As we approach the second half of 2009, it is clear that the Norfolk/Virginia Beach/Newport News economy is still shrinking. In April, employment was down by 0.8% year over year, equivalent to 6,400 jobs. However, when compared to the country as a whole where employment is down by 3.8% year over year, the metro area’s economic health takes on a much rosier hue.

By far the most important contributor to this relatively stronger, more stable economic performance is the metro area’s strong military presence, led by the Norfolk Naval Station, which employs 84,000, the Northrop Grumman shipyard in Newport News, with 18,000 employees, and the Langley Air Force Base, with a combined staff of 9,000.

Along with the rest of the country, Norfolk has lost construction (-3,000) and manufacturing (-2,500) jobs. However, sustained growth of government (+2,400), and education and health services (+1,800) jobs has helped to offset this weakness.

Existing house prices in Norfolk/Virginia Beach/Newport News have declined less in the first quarter (-8.2% year over year) than in the rest of the country (-13.8%). The relatively stronger pattern of employment growth appears to have helped support housing demand in the metro area compared to the country as a whole.

Based on the most recent Manpower Employment Outlook Survey, which indicated that the Norfolk/Virginia Beach/Newport News job market is expected to be among the strongest in the nation, the metro area’s prospects appear brighter than they were just four months ago. This positive near-term employment outlook is reinforced by the Conference Board, which reported that Norfolk/Virginia Beach/Newport News was one of only three U.S. metro areas to see stronger online help-wanted advertising in April.

While the near term outlook for the metro area has improved, a number of clouds remain on the economic horizon, including the relocation of a nuclear aircraft carrier from Norfolk to the Mayport Naval Air Station in Florida, which would mean the loss of 3,200 sailors and civilian staff. In addition, given the significant rise in both apartment and office vacancy rates, both of these construction categories are unlikely to recovery before mid 2010.

Employment Growth - Norfolk-Virginia Beach VA vs Total U.S.

Data Source: U.S. Bureau of Labor Statistics/Chart: Reed Construction Data - CanaData.