D.C. area unemployment rate rises to 5.5 percent

The unemployment rate in the Washington region rose in June from 5.4 to 5.5 percent, the Labor Department reported Tuesday. Although it marks the highest level of joblessness the region has posted in more than a year, it came as the area added 44,400 jobs since June 2012.

While the government sector added 4,300 jobs, there was some indication that automatic federal spending cuts might be beginning to take a toll on the local labor market. The federal government subcategory shed 6,200 positions, the steepest loss in this category since the one-year period that ended September 2012.

James Bohnaker, an associate economist at Moody’s Analytics, said the federal belt-tightening that began before the sequester had many federal workplaces extending incentives for early retirement.

“That effect looks like it’s intensifying now, just because there’s been a pay freeze in place and some workers are worried that there may be layoffs in the future,” Bohnaker said.

The professional services sector, which includes the area’s legions of government contractors, added 10,000 jobs. It’s a modest gain for an industry that employs some 718,000 local workers, but the increase is consistent with what was seen prior to the onset of sequestration. Analysts say this could be because many of these companies are working on contracts that were secured long before the cuts went into effect.

The region’s largest job growth came from the leisure and hospitality industry, which gained 13,700 jobs. The retail sector added 2,900 positions.

“Those are all really good signs that the private sector is holding up well and that people are spending money,” Bohnaker said.

Still, jobs in the retail and hospitality industries tend to be relatively low-paying, suggesting that they won’t give as much of a lift to the long-term health of the local economy as professional jobs would.

Other sectors that posted job gains include education and health services, which added 9,300 positions, and financial activities, which added 5,700 positions.

The information sector lost 1,900 jobs; the manufacturing industry shed 100.

The Labor Department releases seasonally adjusted unemployment rates for metropolitan areas, allowing those figures to be compared on a month-to-month basis. The numbers of job gains and losses are not seasonally adjusted, so those numbers can only be compared year-over-year.

The region’s unemployment rate is significantly lower than the national one, which hovered at 7.6 percent in June as the economy added 195,000 jobs. The Labor Department is set to release a report Friday on the nation’s unemployment situation in July.

Unemployment rates fell in 272 of 372 metropolitan areas in June. Rates increased in 73 areas and were unchanged in 27.

The nation’s highest jobless rate, 31.8 percent, was recorded in Yuma, Ariz. The lowest rate, 2.8 percent, was posted in Bismarck, N.D.

Sarah Halzack is The Washington Post's national retail reporter. She has previously covered the local job market and the business of talent and hiring. She has also served as a Web producer for business and economics news.
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