Last week offered the first snapshots of how the Washington region’s labor market is faring in 2013, with the Labor Department releasing its first state-level and metropolitan area employment reports of the year. The agency also released revisions of its 2012 state and metropolitan area jobs data, which help provide a clearer picture of employment last year. Here are four take-aways from this trove of information:
A surprising boost came from the leisure and hospitality sector. Throughout 2012, monthly metropolitan area employment reports mostly reflected a similar pattern: Professional and business services, long the lifeblood of the local economy, added jobs, but not at a fast enough rate to rev the region’s recovery. Growth in that category was consistently surpassed by that of the education and health services industry, which was the area’s largest job creator last year.
But the January report showed a new sector at the top of the heap: The leisure and hospitality sector posted a year-over-year gain of 11,200 jobs, outperforming health services, which added 9,600 jobs, and professional services, which added 8,700 jobs.
Revisions of the 2012 data, meanwhile, cast new light on leisure and hospitality’s role in the region’s recovery. The fresh numbers show that the sector added 9,800 jobs last year, a significant improvement over the 1,800 jobs it was previously thought to have added. The revisions also show that job growth in this industry last year surpassed that of professional services, which added 6,700 jobs in 2012.
Stephen Fuller, director of the Center for Regional Analysis at George Mason University, said the job growth in the leisure and hospitality industry is likely not because of demand from tourists and business travelers. Rather, Fuller said it’s a result of local residents spending their dollars at the region’s leisure spots.
“Pick any place where you know there are restaurants — 14th Street, U Street, the Ballston corridor — they’re full,” Fuller said.
Fuller cautions that jobs in the leisure and hospitality industry don’t tend to be as high-paying as those in professional services, so gains in the former are not likely to fully counterbalance weakness in the latter.
Professional services performed worse than we thought it did. The revised metropolitan area jobs data showed that the professional services sector added 6,700 jobs last year, fewer than the 9,500 jobs that registered in the initial data. The tepid gains came amid tightened government spending, which prompted many local firms to get leaner last year.
Even the original figure did not carry much promise for the local economy; the gains were quite modest for a sector that typically has been a key driver of growth. But the revision means the growth was even more lackluster than was previously thought.
The Washington region is likely going to need more than middling job growth in this industry if its recovery is to accelerate.
“Overall, the professional and business service category is running at about half of what it was running at in good times,” Fuller said.
Financial activities and construction hiring provide reasons for optimism. The region’s financial activities sector added 4,700 jobs from January 2012 to January 2013. That’s the largest gain the sector has seen since in any 12-month period since 2004-2005.
While it’s not a big enough gain to have a deep impact on the local employment market, Fuller said it could be correlated with other causes for optimism.
“That isn’t bank [hiring], and that probably isn’t venture capitalists. It’s more likely to be real estate agents, and it likely reflects the strengthening of the housing market,” he said.
The construction industry posted more modest gains in the same period, adding 1,400 jobs. James Bohnaker, associate economist with Moody’s Analytics, said this might be another sign that the region’s housing market is picking up.
Things are looking up in the District. The District’s unemployment slipped from 9.4 percent in January 2012 to 8.4 percent in December 2012. Indeed, that rate is still significantly above the national rate, 7.7 percent. And it’s higher than the rates in Maryland and Virginia (6.7 percent and 5.6 percent, respectively). But it is the trajectory that is noteworthy: The District’s joblessness steadily ticked downward last year, while Maryland’s and Virginia’s finished 2012 just slightly lower after bouncing up and down throughout the year.
The District’s jobless rate increased slightly in January to 8.6 percent, but Bohnaker attributed the change to more people entering the labor market, a sign that they are perhaps more optimistic about their prospects of getting a job.