Job growth in Virginia wasn't very stellar last year.
Virginia gained only 12,900 jobs in 2014, or a 0.3 percent increase from the previous year.
That increase was the worst year-over-year performance the state has had since 2010, when it shrunk by 4,800 jobs in the aftermath of the Great Recession.
The meager employment growth in Virginia last year is in stark contrast to the 1.9 percent growth in the nation over the same period.
The Northern Virginia metro area, which typically undergirds economic growth in the state, grew 0.4 percent in 2014 as federal spending cuts continue to dampen growth.
Richmond, on the other hand, had a stellar performance of 1.9 percent employment growth in 2014, making it the fastest growing metro area in the state.
Employment in the state is expected to pick up to 0.6 percent growth in 2015, according to the forecast in the annual Thomas Jefferson Institute “Virginia Economic Forecast” produced by Chmura Economics & Analytics.
By comparison, national employment is forecast to expand 1.7 percent this year. Across-the-board cuts in federal spending are cited as the main factor contributing to the sub-par growth in the state.
Three months after our original forecast, we still expect national employment to grow 1.7 percent in 2015. However, based on the latest data, 0.9 percent seems more realistic for the state.
Why the upward revision?
Forecasting is always difficult, but regional forecasts are even more difficult during the final months of the year, particularly when the economy is shifting to a much faster or slower pace of growth.
The monthly employment numbers for Virginia and its metro areas are based on a sample of firms that represent about 30 percent of the employees in the state. It is called the current employment statistics data.
In March of every year, the Virginia Employment Commission revises previously released employment estimates with more reliable quarterly census of employment and wages data through an annual process known as benchmarking.
The data collected through the employment and wage program represent almost a complete count of employment.
More than 96 percent of civilian jobs are counted through this wage and salary program because employers are required by law to provide the employment commission with a quarterly count of the number of employees covered under unemployment insurance.
So, the further away from March, the greater the potential for error in the employment data. And if a forecast is created based on employment growth that is too high or too low, it will contribute to an incorrect forecast.
To minimize the potential error of the revised data, we used data with a 6 month to 9 month lag as well as other data such as retail sales and payroll withholding figures that are not subject to revisions to inform the forecast.
Based on those data, it’s looking like Virginia’s employment growth will be faster than our original forecast.
The potential of further sequestration in October would once again dampen Virginia’s growth. Newly benchmarked data to be released in March will provide a more accurate base for our forecast.