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Oregon鈥檚 employment report for September could be cause for alarm.

While the state鈥檚 unemployment rate was essentially unchanged from August, the construction industry took a hefty hit, losing 1,400 jobs 鈥� 1,600 if adjusted for seasonality. Typically, September produces a gain of about 200 jobs.

However, industry observers pointed out that activity is up for building permits and residential investment.

The state鈥檚 unemployment rate dropped 0.2 points to 8.7 percent last month 鈥� 0.7 percent lower than September 2011, according to the latest report from the Oregon Employment Department. But Bureau of Labor Statistics data indicates that nonfarm employment fell by 7,900 jobs 鈥� 5,500 in the private sector.

The specialty trade sector suffered 1,300 of construction鈥檚 1,400 job losses. Building equipment contractors and foundation and exterior contractors cut back the most, by 600 and 400 jobs, respectively.

But David Cooke, an economist with the state, said people should take the report with a grain of salt.

鈥淥ne thing about employment numbers is it鈥檚 based on a survey of businesses and there鈥檚 a relatively high variance,鈥� Cooke said. 鈥淭hey can get off track fairly commonly by a decent amount and that may be what鈥檚 happening now.鈥�

One reason Cooke suspects the number may be skewed is because building permit activity is up significantly, though it is still only half of what it was during the boom years. According to fresh data from the U.S. Department of Housing and Urban Development, building permits for privately owned housing units jumped 11.6 percent over August to 894,000 on a seasonally adjusted basis 鈥� 45 percent higher than a year ago.

In the Portland-Vancouver, Wash.-Beaverton market, building permits for single-family homes were up 47 percent, compared to 28 percent for the state as a whole, according to a quarterly report that Portland State University鈥檚 Center for Real Estate issued recently. Multifamily permits were also up 93 percent compared to 60 percent for the state.

Housing starts across the nation were also up in September, increasing 15 percent over August to an annual rate of 872,000 鈥� nearly 35 percent more than in September 2011. Oregon鈥檚 numbers were healthy as well.

鈥淭he current quarter is shaping up to be the strongest for single-family starts since the end of the recession, and expectations are for these gains to continue moving forward,鈥� wrote Josh Lehner, a state economist, in a Wednesday blog post on an Oregon Office of Economic Analysis webpage.

Gains in the residential sector generally translate into commercial sector activity, and local contractors are feeling it.

鈥淲e鈥檙e having a hard time finding guys to tell you the truth,鈥� said David Thompson, controller for commercial contractor Current Electrical Construction Co. and a member of the board of directors for the Independent Electrical Contractors of Oregon. 鈥淚t looks to us right now that it鈥檚 picking up; we鈥檙e hiring.鈥�

Thompson said work has been steady for the past six months, but one thing that still causes some sleepless nights is the breadth of his backlog. While it used to stretch out for six months to a year, today it鈥檚 closer to 60 days.

Corey Lohman, president of Emerick Construction, said business is fantastic at the moment, but that much of it is coming from a backlog that it built at the beginning of the year. Not many new projects are coming in, in large part because of a slowdown in the public sector. He is cautiously optimistic about the year ahead.

鈥淲e鈥檝e been very, very fortunate through the entire downturn,鈥� Lohman said. 鈥淲e haven鈥檛 been in a position where we had to cut back staff, but we鈥檙e absolutely not in a position where we need to hire.鈥�

Emerick employs approximately 35 people. It expects total sales volume this year to reach approximately $50 million 鈥� a 16 percent gain over last year.

Cooke said another factor that might be skewing September鈥檚 employment figures is that the last time the numbers were benchmarked against tax data was 15 months ago. The further that reports move away from benchmarking, the less accurate they are, he said.

September鈥檚 survey was based on data from 204 construction companies representing just 9 percent of the people employed in the industry.

And while building permit activity has ramped up, there could be a lag before that begins to translate into more construction work. But another positive sign, Cooke said, is that residential investment is also starting to pick up.

On his blog, Calculated Risk, economist Bill McBride predicts a large increase in housing starts and home sales in 2013 while the National Association of Realtors predicts 1.12 million housing starts next year. McBride also anticipates that residential investment will increase from 2.4 percent to 4 percent of the gross domestic product over the next few years.

Meanwhile, Current Electric Construction remains optimistic that backlogs will grow.

鈥淭here鈥檚 always a bit of tension if you run out, but that doesn鈥檛 seem to be the case right now,鈥� Thompson said. 鈥淲e鈥檙e going to be busy through the end of the year.鈥�