Jackson County's jobless rate held steady at a seasonally adjusted 12.3 percent in May, due partially to a shrinking work force.

Jackson County's jobless rate held steady at a seasonally adjusted 12.3 percent in May, due partially to a shrinking work force.

According to the figures released Tuesday by the Oregon Employment Department, of the 101,707 people in the labor force, 12,392 didn't have jobs.

The unemployment percentage was an improvement over the May 2009 figure of 13.2 percent, largely because the number of people in the labor force dropped by more than 500.

"I think employers are really hesitant to add on permanent staff members because they are not sure how strong the recovery will be," regional economist Guy Tauer said. "Soft consumer spending, debt troubles in Europe and the handling of an ever-increasing U.S. budget deficit are making people increasingly nervous and it shows up in the hiring numbers. Employers are waiting to see evidence of a more robust upturn in the economy."

Construction employment picked up 90 jobs over the month, but trails 2009 by 480 positions. Manufacturing added 40 jobs over the month, a rare increase in this sector that experienced deep losses during the recession and is down 230 payroll slots from a year ago, Tauer said.

In some quarters, however, manufacturing inventories have declined enough to warrant increased production, either adding hours to the workweek or causing companies to recall laid-off workers.

"There is cautious optimism, which beats pessimism," said Medford Fabrication President Bill Thorndike. "Most of us are starting to see our backlogs improve a little bit. The retailers — Lowe's, Home Depot, everyone — wound back their inventories. You're seeing replenishment of inventories, which were slashed tremendously; Boise is running its mills pretty full time right now."

The lingering question, however, is can the recovery be sustained?

"Is there enough backlog to really justify bringing people back full time or are we at a cautionary point where it's better to use overtime to meet demand until you know demand is in fact increasing," Thorndike said. "Basically, everyone will say we are through the worst of this most recent recession, but is there another risk out there? If it proves true, we could see the economy back on a negative slope, rather than a positive slope."

Thorndike's said his company's business has been aided by Boise's dryer upgrades and global heavy equipment manufacturer Komatsu's need for parts.

"We're fortunate in this valley that Boise is continuing to invest in newer drying technology, which is helping a lot of folks here locally," Thorndike said. "We're starting to see increasing orders from Komatsu, which had fallen dramatically. It's a reflection of the demand that's starting to pick up nationwide."

As employers and the jobless strain their necks to see around the corner, discussions about so-called green jobs frequently surface.

"The messages are so mixed lately that people just wonder about the next drivers in the economy," Tauer said. "There is a lot of talk about green jobs. One thing I have read is that there is still a lot of stimulus money yet to be spent. At the same time there is criticism that stimulus dollars haven't done a whole lot to create new jobs, especially in the private sector."

Statewide, unemployment is a seasonally adjusted 10.6 percent, while the national figure is 9.7 percent.

In Josephine County, the seasonally adjusted jobless rate in May was 14.5 percent — up from 14 percent in April, but down from May 2009's 15.4 percent figure.

Reach reporter Greg Stiles at 776-4463 or e-mail business@mailtribune.com.