Kansas City employment surprises on the upside

Sep 01, 2022
| Posted in
Economy & Housing
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July saw a sizable expansion of employment in the Kansas City region.

Employment growth has been largely flat for most of 2022 but in July, the Kansas City region added 5,600 jobs, adding to the gains from last month (1,700 jobs). This is the largest single-month gain since one year ago (July 2021). The seasonally adjusted unemployment rate declined to 2.8% from 2.9%, suggesting that the labor market remains exceptionally tight in the Kansas City region, given that the pre-recession low was 3.2% and that traditionally, a 4% unemployment has been considered “full employment”.

With this month’s large gain in employment, Kansas City has now recovered 86% of the 139,300 jobs lost from the COVID-19 recession. Kansas City still needs to recover 19,600 jobs to return to the pre-pandemic peak from January 2020.

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Peer metro comparison

Kansas City ranks last overall in 12-month employment growth out of our 11 peer metros. The metro is far behind our peer leaders: Austin (6.2%) and Portland (5.1%). Overall, Kansas City saw only 0.3% growth over the 12-month period. In part, this poor year-over-year performance is because last year’s employment data also showed an unexpectedly large jump in jobs, one that was significantly above the trend. So comparing July of this year to July of last year makes it look like there has been little progress. In reality, immediately following the July 2021 report, the region saw a sharp drop in the number of jobs from which it has gradually been recovering. Essentially, it has taken 12 months to catch up to where we thought we were one year ago. However, this does not cover up the fact that, although Kansas City did not see as large a decline as other peer metros from the COVID-19 recession, the metro continues to struggle to regain its prior level of economic activity.

Specific industries performance

Industries that saw growth during the past 12-month period:

  • Leisure & Hospitality (4,100 jobs)
  • Mining, Logging, & Construction (4,000 jobs)
  • Professional/Technical Services (3,500 jobs)
  • Local Government (1,300 jobs)

Industries that saw a decline during the past 12-month period:

  • Administrative Support & Waste Management (-4,000 jobs)
  • Financial Services (-2,500 jobs)
  • Retail Trade (-1,000 jobs)
  • Federal Government (-800 jobs)

July saw a surprisingly large gain in employment compared to the tepid growth we have seen earlier in the year. Although the large gain in employment was a welcome surprise, continuing signs of inflation and the Federal Reserve’s promise to keep raising rates until inflation is contained signal that national growth will likely slow in the near- to medium term, and that may cause the region’s growth to slow further.

How severe the slowdown will be and how long it will last will largely depend on how quickly inflation rates return to the Fed’s 2% target and whether the level of interest rates needed to achieve that benchmark push the economy into a recession. Many economists believe a recession is likely, but the Fed still believes it is possible to put the brakes on inflation without causing a significant rise in unemployment.

Note: Monthly employment and unemployment figures can be volatile, and payroll employment estimates can be subject to substantial revision. Therefore, it is important not to read too much into any one monthly report, and each should be considered in the context of other information that may be available.

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