The Washington area’s unemployment rate rose in July to 5.6 percent from 5.5 percent, the Labor Department reported Wednesday, as greater job losses in the federal government pointed to the effects of government spending cuts on the local job market.
The federal subsector shed 7,600 positions between July 2012 and July 2013, the steepest decline in any one-year period in at least a decade.
The professional services industry, which includes the area’s throngs of government contractors, gained 8,700 jobs. But that’s a relatively paltry uptick for an industry that employs 716,000 workers in the region and is the backbone of the local economy.
“The Washington metro area economy is now very much on the defensive. And economic actors, instead of acting boldly, will act more cautiously,” said Anirban Basu, chief executive of Sage Policy Group, a Baltimore economic consulting firm.
Despite the lackluster performance in those two categories, the data did contain some reasons for optimism. The Washington area added 50,600 jobs between July 2012 and July 2013, its largest year-over-year gain since September 2011.
The financial sector gained 7,700 jobs, its biggest increase in any one-year period since 2002-2003. For those gains, analysts credit a pickup in business at real estate firms as the housing market gets back on track.
The greatest job increases — once again — came from the leisure and hospitality sector, where 15,200 jobs were added amid an explosion of new restaurants and bars around the region. The job growth in this sector offers something of a mixed signal about the health of the local economy. That businesses in this sector are hiring likely means that consumers are shelling out dollars at these establishments. But the positions in this industry often don’t pay well, especially compared with the professional jobs that have traditionally been the stronghold of this economy.
The second-largest gains came from the education and health services industry, which added 11,100 positions. Other sectors that saw increases include retail, with 5,800 more jobs, and information, with 200 more jobs.
The construction sector shed 1,800 positions.
Even with sequestration’s drag, the Washington region’s unemployment rate remains far below the national figure, which dipped to 7.4 percent in July. Still, the trajectory here has not been favorable. While the unemployment rate has been steadily ticking down at the national level, it has been creeping up in this area since April.
“There’s enough noise in the economy that is negative, that what we’re seeing here is an economy that doesn’t have direction,” said Stephen Fuller, director of the Center for Regional Analysis at George Mason University.
The unemployment rate dropped in 320 of 372 metropolitan areas in July. It rose in 38 areas and held steady in 14. Yuma, Ariz., recorded the highest jobless rate (34.5 percent), and Bismarck, N.D., had the lowest (2.5 percent).
The Labor Department releases seasonally adjusted unemployment rates for metropolitan areas, which allows those figures to be compared month to month. The data on job gains and losses are not seasonally adjusted, so those figures must be compared year over year.