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Washington loses more jobs than it gained, June report shows

August 3, 2011

For the first time in 14 months, the Washington area lost more jobs than it gained, according to a Labor Department report on June unemployment released Wednesday.

The area unemployment rate rose half a percentage point in June to 6.2 percent, the report said, largely because of job losses in the federal government.

Throughout the economic downturn, the Washington region fared much better than most other metropolitan areas mainly because the federal government kept hiring by the thousands as the private sector contracted. Washington avoided plunging as far into the depths of the recession as other regions did and turned the corner on job gains months before any other metropolitan area.

But now, as regions surrounding Dallas, New York, Chicago, Houston and Boston are gaining tens of thousands of jobs on an annualized basis, the Washington area is lagging. It lost a net 2,700 positions from June 2010 to June 2011, according to the report.

The region’s unemployment rate rose from 5.7 percent in May, but the higher rate in June does not mean that unemployment worsened from May to June. Because the numbers are not seasonally adjusted, a side-by-side comparison from one month to the next is not possible.

The June 2010 to June 2011 change, which more accurately reflects fluctuating factors such as seasonal work that occurs in certain months of the year, shows that the area’s jobless rate fell one-tenth of a percentage point — to 6.2 percent from 6.3 percent.

Part of the reason for the drop in jobs from a year ago is the loss of temporary census workers who ended their work for the government in fall 2010. But analysts also attribute the declines to a slowdown in hiring, spurred by the showdown over the federal budget.

Some analysts said they fear the job losses could be a harbinger of what the area will face when the federal budget cuts from the debt-reduction plan are set into motion.

“The federal government was gaining 13,000, 14,000 jobs [on an annualized basis] consistently last year. Now it’s lost its steam,” said Stephen S. Fuller, director of the Center for Regional Analysis at George Mason University. “What gave us early growth last year and made us the fastest-growing metro area looks like our Achilles heel this year. The federal government isn’t going to be carrying the water [for the region] any longer.”

Federal, state and local government in the region posted a net loss of 5,600 jobs from June 2010 to June 2011, according to the report, slightly more than the figure recorded from May to May. The overwhelming majority of the losses can be attributed to the federal government. In fact, the federal government lost 5,700 jobs, offset in the broader category by some gains in state jobs.

Other sectors that experienced net losses were construction, down 6,800 jobs; education and health, down 1,200; information technology, down 800; and leisure and hospitality, down 800.

The sectors that posted net gains were professional and business services, up 11,000 jobs; financial services, up 1,500; and retail, up 300.

But some analysts are concerned that the professional and business services sector, which includes government contracting, also could be hit by the budget cuts.

“We fully expect austerity in the professional services marketplace over the next couple of years. The counterbalance is as government activities shrink and with impending retirement [of federal workers] we may have a significant need for contractors to support agency mission,” said Alan Chvotkin, executive vice president of the Professional Services Council.

“It’s really impossible to begin to speculate where the winners and losers will be,” he added.

The region’s not-seasonally adjusted June unemployment rate was well below the national rate of 9.3 percent, down from 9.6 percent the year before.

The unemployment rate dropped in 224 of the 372 metropolitan regions across the country. It rose in 127 areas and remained steady in 21.

Riverside, Calif., had the highest unemployment rate among the top 49 metropolitan areas — 14.2 percent. Oklahoma City had the lowest among the top areas, with 5.7 percent.

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