The unemployment rate in the Spokane metropolitan area fell in May to its lowest level in almost nine years.


At 4 percent, the rate dipped to its lowest point since September 1998, when it came in at 3.6 percent.


That is mighty low, Jeff Zahir, the Washington state Department of Employment Securitys Spokane-based labor market economist, says of the May figure.


Still, Zahir cautions that the unemployment rate should be taken with a grain of salt because its based on a relatively small survey of county residents.


The best way to look at it is as a trend, he says.


Through May this year, the Spokane areas unemployment rate, which is reported monthly, has averaged 5.1 percent, compared with 5.4 percent through the first five months of 2006, the departments figures show. The unemployment rate was lower here in January, March, April, and May than in the year-earlier months, and in February it was at 6.1 percent, the same level as in February 2006.


The average annual unemployment rate here has fallen every year since 2002, when the economy softened after the terrorist attacks in September 2001. In 2002, unemployment averaged 7.7 percent, its highest level in at least 12 years. Last year, unemployment averaged 5 percent, down from 5.7 percent in 2005, 6.5 percent in 2004, and 7.5 percent in 2003.


Like many economists, Zahir puts more stock in a survey derived from a monthly count of the number of employees for whom employers pay state workers compensation premiums than he does in the survey from which the unemployment rate is calculated. He says the latter survey involves a much larger sample of people.


In the latter survey, the number of people employed in nonagricultural wage and salary jobs in the Spokane area climbed through the first five months of 2007 by a monthly average of 2.6 percent, after growing by annual averages of 3.5 percent in 2006 and 2.2 percent in 2005.


After losing 2,700 jobs in 2002, the economy began adding jobs in 2003. In 2004, it continued to rebound, adding jobs at a compound annual average of 2.5 percent through 2006, Zahir says.


The economy here racked up even more impressive percentage job-growth gains in 1991 through 1994, but the unemployment rate never dipped below 6.3 percent during that period.


That is a much different situation, Zahir says.


Job growth in 2007 might exceed 2006s strong 3.5 percent surge, and this year also might bring a fifth straight year of declining unemployment, Zahir says.


Because of the current strong growth and continuing low unemployment, youve basically dried up all of the available labor thats in the community, Zahir says. He says some employers here now are waiting to fill jobs that open up due to attrition, reasoning that theyd prefer to wait to hire new people until after the labor market softens somewhat. Businesspeople know the labor market is tight, he says.


This years job gains have come even though the Spokane area has seen close to 600 layoffs since January, Zahir says. Thats a lot, he says, but adds that the layoffs appear to have occurred primarily because companiesand hospitalsare consolidating operations, not closing their doors.


People often remark to him that they dont see many new companies coming to town, and ask him where the new jobs are being added, Zahir says.


Theyre home-grown jobs, he says. Our businesses are expanding. To many people in Spokane, it defies their intuitive sense of whats going on. Yet, from an economists standpoint, it is absolutely good for local companies to add jobs, he says. If you want a town of entrepreneurs, youve got it here.


Meanwhile, the seasonal labor market also is tighter, with farmers hanging on to good, productive workers even when harvest isnt on, restaurants hanging on to them during slack times, and construction companies hanging on to them between building jobs because its hard to replace desirable personnel, Zahir says. He adds that hes wondering if and when, really when, this will change when the economy softens.


The state is due to report the Spokane areas unemployment rate for June on July 17, Zahir says.


He says he doesnt think that the rate will go up from what it was in May, because while initial claims for unemployment insurance rose in the state and in some metropolitan areas through the 25th week of the year, ended June 23, compared with the year-earlier period, they didnt rise as much in the Spokane area.


Contact Richard Ripley at (509) 344-1261 or via e-mail at editor@spokanejournal.com.