Economist: Interest rate hike could cost jobs

HELENA - Montana added 4,000 jobs in the past year, but a big portion of that growth may be lost soon, an economist said Tuesday.

Paul Polzin, director for the Montana Bureau of Business and Economic Research, said about 1,300 of those new jobs were found in the construction industry and at building material stores. But those are the very businesses that could be hurt most by an expected rise in interest rates, he said.

''One-third of the increase is in industries that are vulnerable to the likely increase in interest rates,'' he said. ''Many national forecasters expect the Federal Reserve to increase the base rate this spring or early summer, and construction projects are interest-rate sensitive.''

The monthly labor report from the state Department of Labor and Industry showed the annual job increase rate in April was 1 percent, continuing a trend that started in 2003.

The construction industry, one of the higher-paying sectors, increased by 900 jobs and building materials stores added 400. Natural resource and mining jobs grew by 500, financial businesses added 700 jobs, professional and business firms added 400, and educational and health service companies increased by 600 jobs.

Manufacturing businesses lost 500 jobs in the past year, while lodging jobs were down 200 and state government had 300 fewer jobs.

Polzin said the drop in accommodation industry jobs comes despite high occupancy rates for motels, and may signal an effort by owners to cut costs in their businesses.

While job growth continued at a steady pace, Montanans' wages managed to stay even with inflation, the labor report said. Average weekly earnings in April were up $9.73, a 2.4 percent growth that was slightly better than the 2.3 percent rise in the cost of living.

The report also said that unemployment remained unchanged in April from a year earlier. The 4.6 percent jobless rate was identical to April 2003 and meant that an estimated 21,800 Montanans were out of work last month.

The highest county unemployment rates in April were Lincoln, 16.4 percent; Big Horn, 12.4 percent; Glacier, 12 percent; Sanders, 8.7 percent; and Mineral, 8.3 percent.

The lowest county jobless rates were McCone, 2 percent; Garfield, 2.1 percent; Sweet Grass, 2.3 percent; Carter, Toole and Wibaux, 2.4 percent; and Chouteau, 2.6 percent.

Among the most-populous counties, Flathead had the highest unemployment rate at 7 percent, followed by Lake, 6.6 percent; Park, 5.9 percent; Ravalli and Silver Bow, 4.7 percent; Cascade, 4.1 percent; Lewis and Clark and Missoula, 3.7 percent; Hill, 3.6 percent; Gallatin, 3.4 percent; and Yellowstone, 3.1 percent.