Maryland Survey of Business Activity

The latest labor report offered mixed signals regarding the direction of Maryland's labor market in November. In the household survey, the state's unemployment rate continued its downward trend over the last three months, edging lower by one-tenth to 6.6 percent. In the establishment survey, however, payroll employment declined by 3,100 with declines widespread across industries. Private employment declined for the first time in three months.

Looking at the payroll numbers more closely, the decline in employment was fairly widespread across industries. Retail trade experienced the largest decline in November, losing 3,100 jobs, followed by sizeable losses of 1,700 jobs in accommodation and food services and 1,100 jobs in both local government and other services. Within the government sector, the loss in local government positions was offset by an increase in federal and state workers of 700 and 1,300, respectively. As a result, total government payroll employment rose by 900 for the month. Private payroll employment fell by 4,000 jobs after exceptionally strong gains in September and October. The sectors that experienced increases in employment were health care, by 2,300, and educational services, by 1,200, along with a moderate gain in natural resources, mining, and construction. The year-over-year percent change in total payroll employment declined to 0.6 percent — less than half of the 1.4 percent rate for the nation. Private employment growth was higher at 1.1 percent, but still considerably below the national year-over-year rate of 1.8 percent.

The household survey indicated a notable improvement in labor market conditions for a third consecutive month. The unemployment rate declined one-tenth to 6.6 percent and is now half a percentage point lower than its recent high of 7.1 percent in August. Over the past three months, the labor forced increased by 32,400 workers. There were 45,200 newly employed workers and a decline of almost 13,000 unemployed. As a consequence of the increase, the labor force participation rate increased by five-tenths over the past three months to 67.5 percent.

The latest results of our Maryland Survey of Business Activity suggested weaker conditions in the labor market in December. Fifteen percent of respondents indicated that they expanded their workforce for the month while 22 percent shed workers. This was the first time that more respondents indicated that they lost workers than added them since January 2011. The number of firms expecting to expand their workforce over the next six months improved, however, to 31 percent in the December survey from 26 percent in November.

Overall, the mixed signals muddy the outlook for the Maryland labor market. The labor market reports from March through August this year indicated that the market was very weak — with losses in employment and a rising unemployment rate. The labor reports for September and October were very positive and in stark contrast to those earlier in the year and seemed to contradict the prevailing concerns about the potential impact of sequestration on the state economy. While the labor market continues to improve, until there is greater clarity regarding fiscal policy and its potential impact on the state economy, the pace of improvement in the labor market will likely remain uncertain as well.