Labor market conditions improved in the District of Columbia in July, according to the latest labor market report. Payroll employment rose by 3,400 jobs and the unemployment rate continued to decline. Private employment increased by 2,700 with gains relatively widespread across sectors. The household survey indicated continued improvement as the unemployment rate declined for a fourth consecutive month and for the 10th time over the past year. At 8.9 percent, the unemployment rate was 1.6 percentage points lower than its recent peak of 10.5 percent in August 2011.

Looking at the payroll numbers more closely, the July increase was relatively broad based. Employment gains were largest in the educational services sector, which added 1,900 jobs for the month. Over the past three months, education employment has experienced a net increase of 3,300. There were also sizeable increases in leisure and hospitality, government, and other services, accompanied by more moderate gains in construction, and trade transportation and utilities. Health care jobs declined moderately (by 600 jobs), while employment in information, financial activities, and professional and business services also declined slightly. Within professional and business services — an important sector for the District of Columbia — there was a moderate gain in professional, scientific, and technical services of 700 jobs that was offset by losses in administration, waste management and remediation; and other business services. The year-over-year change in total payroll employment in July increased to 1.4 percent from 1.0 percent last month — equal to the national rate. Growth in private sector employment was more robust, with private sector jobs increasing by 2.7 percent over the past 12 months, well above the 1.8 percent rate for the nation as a whole.

The results of the household survey indicated continued improvement in the labor market in July. The unemployment rate fell two tenths to 8.9 percent, declining 1.6 percentage points since August 2011. The number of unemployed in the survey declined in each of the last 11 months, while the number of employed increased in each of the past 12 months. Unlike recent months however, the size of the labor force edged lower in July after four consecutive increases. As a result, the labor force participation rate edged down to 67.6 percent from 67.8 in July, but remained well above its recent low of 66.5 percent in July 2011.

Overall, both surveys indicated continued improvement in the District of Columbia's labor market. Despite ongoing concerns about anticipated cutbacks in federal spending, there has yet to be a significant restraint on job growth in the private sector. However, at 8.9 percent the unemployment rate remained elevated, indicating a very weak labor market for District residents. In addition, the level of claims for unemployment insurance also remained elevated and considerably higher than during the recession. So, despite significant improvement over the past 12 months, labor market conditions remained weak and the outlook for the near term was still uncertain.