Ann Arbor-area unemployment rate falls to 5 percent as labor force grows

Unemployment rates in Ann Arbor fell sharply in September to 5 percent, according to a report by the Michigan Bureau of Labor Market Information and Strategic Initiatives.

The report cited seasonal public sector education jobs added as students returned to school as a major factor in the number of employed Ann Arbor residents.

Unemployment rates dropped across the state, with Lansing’s rate falling to 6.2 percent and the statewide rate dipping to 8.2 percent, a full percentage point below August’s rate and 1.6 percent lower than a year ago.

The unemployment rate for residents living in the Ann Arbor area fell from 5.8 percent in August and 6.4 percent in September 2011. That decrease comes at the same time as Ann Arbor’s labor force, a measure of how many people are actively working or seeking employment, has been rising.

Smaller labor forces, a side effect of people giving up looking for jobs, are often seen as a qualifier when unemployment goes down. However, Ann Arbor added 600 to the labor force in September and 3,400 year-over-year for a 1 percent increase.

Ann Arbor added 5,300 net jobs in September, but according to the report, state-government related education jobs including hiring by local universities accounted for nearly 90 percent of new jobs created. Most other sectors saw month-over-month job losses, including a loss of 700 jobs in the professional and business services sector.

Public sector jobs were the primary success story in the month-over-month data, and they also showed a 2,000-job increase over September 2011. That jump accounted for two-thirds of the jobs created in the past year in Ann Arbor. The other major growth sector, despite its poor performance in September, was professional and business services.

Retail also saw a slight bump of 200 jobs in September as stores start to hire for the holiday season and manufacturing was up 100 jobs, but leisure and hospitality services dropped 500 jobs on the month.

Ann Arbor’s unemployment rate has been in steady decline since peaking in 2008, according to the economic outlook for Washtenaw County prepared for AnnArbor.com by economists George Fulton and Donald Grimes. The continued drop to 5 percent actually outpaces their forecast for 2012 unemployment.

Ben Freed covers business for AnnArbor.com. You can sign up here to receive Business Review updates every week. Reach out to Ben at 734-623-2528 or email him at benfreed@annarbor.com. Follow him on twitter @BFreedinA2