The Cleveland-Akron area lost 2,505 jobs last month, a 0.21% decline from April, according to the Ahola Crain’s Employment Report, or ACE Report.

The report estimates that the seven-county Northeast Ohio region employed 1,174,540 people in May, down from 1,177,045 in April.

The report is based on payroll data from 3,000 employers, gathered by The Ahola Corp., a Brecksville payroll and human services firm.

Cleveland Heights economist Jack Kleinhenz, who developed the ACE Report economic model, said the decline in the May seven-county employment estimate, “while perhaps a bit discouraging, can be an indication that labor markets are tightening.”

He cited a National Federation of Independent Business (NFIB) jobs report from May that found business owners are upbeat about sales and are looking to add staff, but that firms say it’s hard to find qualified workers.

Kleinhenz said two factors are key to the shrinking labor pool.

Northeast Ohio’s unemployment rate fell to 5.1% in April from 6.2% in March, according to data from the Ohio Department of Job and Family Services. That translates into a decline in the jobless of 14,200 people, from 85,900 to 71,700. At the same time, baby boomers are retiring.

To Kleinhenz that suggests that “there are not enough people out of work to go back to work.”

Also, Kleinhenz sees a longer-term upward trend, with regional employment growing by 2,647 in the 12-month period ending in May, though that gain was accomplished by five up months overcoming seven months of job declines. By comparison, national employment has registered 80 straight months of increase.

The greatest loss in jobs came in the goods-producing sector, which includes manufacturing and construction, a loss of 1,655 jobs versus the loss of 850 service sector jobs. That correlates, Kleinhenz said, to recent U.S. Census figures showing that factory orders declined 0.2% in May.

Manufacturing production was down 0.4%, Kleinhenz said, including a 2% decline in motor vehicle output.

“I continue to expect a pickup in the pace of economic activity in the second quarter and modest growth for the remainder of 2017,” Kleinhenz said. “The second-quarter 2017 National Association for Business Economics outlook median forecast calls for average annual GDP growth of 2.2% for 2017 as a whole.”

Seasonally adjusted data

Month	Non-Farm	Small (1-49)	Mid-Sized (50+)	Goods-producing	Service Producing
Dec 2016	1,169,560	476,230	693,330	210,690	958,870
January	1,173,253	477,635	695,618	212,773	960,480
February	1,175,747	478,633	697,113	213,467	962,280
March	1,175,054	478,338	696,715	213,524	961,530
April	1,177,045	479,227	697,818	212,773	964,273
May	1,174,540	478,291	963,423	963,423	963,423