West Virginia's labor market improved in October, with gains in private sector employment slightly more than offsetting government job losses. This was a positive change for a state where employment contracted in each of the eight preceding months and private sector employment suffered more than government employment in the past few months. West Virginia's unemployment rate also inched down in October. Despite the improvement, however, the West Virginia labor market remained in challenging territory.

For the first time in nine months, the establishment survey indicated that employment in West Virginia increased on a monthly basis. However, after adjusting for seasonal factors, the 200 additional jobs in October did little to offset the 16,500 net jobs lost between January and September of this year. All of the gains in October were in the private sector as government employment fell by 1,300 jobs. The year-over-year numbers were less upbeat, reflecting the difficulties facing the West Virginia labor market in the past 12 months. Nonfarm employment fell by 1.5 percent over the year ending in October, with employers in the state cutting a net 11,000 jobs.

The monthly employment growth in October was entirely concentrated in the private sector. Not surprisingly, given the small total gain, industry growth varied considerably. The most upbeat reports came from mining and logging, which added 700 jobs, and leisure and hospitality, which added 1,400 jobs. It should be noted that the 700 jobs gained in mining and logging was small compared to the 6,400 jobs lost in that sector since January 2012. In fact, while the industry did the most to boost West Virginia employment in October, it was also the biggest drag on employment over the year, accounting for almost 50 percent of the total year-over-year payroll decline and more than 75 percent of the private sector year-over-year decline. Meanwhile, government employment fell by 1,300 jobs in October — losses that were split between state government and local government. Over the year, the 4,100-job decline in government employment was almost entirely in local government.

Consistent with the improvement noted in the establishment survey, the household survey reported a slight decline in the unemployment rate from 7.6 percent to 7.5 percent in October — the first decrease since April. This news is particularly promising because of the accompanying 1,200-worker expansion in the state’s labor force in October. In other words, West Virginia had fewer unemployed and the new or renewed workers in the state were joining the ranks of the employed.

While the state's unemployment rate compared favorably with the national unemployment rate of 7.9 percent, it was elevated compared to its level at the beginning of 2012, while the U.S. rate has been generally on the (albeit gradual) decline. On the whole, the news was better than in recent months, but the West Virginia labor market has a ways to go to regain the traction lost in the past year.