The latest employment report gave mixed signals for the District of Columbia labor market. In the establishment survey, payroll employment increased by 1,800 jobs; however the increase resulted from gains in just a few sectors. In the household survey, the unemployment rate rose by two-tenths to 8.5 percent. This was the first increase in the unemployment rate since July 2011 when the unemployment rate rose to 10.5 percent. Since then, the unemployment rate was on a relatively steady decline until last month.

Looking at the payroll numbers more closely, the December increase in payroll employment resulted from gains in just a few sectors. Professional and businesses services and other services registered the largest increases (1,700 and 1,200, respectively). Natural resources, mining, and construction, and financial activities had more moderate gains (500 and 400, respectively). Offsetting those increases was a sizeable decline in education services of 1,600 and modest losses in most other sectors such as trade, transportation and utilities; retail trade; information; and government.

In 2012, total payroll employment declined by 2,100, or 0.3 percent. Private payroll employment was essentially flat for the year, posting a modest increase of 600 jobs, or 0.1 percent. The decline in 2012 was fairly widespread across industries. The largest decline was in government payrolls, which fell by 2,700 for the year, as well as in leisure and hospitality, and professional and business services, which lost over 1,000 jobs each. The health care sector remained strong in 2012, however, gaining 2,100 jobs. Other services and construction posted notable gains for the year while financial services jobs edged slightly higher. All other major industry sectors registered losses.

The headline number from the household survey indicated that conditions worsened in the District in December. The number of unemployed increased for the first time since mid-2011, by 700, and the unemployment rate posted its first increase since mid-2010, rising two-tenths to 8.5 percent. However, the number of employed workers in the survey increased by a sizable 2,900 workers, the sixteenth consecutive monthly increase. The number of employed workers has increased by 3,400 over the past four months. With the large increase in the labor force in December, the labor force participation rate rose by 0.6 percentage point to 69.7 percent. It has increased by 2.2 percentage points over the past four months.

Overall, the surveys painted a mixed picture of the labor market for December. The unemployment rate rose by two-tenths as the number of unemployed workers increased. However, the number of employed workers in the household survey increased notably for a fourth consecutive month and payroll employment posted a solid increase. Growth in 2012 appears to have been impacted by actual and anticipated cutbacks in federal spending. Government payroll employment decreased last year and there was essentially no job growth in the private sector over the year. Notably, professional and business services employment, a key sector for the District labor market, declined in 2012. Given the ongoing uncertainty regarding federal spending, it seems likely that labor market conditions within the District will remain weak and the outlook for the near term uncertain.