April 30, 2013

Growth forecast for Wichita-area jobs revised downward

Four months into 2013, and an earlier forecast for mediocre job growth in the Wichita area is being revised down.

Four months into 2013, and an earlier forecast for mediocre job growth in the Wichita area is being revised down.

A new forecast issued Tuesday by the Center for Economic Development and Business Research at Wichita State University predicts that in 2013, the Wichita area will gain more than 4,000 jobs.

The projected increase is confirmation that Wichita, like much of the U.S., remains locked into a slow growth track, said Center director Jeremy Hill.

The late April revision is down slightly from the center’s annual jobs outlook in October, when the forecast predicted close to 5,000 new jobs.

One of the key differences in the forecasts, Hill said, is that a rebound in business jets remains frustratingly elusive. Since the October forecast, Hawker Beechcraft became just Beechcraft, dropping jet production. And now Cessna executives are reducing production of small jets and cutting several hundred jobs.

“We didn’t expect a whole lot in manufacturing, and now we’re expecting even less,” Hill said.

The biggest job gains are in the service sector. This includes companies that supply services to businesses, from reviewing their contracts to picking up their trash.

A lot of that is being driven by outsourcing, Hill said, as companies shed functions from their payrolls and hire outsiders to do the work.

One of the beneficiaries of this trend are temp agencies.

The Arnold Group has seen about a 7 percent growth in placements in 2013 compared to the same months of 2012, said Vice President Phillip Hayes.

That comes on top of a 21 percent burst in 2012 compared to 2011.

This year, he is seeing some employers coming to him because they need labor but are wary of the coming changes in the health care law.

But overall, he said, the economic recovery remains frustratingly unpredictable.

“We’ll try to do some planning so we can concentrate on industries that might be better insulated, and I would say we were wrong 50 percent of the time,” Hayes said. “Trying to get a pulse on this has been very fluid.”

Another industry WSU is predicting will see some growth are retailers and hotel/restaurants.

But hotel owner Jim Korroch said he isn’t seeing it at his properties, particularly those downtown. He owns the Courtyard by Marriott in Old Town and Fairfield Inn & Suites at WaterWalk.

He has had to trim hours for his employees because business has been inconsistent. February was up, March was down, but April is up, he said.

“It’s a hot and cold story,” he said.

Korroch acknowledged it may not be just the economy. A series of new hotels has come into the market in the past couple of years riding a wave of cheap financing.

One service sector that will remain consistently strong in 2013, Hill said, is the health care sector, particularly hospitals.

The production sectors – manufacturing, construction and the oil and gas industry – will do OK but not great.

Hill noted that many of the jobs associated with the oil and gas industry are actually filled by one- or two-man companies rather than employees, so the jobs numbers won’t completely reflect the gain.

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