Sector takes a painful hit
December 8, 2008
Mike Armstrong, Philadelphia Inquirer
When you look beneath that awful headline number from Friday’s employment report, you can see the damage in the various sectors of American industry.
One thing that should give everyone pause is how large the job destruction in the services sector was. Of the 533,000 jobs that disappeared in November, services accounted for 370,000.
The United States long ago transitioned from a manufacturing economy to a service-based one. It surrounds us everyday. Retail stores, fast-food restaurants, hospitals, colleges, hotels and banks are everywhere, especially in Center City.
One service sector in particular that shed a lot of workers in November was the professional and business services sector. That’s the sector that employs lawyers, engineers, architects and accountants as well as janitors and temporary help. Nationwide, 136,000 jobs disappeared from that sector between October and November, according to the Bureau of Labor Statistics.
Given that the office towers of Philadelphia’s central business district are crammed with lawyers, consultants and accountants, the swoon in professional and business service would appear to be an ominous development for our region.
Between October 1998 and October 2008, the professional and business services sector of Philadelphia and its four Pennsylvania suburban counties grew from 266,300 to 309,800.
However, Steven T. Wray, executive director of the Economy League of Greater Philadelphia, cautions that there can be a lot of “noise” in the data when you start looking at industry sectors. For example, November’s weakness in professional and business services could reflect fallout from Wall Street’s turmoil. That would likely hurt the New York area more than Philadelphia.
We won’t know for sure until more sector data on a regional basis are released. For example, looking just at legal services for the five-county region, employment has largely remained flat at 27,400 from October 2007 to October 2008. Ten years ago, employment in legal services was 25,200.
And calamity can benefit some businesses, Wray said. Turnaround specialists, distressed-asset investors and law practices focused on financial workouts would appear to have lots of potential targets.
But Philadelphia’s biggest law firms are global enterprises now. With the globe in full-blown recession, it’s hard to see how they’ll avoid feeling pain. Reed Smith LLP, which has a large Philadelphia law office, said last week it would cut 115 from its support staff.
One of the few sectors that didn’t shed jobs nationally was education and health services, which traditionally has been Philadelphia’s biggest economic cushion.
“Eds and meds” are why the region doesn’t fall too hard during recession, but also can lag behind during economic recovery, Wray said.
Can the University of Pennsylvania, Temple University and more than 60 other colleges in the region protect us again? Or will the persistent credit crisis, year-long U.S. recession, and hemorrhaging state and local government budgets prove too much this time?
Annual Meetings
Shareholders of two local companies will gather this week for annual meetings.
Medical-device maker Kensey Nash Corp. will hold its meeting at its corporate offices in Exton Wednesday at 10 a.m.
Personal-security equipment maker Mace Security International Inc. is making its presence felt locally again.
Mace will hold its annual meeting in meeting room 309 at the Marriott Philadelphia at 12th and Market streets Thursday at 10 a.m.
Earnings
Monday: C&D Technologies
Tuesday: Pep Boys — Manny, Moe & Jack.