Second Consecutive Report Suggests Improvement in Maryland Labor Market
The latest labor report indicated that the Maryland labor market strengthened notably in October for a second consecutive month. As a result of employment gains across most industries, payroll employment increased by 14,000 jobs. In the household survey, the unemployment rate edged lower by two-tenths for a second consecutive month to 6.7 percent, reversing its upward trend over the previous six months.
Looking at the payroll numbers more closely, the sizable increase in payroll employment was due to gains in the private sector that offset losses in government employment. Private payroll employment rose by 16,700 with widespread gains across industries. This followed an increase of 9,500 in September. The gain of 26,200 jobs over the past two months was a sharp change from previous months. Employment fell in five of the six prior months and increased by just 3,500 from January through August. Among the major industry sectors, the only sector to register a decline for the month was manufacturing, which lost 2,400 jobs in October. Professional and business services, retail trade, leisure and hospitality, and construction registered sizable gains for the month. Financial services, education and health services, and other services experienced moderate increases. Total government employment declined by 2,700 jobs as a result of declines at the federal, state, and local level. The year-over-year change in total payroll employment improved to 1.3 percent. Private payroll employment growth over the last year was slightly higher at 1.7 percent, one-tenth below the national rate.
The household survey indicated a notable improvement in labor market conditions for a second consecutive month. The unemployment rate declined two-tenths to 6.7 percent — partially reversing the steady increase over the past six months from 6.5 percent in February to 7.1 percent in August. The number of unemployed workers decreased for the second time in nine months. The number of employed in the survey increased for a second consecutive month, jumping by 21,000 workers. As a consequence the labor force posted its second monthly increase since April and the labor force participation rate increased by three-tenths to 67.3 percent.
The results of the Maryland Survey of Business Activity have been more positive than the labor market reports in recent months. The latest survey results suggested modest improvement in the labor market in October. Twenty-one percent of respondents indicated that they expanded their workforce for the month while 14 percent shed workers. The number of firms expecting to expand their workforce over the next six months was 18 percent in the October survey — down considerably from earlier in the year when nearly 50 percent indicated that they planned to add workers.
Overall, the labor market reports from March through August indicated that the Maryland labor market was very weak — with declining employment and a rising unemployment rate. The very positive results in September and October were in stark contrast to that trend and ran counter to the prevailing concerns about the potential impact of sequestration on the state economy. Whether or not this is the beginning of a sustained improvement in the labor market remains to be seen.
R. Andrew Bauer