While Connecticut”™s overall economy performed relatively well in January as the extent of the mortgage crisis became clearer, the financial services sector that is a pillar of Fairfield County”™s economy shed 1,700 jobs from a year ago.
Even as the updated employment figures arrived last week, the Federal Reserve revealed it would free up to $200 billion in funds for banks and securities dealers to borrow, a needed source of liquidity.
Connecticut”™s had 1.7 million jobs in January, according to a state Department of Labor survey of businesses published last week, down 2,200 from December but still up 13,100 from a year ago.
The Fairfield County area accounted for 6,100 new jobs year over year. The Department of Labor [DOL] estimated the local economy dumped 13,500 jobs between December and January, but because DOL does not adjust its metropolitan-level numbers for seasonal considerations such as holiday hiring, the number could paint a darker picture than reality would dictate.
Unemployment in both lower Fairfield County and the Danbury area rose 0.3 percent to 4.7 percent and 4.2 percent, respectively.
The state”™s employment growth exceeded the nation”™s in the second half of 2007, according to John Tirinzonie, a DOL economist, but he said the drop between December and January could be due to a ripple effect from the national economic downturn.
Data from the Department of Revenue Services provided mixed results: while income tax collections rocketed up 12 percent between January 2006 and this past January, sales and use tax collections dove 18 percent, a possible indicator that earners are hording their cash against an economic downturn.
By far the hardest hit sector between December and January was arts and entertainment, which shed 5.5 percent of its jobs on a seasonally adjusted basis.
The Connecticut General Assembly”™s Office of Fiscal Analysis expects Connecticut to shed jobs in the coming year, but said that personal income and retail sales are expected to rise, albeit at a slower pace.
The Office of Fiscal Analysis (OFA) published its latest analysis of the economy in late February, relying on forecast information from Moody”™s Economy.com division based in West Chester, Pa..
While the housing market has put a damper on Connecticut”™s growth, employment has been stabilized by relative strength of exports; , sales by defense contractors like Sikorsky Aircraft Corp.; and the ever-expanding casinos in eastern Connecticut.
Connecticut exports increased 12 percent between 2006 and 2007, according to an analysis published by the Connecticut Business and Industry Association.
Despite the January dip in financial services employment, the state”™s long-term outlook remains favorable due to expected growth in the financial services and health-care industry, OFA indicated, as well as continued tightness in New York City”™s commercial real estate market that is pushing some companies into Connecticut.
Still, with annual job growth expected to average below 1 percent over the next several years, the agency expects Connecticut”™s economy to lag that of the nation. OFA attributed the slower growth curve to above-average business costs, slow population growth, and traffic congestion that discourage companies from expanding here.
