August data shows new employment in the Kansas City region, though still at a slow rate

Oct 10, 2022
| Posted in
Economy & Housing
KC Workforce Indicators logo

Employment continues to improve in August, adding 1,900 jobs and this data continues the upward trend from last month which added 5,800 jobs.

The seasonally adjusted unemployment rate declined to 2.7%, suggesting that the labor market remains tight in the region, given that the pre-recession low was 3.2%. With the newly added employment, Kansas City has now recovered 87% of the 129,300 jobs lost from the COVID-19 recession. Kansas City still needs to recover 17,500 jobs to return to the pre-pandemic peak of January 2020.

View the latest data

Peer metro comparison

Kansas City ranks 10th overall in annual employment growth out of our 11 peer metros, improving one position over last month, with a growth rate of 0.6% over the 12-month period ending in August. The metro is far behind peer leaders like Austin (5.5%) and Charlotte (5.4%). 

Like last month’s report suggested, this poor performance is partly because both July and August of last year saw an unexpectedly large jump in growth than the region’s post-pandemic trend would suggest. Comparing August of this year to August 2021 makes it look like there has been little progress. We expect that next month’s annual increase in employment return to something more reflective of the region’s general pace of recovery.  Unfortunately, since August 2020, that pace has been the slowest among our peers.  

While the region’s performance on employment has been lagging, its performance on unemployment has not.  At 2.7% in August, the region’s unemployment rate is tied with Indianapolis and Nashville for the second-lowest among the region’s peers. Minneapolis has the lowest unemployment rate at 1.9%. 

Specific industries

The Professional/Technical Services, Health Services and Construction industries led the way in creating jobs over the past year, each adding about 4,500 jobs. These industries are followed by the Transportation & Utilities industry, which added 1,600 jobs in the past 12 months. On the downside, both Administrative Support and Financial Activities lost more than 3,000 jobs during this period.

Construction has been growing consistently since the earliest days of the pandemic, mostly related to new distribution space to support greater use of e-commerce.  This also explains the growth in Transportation as both delivery services and the warehousing of products to be delivered are included in this industry. However, it is only within the last year or so that Professional/Technical Services and Health Services have begun accelerating.

Meanwhile, Financial services employment has been declining since before the pandemic began due to both industry consolidation and shifts to online transactions. The decline in Administrative Support is more recent and may be a signal of a slowing economy since temporary workers are included in this sector and these are among the first to be cut when the economy slows.

August continues to add new employment to the Kansas City region, though still at a slow rate.  It is likely that labor scarcity is contributing to this, given the region’s exceptionally low unemployment rate. National policy, however, seeks to slow the economy to cool off a very tight labor market and reduce inflationary pressures. The Federal Reserve has signaled that they intend to be aggressive at raising rates to achieve these aims. Because of this, growth should slow further in the near- to medium-term. The Federal Reserve still believes it is possible to engineer a “soft landing” where the level of employment slows but does not decline. Yet, given how quickly the Federal Reserve Open Market Committee is raising short-term interest rates, it seems increasingly likely that employment declines could nonetheless occur within the next six months.

All Posts