The Washington area saw an annual increase of 47,000 jobs in May — the biggest jobs month in more than a year — even as the number of federal government jobs shrank in anticipation of spending cuts.
The increase is largely driven by suburban Maryland and Northern Virginia, which both saw big gains in May compared with the prior year. Northern Virginia saw its largest jobs increase — 27,500 jobs over last May — since March of 2011. The Maryland suburbs saw its biggest leap for any month since February of 2011 with 12,500 more jobs.
Anirban Basu, CEO of Sage Policy Group in Baltimore, said the burst is likely due to more work for private contractors doing work for the federal government, most of whom are located in the suburbs. But he added that the slowdown in federal employment — the region lost 3,400 federal jobs from May 2011 — should serve as a warning.
| Private employers driving economy | ||||
| Total jobs last month increased over May 2011 | ||||
| Sector* | D.C. | Md. suburbs | N.Va. | Region |
| Financial | 100 | -400 | 4,700 | 5,500 |
| Construction | 1,200 | -500 | 1,100 | 5,500 |
| Leisure & hospitality | 2,500 | 200 | 8,400 | 11,600 |
| Retail | 200 | 1,400 | 1,700 | -3,800 |
| State & local gov’t | 200 | 4,900 | 4,000 | 6,700 |
| Education & health | 9,400 | 3,600 | 2,700 | 16,600 |
| Federal gov’t | -3,300 | 900 | -500 | -3,400 |
| Professional & biz | 300 | 3,400 | 4,100 | 7,100 |
| TOTAL | 12,700 | 12,500 | 27,500 | 47,000 |
| *Not all sectors included on chart (Source: George Mason University Center for Regional Analysis) | ||||
“It would appear the federal agencies are becoming defensive again as we approach 2013, and I suspect that may translate into slower job growth for the suburban areas for [the rest] of the calendar year,” he said.
That seems to be playing out first in the District, which is still adding jobs but at a less dramatic rate than its neighbors. In fact, the city’s gain of 12,700 jobs over last May is the second-smallest annual increase for any month since July 2011.
In addition, the regional drop in federal employment is almost entirely limited to the District, which lost 3,300 federal government jobs.
Basu said the losses are likely due to agency directors making cuts in anticipation of the federal spending cuts that are slated to automatically kick in next year.
“We saw something similar during the period of the debt ceiling issues last summer when agency heads became much more cautious in spending prior to the early August resolution,” he said.
Fitzroy Lee, chief economist for the D.C. Office of the Chief Financial Officer, said those federal employment losses have the city’s financial planners bracing for impact next year. The office is projecting a roughly $40 million decrease in income tax revenue in 2013.
“For us, the biggest risk is what’s going on with the federal government over next couple of years,” Lee said. It’s the biggest employer and keeps these office buildings occupied for the most part. … We have to be cautious looking forward.”
On the upside, health and education service employment is soaring regionwide, led by 9,400 new jobs in D.C. compared with last May. The hospitality industry is also making big gains, mostly in Northern Virginia, which saw 8,400 new jobs over the year.
