Where the Jobs Will Be in 2010

From BusinessWeek | Nov 2009

Regions across the U.S. will see job growth in the first quarter of
2010. But the growth will be sporadic and many areas will continue to
lag

By
Prashant Gopal

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The recession might be technically over, but unemployment is
rising month after month even in most of the nation's strongest job
markets.

A full-fledged job recovery seems to be a long way
away. But some metros are poised for significant job growth by the
first quarter of next year. BusinessWeek.com teamed up with Moody's
Economy.com to identify America's 25 next recovering job markets. These
metros were ranked based on Economy.com's projected job growth in the
first three months of 2010.

Topping the list is Mount Vernon,
Wash., a small town about 60 miles north of Seattle with just 48,000
workers. The town, which lost jobs quickly during the recession, could
see a rebound, in part because tourism, retail, and hospitality will
make a comeback as the economy improves. Additionally, the weak dollar
will provide a boost to communities with international trading ports
and metros that border Mexico, such as Brownsville, Tex. (a port town
that is No. 4 on our list), and border town McCallen, Tex. (No. 3). Our
list was also packed with towns that are closely linked to the energy
industry (Billings, Mont., Houston, Tex., and Farmington, N.M.),
college towns (College Station, Tex., Tuscaloosa, Ala., Auburn, Ala.,
and Lawrence, Kan.), and military towns (Columbus, Ga., Augusta, Ga.,
and Texarkana, Tex.).

None of the metros on the list experienced
a housing bubble that had a disastrous pop. Miami, Las Vegas, Phoenix,
and Stockton, Calif., will likely be in a funk long after many Texas
metros are in growth mode.

"These are areas that had little or
no housing cycle and stand to benefit from the renewed firmness in
commodity prices," said Chris Lefakis, an economist at Moody's
Economy.com. "This could be an export-lead recovery with the
replenishment of inventory leading to a resurgence in manufacturing."

Room for Growth in Manufacturing

The
manufacturing sector has taken such a battering that it has a lot of
room for improvement. Inventories have fallen to such low levels that
manufacturers will have to increase production even to keep up with
existing demand, Lefakis said.

A plant opening or just expanding
can have a magnified impact on a small metro, giving a swift boost to
the job market, said Joel Naroff, president of Naroff Economic Advisors
in Holland, Pa. But job growth elsewhere mostly will be slow and
incremental, he said. Companies will be cautious about hiring and will
expand overtime hours and bring on temporary workers before making
permanent hires.

The good news is that overtime pay and the
increase in temp workers will push up wages nationwide, which could
result in more consumer spending, he said.

"If the economy
begins to grow, it will be enough [for companies] to add slowly to
payroll," Naroff said. "I'm not expecting a vigorous upturn."

Travel,
hospitality, and retail could see more dramatic growth. Throughout the
recession, Americans have cut down on travel, eating out, and shopping.
If the economy improves, they'll add more entertainment to their
budgets, he said.

"People might not go to Disney World," said Naroff. "But they might start going out to dinner once week."

New
York City, which didn't make our list, could also have a great year,
especially now that Wall Street is giving out bonuses "like 2008 never
existed," he added.

The federal government will also play a key
role in the recovery even as it begins to phase out tax incentives and
other economic stimulus spending, Moody's Economy.com Chief Economist
Mark Zandi said on CNBC Nov. 3.

"Without the government, the
consumer would be pulling back," Zandi said. "By early next year job
losses will abate ... so we will start to see wage and salary growth and
government can begin to pass that baton off [to the private sector].
But it will be a tricky handoff."

Click here to see America's 25 next recovering job markets.