Washington region's unemployment rate rises to 6 percent in May

By V. Dion Haynes
Washington Post Staff Writer
Thursday, July 1, 2010; A12

The Washington region's unemployment rate rose to 6.0 percent in May from 5.9 percent the previous month, according to federal government data released Wednesday, illustrating for some experts a slowdown in the hiring surge seen earlier this year.

While job growth remains sluggish nationwide, economists have seen hopeful signs this spring of a labor market recovery in the D.C. area. The region's jobless rate, which peaked at 6.9 percent in January and February, has been falling faster than economists had projected. The District, Maryland and Virginia have all reported net employment gains, adding private-sector jobs faster than other parts of the country.

But in May, experts said, some local employers began putting the brakes on hiring as global financial markets tumbled on fears that economic recovery was faltering.

"The improvements [in hiring] we saw early in the year perhaps will not be sustained through the end of the year," said Sara Kline, associate economist at Moody's Analytics, who studies the Washington region. "We're seeing a pause in the recovery."

Accelerated hiring in early 2010 drew long-term or so-called discouraged unemployed people back into the labor force to resume their job search. In the first few months of the year, the growth in jobs was able to absorb many of those people, experts say, and the unemployment rate dropped.

But when hiring slowed, the trend on the unemployment rate reversed.

"Don't interpret [the higher unemployment rate] as more layoffs," said James Diffley, senior director of IHS Global Insight's suburban Philadelphia office. "People are saying, 'I'm looking for work and don't have it now.' " When they don't get hired, he said, they "push the unemployment rate up."

Beyond concerns about the broader economy, D.C. area employers were also more cautious about the federal government's moves away from contracting out work.

"Clearly, expectation was being created both by the federal government and the government contractor community about current or future [job] opportunities," said Alan Chvotkin, executive vice president and counsel for the Professional Services Council, a trade association representing government contractors. "Some may not be as real as anticipated, and there may be a mismatch between expectations and actual jobs available."

Despite the slight uptick in unemployment, the D.C. region continued to outperform most of the nation, according to the government data, and compared with May 2009, the area's jobless rate of 6.0 percent was unchanged.

The not-seasonally adjusted U.S. unemployment rate in May was 9.3 percent. In more than two-thirds of the 372 metropolitan regions, unemployment for the month was higher than it was the year before. About one-third of the regions had rates of at least 10 percent.

El Centro, Calif., had the nation's highest regional unemployment rate in May, at 27.5 percent. Bismarck, N.D., had the lowest rate, 3.1 percent.

On a year-to-year basis, the Washington region experienced net gains in several sectors in May, including retail, which added 8,600 jobs; professional business services, which added 4,100; and government, which added 13,900.

Gains "are fairly broad-based, they aren't just in government," said Morris Segall, president of SPG Trend Advisors in Baltimore. "Clearly, from Arlington to Bethesda, this is one of he strongest employment zones in the country."

Still, other sectors continued sliding, including construction, which lost 6,500 jobs; information, which lost 5,000; and financial, which lost 3,800.

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