Labor market conditions improved in the District of Columbia in September, according to the latest labor market report. Payroll employment jumped 14,200 jobs due to a sharp increase in government employment, while private employment increased by a more modest 2,500 jobs. The household survey indicated continued improvement as the unemployment rate declined for a sixth consecutive month and for the 12th time in the past 13 months. At 8.7 percent, the unemployment rate was 1.8 percentage points lower than its recent peak of 10.5 percent in August 2011.

Looking at the payroll numbers more closely, the September increase in private payroll employment was mostly the result of a sizeable increase in education and health services employment along with more modest gains in other sectors. Educational services employment rose by 1,900 in September while health care and social assistance employment increased by 900 jobs. There were also modest gains in financial services and other services. Partially offsetting those increases were declines in trade, transportation and utilities employment, information sector jobs, and professional and business services employment. Within the professional and business services sector, increases in administration, waste management and remediation jobs were more than offset by declines in professional, scientific and technical services. Total government employment jumped by 11,700, reversing August's decline of 9,900. The swing in government employment in August and September was due to changes in local government. Federal government employment increased in August and September by 700 and 900 jobs, respectively. The year-over-year change in total payroll employment in September stood at 0.9 percent — five-tenths lower than the national rate of 1.4 percent. Year-over-year growth in private sector employment was 1.9 percent, well below the 3.2 percent rate in January of this year and 3.7 percent rate in September 2011.

The results of the household survey indicated continued improvement in the labor market in September. The unemployment rate fell one-tenth to 8.7 percent. The number of unemployed declined for the 13th consecutive month. The number of employed in the survey jumped by 3,600 — the second largest increase in the history of the series. As a result of the unusually large increase in the number of employed, the labor force increased sharply and the labor force participation rate rose by six-tenths to 68.1 percent.

Overall, the surveys painted a positive picture of the labor market for September. The unemployment rate continued to decline and private payroll employment rose moderately. However, at 8.7 percent the unemployment rate remained elevated, indicating a very weak labor market for District residents. In addition, private payroll employment gains over the past six months were modest, in contrast to stronger increases last year. Perhaps concerns about anticipated cutbacks in federal spending have impacted hiring decisions within the District of Columbia. So, despite improvement over the past 12 months, labor market conditions remain weak and the outlook for the near term is still uncertain.