Unemployment up in state as economic growth slows

The monthly jobs report from the state Employment Security Department often is full of seemingly contradictory data, but May's report was even murkier than usual.

The state added 2,100 nonfarm payroll jobs last month but also had 21,200 fewer employed people. The overall number of payroll jobs was up a solid 3.4 percent from May 2005, but the unemployment rate rose to 5.1 percent compared with April's 4.7 percent.

Beneath the confusing headline numbers, there's considerable evidence for a simple conclusion: Washington's surging economy — fueled in large part by the feverish real-estate market — is simmering down.

The 2,100 payroll jobs added in May, for instance, were the fewest since September 2005, when jobs actually fell. April's job gain was revised downward, to 3,900 from 5,200.

Since January, the state has added fewer jobs each month than the month before. On a quarterly basis the same trend holds true: After adding 41,100 jobs in the fourth quarter of 2005 and 33,300 jobs in the first three months of this year, Washington has grown by just 6,000 jobs so far this quarter.

And the unemployment rate, after dropping below 5 percent in the first four months of this year, is now back above that level.

Evelina Tainer, the Employment Security Department's chief economist, cautioned about reading too much into the unemployment rate, particularly since it was 5.2 percent as recently as December.

"I would rather see [a higher rate] confirmed in another month before I'd say we had a problem," she said.

Nonetheless, she said, "The rate of growth we've seen in the past six months was pretty gangbusters, but it wasn't sustainable. The pace we're seeing now is certainly more sustainable."

The unemployment rate is derived from a survey of around 1,300 households, while the payroll figures come from a separate survey of 7,000 to 8,000 business establishments.

For that reason, Tainer said, the household numbers — including the jobless rate — tend to bounce around more than the payroll numbers.

Washington's jobless rate for May was higher than the national average of 4.6 percent but lower than the 5.6 percent Oregon reported Monday.

Adjusting the raw data for seasonal factors, such as weather, holidays and cyclical industries, can also make the data hard to interpret.

Take those 21,200 fewer employed Washingtonians. That statistic comes from the seasonally adjusted household survey, which found that the total labor force fell by 8,300 between April and May while 12,900 more people were unemployed.

The unadjusted numbers, however, showed the labor force actually growing by 200 and the number of people who said they were unemployed rose by 7,100.

No matter how you slice the numbers, though, the state's economy appears to be growing more slowly. A big reason, economists suspect, is the cooling of the Northwest housing market.

Statewide, the housing market in the first quarter was "basically flat" compared with the same period in 2005, said Glenn Crellin, director of Washington State University's Center for Real Estate Research.

While the median price rose 17.1 percent, according to the center, resales were down 0.3 percent and building permits were off by nearly 4 percent.

Though complete data for the current quarter aren't yet available, Crellin said, "it's beginning to look like the second quarter is going to come in a little slower than the second quarter of 2005, but still very active by historical standards."

And John Mitchell, regional economist for U.S. Bancorp in Portland, noted that residential building permits in both Washington and Oregon have dropped over the past four months.

The state's construction sector, which had added a revised 300 jobs in April and 8,500 jobs since the beginning of the year, lost 500 jobs last month — the first construction-jobs losses in a year. Real estate and rental leasing, however, gained 100 jobs in May, on top of the 200 gained in April.

Aerospace continued strong, adding 400 jobs last month and 6,600 over the past 12 months.

Boeing reported that its Washington employment grew by 371 jobs in May to 64,175; virtually all the growth was in the Renton-based commercial-airplanes division.

Professional, scientific and technical services — a hodgepodge category that includes lawyers, accountants, architects and computer-systems administrators — added 1,400 jobs in May and 6,100 over the past 12 months.

Growth in that category, Tainer said, generally reflects the overall health of the state's economy.

And the Northwest's fundamentals remain strong, Mitchell said.

"What we had before wasn't going to keep going, but the direction is still up," he said. "When you've got a [relatively weak] dollar and strength overseas, that bodes well for exports from Washington, and not just aerospace."

Drew DeSilver: 206-464-3145 or ddesilver@seattletimes.com