 
As a wide range of local businesses reported renewed activity in their industries, it increasingly became apparent that Connecticut may have dodged the worst prognostications heading into the recession last fall.
At that point, economists feared the state”™s heavy reliance on financial services in Fairfield County and Hartford would expose it to reverberations from Wall Street and the collapse of the credit markets.
While major financial employers like GE Capital, UBS AG and large hedge funds cut an undisclosed number of jobs, it appears many smaller companies were already running at peak efficiency and so had relatively few extraneous jobs to jettison as revenues plunged.
According to preliminary estimates by the Connecticut Department of Labor, the Fairfield County area may have added 1,800 jobs in May. Separately, the Federal Reserve Bank of New York reported in mid-June that brokers noted little change in vacancy rates and asking rents among commercial office properties in the Fairfield County area.
What”™s more, the Fed said financial services companies are generally showing profits in the current quarter, thanks to a combination of market gains, low interest rates and a pickup in underwriting activity.
The Fed added there are scattered reports of hiring in the financial sector, mainly at smaller firms, but those gains are being wiped out by ongoing layoffs at large financial companies undergoing restructuring in the wake of mergers sparked in the credit crisis.
Despite the estimated job gains, the unemployment rate inched upward slightly to 7.9 percent, as recent graduates enter the work force and as others who perhaps tabled their job hunts resume looking for work as the economy recovers from the nadir of the recession.
The same dynamic appeared to be at work statewide, as Connecticut”™s unemployment ticked upward to 8 percent, despite the state adding 3,600 jobs in May, giving the state its first increase since the Wall Street collapse last September.
Perhaps incredibly, employment in Connecticut”™s financial services industry was down just 2.8 percent in May compared to a year earlier, and the sector lost just 100 jobs from this past April.
Employment in the construction industry still lagged 21 percent below the May 2008 figures, but the industry added an estimated 700 jobs between this past April and May.
And even as some retailers and restaurants have shut down, others have sprouted in their place, including in major retail districts like Greenwich, Norwalk, Westport and Danbury.
“Solid increases in unadjusted employment numbers last month for the construction, retail trade, and leisure and hospitality industries helped push the adjusted figures into the black, giving us some hope that the worst may be behind us,” said John Tirinzonie, an economist in the Connecticut Department of Labor, in a prepared statement. “However, given the volatility of monthly changes, this gain may be more of an anomaly rather than the beginning of a consistent pattern.”
The health care sector had the biggest increase on a year-over-year basis at 1.8 percent. The entertainment and recreation industry posted the biggest month-over-month gain at 5.3 percent, despite the Fed saying metropolitan area tourism organizations reported a continued softening of business as of mid-June.
Despite anecdotal evidence of increased economic activity, Gov. M. Jodi Rell cautioned the state is hardly out of the woods, with income taxes still running well below previous projections.
“The national economic downturn has dealt a devastating blow to Connecticut”™s economy,” Rell said, in a written statement. “It is painfully clear that the taxes already on the books are not generating the revenue we had anticipated. Families and employers are struggling mightily.”
