July was not a good month for West Virginia's labor market, but there were signs that the worst may be over. On the bleak side, the establishment-based measure of total nonfarm employment (seasonally adjusted) continued to fall, marking the sixth straight monthly decline since nearly returning to its pre-recession level at the beginning of this year. Even worse, the state’s unemployment rate, based on estimates of household employment, not only rose for the third straight month, but also experienced its largest single monthly increase since the closing stages of the last recession. Yet, for all that, July was as much a victim of revisions to June’s employment numbers as it was of the weakness in July's preliminary numbers.

After recovering nearly all of the 25,000 jobs lost during the Great Recession by the start of this year, West Virginia's labor market lost over 8,000 jobs since January, or essentially all of the gains achieved over the second half of last year. Of course, recoveries seldom occur without some interruption in employment gains. The state's labor market lost 1,300 jobs during a mid-year swoon in 2010 and shed 7,000 jobs in mid-2011 before resuming its upward trend. So, even if the losses so far this summer are greater than during the previous two summers, they are not without some precedence. Moreover, the job dip in July was the smallest decline of the year to date — only 500 jobs, compared to the 2,300 lost in June (which was roughly twice the size of the preliminary estimate in the June report). Even with possible revisions to July's employment numbers, July could be the start of the bottoming-out phase of this year’s mid-year slump.

Another hopeful sign in the July data was that most of the weakness in the preliminary employment numbers was in the government sector, while private sector jobs were relatively unchanged. In June, private sector employment losses were initially estimated at 1,600 jobs, but were revised to a modest gain of 100 jobs — a significantly more positive revision. Among the main beneficiaries to that revision were the trade, transportation, and utilities industry and the leisure and hospitality industry, with each being revised upward by at least 500 jobs. In July, private sector employment was down about 200 jobs, with most of the weakness coming from the manufacturing and the trade, transportation, and utility industries (losing 400 and 700, respectively). In contrast, the government sector was initially estimated to have gained 400 jobs in June, but was revised to a loss of 2,400. In July, the government sector added another 300 to the loss column. Interestingly, in both months, local government accounted for the bulk of the sector's job losses.

Putting the rise of the state's unemployment rate (from 7.0 percent in June to 7.4 percent in July) in the context of the employment changes in June and July and of the leading role played by local government in job losses makes that jump somewhat less threatening than perhaps it first appeared. Hopefully, July's employment report is signaling that the labor market will soon be firming — just as it has in the past two years, following a brief period of weakening in late spring or summer.