Despite suffering (along with most of the rest of the country) a severe pull back in housing demand that has caused residential construction to stall, the Pittsburg economy appears to be in relatively good health. This observation is based on the fact that the unemployment rate in the Pittsburgh metro area, at 4.0%, is the lowest it has been since the end of 1999.

In contrast to the volatile pattern of employment growth in several metro areas in the South and West, employment in Pittsburgh has exhibited a much slower pattern of growth over the past several years. This slower rate of job creation occurred as the economy underwent a fundamental shift in its key industrial drivers.

Service Sector now the Dominant Source of New Jobs
After being driven by its manufacturing sector for over a hundred years, the service sector has gradually become the dominant source of new jobs. Since 2002, employment in education and health services and professional and managerial services has increased by almost 45,000 jobs, whereas employment in manufacturing has shrunk by almost 15,000 jobs.

Moreover, contrary what many might think, these new service-sector jobs pay quite well. In 2006, per capita incomes in Pittsburg increased by +6.0% year over year versus +5.4% for the country as a whole. With average per capital income at $38,717, almost the same as in Los Angeles, Pittsburgh is ranked 48th out of 363 metro areas in the country.

Upcoming Large Projects
Although there are clouds over the nation’s economic horizon, the outlook for Pittsburgh is somewhat more encouraging in part due to the decision by Westinghouse to locate its nuclear energy campus in fast-growing Butler County’s Cranberry Woods. This facility, once completed, will result in the hiring of 1,000-plus engineers and the relocation of 2,150 existing staff to the new location.

Finally, another contributor to growth over the near term will be construction of the new Children’s Hospital by the Metro Area’s largest employer, the University of Pittsburgh Medical Center.

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