Michigan ended 2014 with its lowest jobless rate in more than 12 years, thanks to a drop of nearly a half percentage point from November that pushed the year-end unemployment rate down to 6.3 percent.

Over the course of 2014, the official household survey of workers found Michigan added 138,000 jobs. The number of men and women holding jobs or looking for work in the state labor force grew by 47,000, and the number of unemployed workers dropped by 89,000.

The overall gain in employment was a striking 3.2 percent increase over the previous year-end number, and the best since the official end of the Great Recession in 2009. But the more limited payroll survey of employers, also called the establishment survey, found job increases slowing down to show the smallest gain since 2009 — 44,000 added jobs, a gain of just 1.1 percent.

So is job growth in Michigan exploding — or stalling out?

"If you're using the establishment survey, that's not very good growth, but the household survey shows very good growth," said Charley Ballard, professor of economics at Michigan State University.

The household survey is exactly that: Researchers poll a statistically significant number of homes and ask how many people in the household are working and how many want a job. The total is the labor force, and those looking for work make up the official unemployment number.

That survey includes self-employed workers, farm workers and independent contractors, while the establishment survey polls only larger employers to see how many workers are on their payrolls. Economists consider that to be more conservative.

While the two surveys frequently don't match up from month to month, they do move in the same trend over time. For the past two years, the household and payroll surveys showed job growth slowing in Michigan. Now the household survey finds jobs grew more than four times faster than in 2013, while the payroll poll shows job growth dropping by more than one-fourth of the 2013 rate.


"One story is that after a downturn, a lot of the job growth is in little firms that aren't in the establishment survey," Ballard said.

In that case, the payroll trend could be lagging the household survey, and will show increasing growth in a year or two. And that would line up with economic forecasts that show increasing momentum in the job growth in both the nation and the state.

Job growth in Michigan had its ups and downs in the first half of 2014, but turned in steadily better numbers for the last six months, said Bruce Weaver, an economic analyst with the Michigan Department of Technology, Management & Budget. He noted payroll jobs in the state gained 62,000 between April and December, with the yearly total dragged down by job losses in the first quarter.

"We've got a nice trend of increased payroll jobs in seven of the last eight months in the state," he said. "Whether you look at the unemployment data or the payroll data, there's been an acceleration of improvement during the second half of the year. In the second half of the year, we've seen more significant improvements in both the jobless rate and the pace of job creation."

The biggest gains for 2014 came in professional and business services, which added 18,000 jobs. Manufacturing added 10,000 jobs, education and healthcare added 8,000, and the construction industry, which has been lagging for years, added a surprising 7,000 jobs. The biggest job losses came, once again, in the government sector, which shrank by 5,000 positions. Retail trade lost 3,000 jobs, while the finance sector lost 2,000 jobs.

The preliminary average annual unemployment rate for the state is estimated at 7.2 percent, down from 8.8 percent for 2013.

The December rate of 6.3 percent was down four-tenths of a percentage point from November's rate of 6.7 percent, and marked a full two-point decline from December 2013. That's the lowest the state unemployment rate has been since since November 2002, when the rate was 6.2 percent. However, the size of the state labor force and total number of employed workers in the state remains significantly lower now than in 2002.


Economists expect to see continued job gains in 2015. Researchers with the Research Seminar in Quantitative Economics at the University of Michigan predicted moderate job growth for 2015 and 2016 when they released a November forecast, and they're not alone.

"With an unemployment rate above 6 percent, I still think there's room for some growth," Ballard said.

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