of 1.6 percent.

Still, some costs continue to rise fairly rapidly, among them medical care, which has risen 60 percent in the past decade, three times the rate of the overall consumer price index, Fried said.

The department measures food costs around the state four times a year. The survey includes utility and fuel costs. To no one's surprise, those surveys show food costs are lowest in the major metropolitan areas and highest in the remote villages. Communities along the railbelt fall somewhere in between.

According to December 2002 figures, if an Anchorage family of four spends $100.61 a week for food, that same family would spend $138.87 in Homer, $119.12 in Kenai-Soldotna and $123.53 in Seward.



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