The local economy saw only meager job growth in its most crucial industries during the one-year period ended in August, according to a recent Labor Department report that offered fresh evidence that federal spending cuts are taking a toll on the region’s job market.
The professional services sector, which includes government contractors, added 1,300 jobs — the weakest growth seen in the region’s largest industry since 2009-2010.
The area’s second-largest sector, government, gained 1,600 jobs. Its federal government subcategory shed 7,300 positions, suggesting that the growth came from state and local government jobs.
“All of this uncertainty for the government, as well as the government contracting firms, is weighing heavily in the local market,” said Paul Villella, chief executive of Reston-based staffing firm HireStrategy. “It hasn’t been a dive off the cliff, but it has been significant, and it’s been brewing for a while.”
Kathleen Smith, chief marketing officer at Falls Church-based ClearedJobs.Net, said her organization has recently noticed an uptick in résumés submitted to its database and has seen stronger-than-usual turnout at its job fairs for workers with security clearances. Smith said those workers face a tough market.
“The standard statement we’re hearing now is that three separate jobs are being put into one person,” Smith said. Often, she added, employers in the cleared world are looking to fill jobs from within instead of looking for outside talent.
The local unemployment rate dipped to 5.5 percent in August from 5.6 percent in July, but the decline reflected a decrease in the size of the labor force. It mirrors what happened with the national labor market in August, when the unemployment rate slipped to 7.3 percent as the labor force participation rate fell to its lowest level in 35 years.
The Labor Department is set to release on Tuesday its report on the national employment situation for September. Economists forecast that the unemployment rate held steady and that job growth was slightly better in September than in August. They expect to see 180,000 jobs added, compared with 169,000 gained the previous month. That report is typically issued on the first Friday of each month, but was delayed due to the government shutdown.
The Washington region added 33,400 jobs overall, with the greatest growth from the leisure and hospitality sector. That industry added 12,300 positions amid a boom in restaurants and bars in the District.
“All of our eggs shouldn’t be in this basket,” cautioned Daraius Irani, director of the Regional Economic Studies Institute at Towson University, because jobs in this sector tend to be low-paying.
The education and health services industry added 8,900 jobs, while financial activities gained 7,900 positions, its strongest year-over-year job growth in a decade. Economists say that the improvement is likely linked to the recovery of the local housing market. As that sector rebounds, it creates a need for more real estate agents and mortgage financiers.
The retail industry added 5,500 jobs.
The information sector shed 1,500 jobs, while the construction industry lost 1,000 positions.
The Labor Department releases seasonally adjusted unemployment rates for metropolitan areas, which allows that data to be compared on a month-to-month basis. The numbers of job gains and losses are not seasonally adjusted, so those figures can only be compared year over year. The August data had been scheduled for release on Oct. 2, but was delayed due to the government shutdown.
Stephen Fuller, the economist who directs the Center for Regional Analysis at George Mason University, said that there likely won’t be another clear snapshot of the local job market until data for November are released. That’s because the 16-day shutdown might have affected workers’ and businesses’ responses to the Labor Department survey.
The recent deal to raise the debt limit and reopen the government provides funding for federal agencies through Jan. 15. It is expected that as that deadline approaches, there will be another showdown on Capitol Hill that is likely include a debate over whether to continue the deep automatic spending cuts known as the sequester.
“This continued uncertainty going into January is not giving anybody any great confidence about spending money and employing people,” Villella said.
Unemployment rates fell in 311 metro areas, rose in 47, and were unchanged in 11. The nation’s lowest jobless rate was recorded in Bismarck, N.D.: 2.4 percent. Yuma, Ariz., had the highest jobless rate: 32.6 percent.