Region led the state in job losses in '08

Hampton Roads lost almost 1 percent of its jobs during 2008, the biggest decline among metro areas in Virginia last year, according to revised figures issued Tuesday by the Virginia Employment Commission.

The average employment in the region fell by 6,800, or 0.9 percent, the state agency said after conducting its annual analysis of data.

Throughout most of 2008, the commission had reported sustained job growth for Hampton Roads and the state.

However, figures taken from the unemployment insurance taxes paid by employers indicated that Hampton Roads lost jobs during 2008 and that the losses accelerated during the last three months of the year, said William F. Mezger, chief economist of the VEC's economic information services division.

The average number of jobs in the region during 2008 stood at 768,500, down from 775,300 a year earlier.

"The downturn was steeper than anyone expected," Mezger said.

And the pace of losses witnessed during the last quarter of 2008 appeared to continue into January, February and March, he said. The commission has not yet reported job figures for those months.

Indications as to whether a region is adding or losing jobs are closely watched by businesses - including those in the housing and retail sectors - that rely on personal income for sales.

In Hampton Roads, the falloff in jobs between 2007 and 2008 was especially notable in the retail, wholesale and transportation sectors, which shed 4,200 jobs, and in construction, where employment fell by 3,000. Manufacturing and financial services also witnessed job losses.

The drop in retail employment was marked by sluggish seasonal hiring during the 2008 holiday season, while the falloff in port traffic last year hurt transportation jobs, Mezger noted.

Vinod Agarwal, a professor of economics at Old Dominion University and a member of ODU's Economic Forecasting Project, said he had expected the VEC to scale back its figures for job growth in Hampton Roads, partly because its figures for construction work seemed too high.

However, he expressed surprise at the VEC's report of a decline in jobs. In its annual projections for 2008, the ODU forecasting team had predicted an increase of 7,000 jobs for the region.

Since late last year, employers throughout the country have been slashing payrolls in response to weak demand and dwindling consumer traffic. The Hampton Roads economy, Agarwal said, "is not immune to major forces in the national economy."

However, he and Mezger called attention to the role of defense spending in the region, which has provided a cushion during economic downturns. Earlier this year, the ODU Forecasting Project predicted that defense spending in Hampton Roads will climb 4.5 percent in 2009.

"People need to understand that the Defense Department plays a crucial role in the region's economy," Agarwal said. The university's forecasting team has estimated that defense spending generates between 40 and 45 percent of Hampton Roads' output of goods and services.

Until it has more of the VEC's revised data, the ODU forecasting team will stick with its earlier forecast of employment growth of 0.2 percent, or 1,572 jobs, in Hampton Roads for this year, Agarwal said.

Statewide, the average number of nonfarm jobs fell by 3,900, or 0.1 percent, last year to 3,757,500, the VEC said in its report. Three of Virginia's nine metro areas - Blacksburg-Christiansburg-Radford, Lynchburg and Northern Virginia - posted modest gains.

Tom Shean, (757) 446-2379, tom.shean@pilotonline.com