State jobless rate rises sharply

Unemployment in Washington state took its biggest jump in nearly 28 years last month, as employers cut payroll jobs for the third straight month.

The unemployment rate rose to 5.3 percent in May from 4.7 percent in April, after adjusting for seasonal variations, according to the state Employment Security Department. In the Seattle metro area, unemployment leapt seven-tenths of a percentage point last month, to 4.1 percent.

Both increases mirrored the sharp half-percentage point jump in the U.S. unemployment rate last month. The national rate now stands at 5.5 percent.

May's increase, coming after a three-tenths of a percentage point increase in March, brought the state jobless rate to its highest level since October 2005. While still lower than the national rate, the latest data show that even a relatively healthy economy like Washington's is vulnerable to the nation's economic ills.

"This report may skewer the notion that Washington is immune to the downturn," said Bill Conerly, an economist and business consultant in Portland. "The state has done better than the nation for a number of reasons, but immune — no."

The six-tenths of a percentage point rise was the biggest one-month gain in Washington's jobless rate since June 1980, said David Wallace, the state's acting chief labor economist. Typically, the rate moves up or down just one or two-tenths of a percentage point per month.

"We can't help but be affected by what's happening at the national level," Wallace said.

The glum unemployment news was compounded by the nonfarm payroll report, which showed that job losses were spread throughout most sectors of the state's economy.

Payrolls fell by a seasonally adjusted 2,600 jobs last month. Since nonfarm employment peaked in February, the state has lost 5,000 payroll jobs.

(The payroll numbers are derived from a survey of about 7,500 Washington employers. The unemployment rate comes from a separate survey of 1,100 to 1,350 Washington households.)

Only a handful of industries recorded payroll gains in May. They included software, which added 700 jobs; employment services (including temporary-help agencies), which added 600, and accounting firms and hotels, each of which added 300.

Aerospace gained 600 jobs, but job losses in food-processing, wood-products and other manufacturing industries left the manufacturing sector as a whole unchanged for the month.

Retailers shed 1,100 jobs in May, with more than half those cuts coming at car dealers and clothing stores. Conerly said he was a bit surprised at the retail job losses, since retail sales in Washington had come in strong at least through the first quarter.

Residential construction fell by 900 jobs in May, further fallout from the housing slump; heavy and civil engineering, representing construction work on such things as roads and bridges, lost an additional 300. But nonresidential building continued to show resilience, with a 700-job gain.

Education and health services lost 900 jobs last month, mostly on the education side; government cut 700 jobs.

About 176,060 Washingtonians are now seeking work, according to the department, up from 143,150 in May 2007.

Despite the unpromising jobs numbers, Conerly noted that they're lagging indicators — that is, they say more about where the economy has been than where it's going. He still thinks Washington's strengths — a robust export sector, a relatively mild housing slump compared with the rest of the country, healthy major employers such as Microsoft and Amazon — mean the state will experience "only a minor dip" this year.

"I think the second half of this year is going to look a lot better nationally, and locally as well," he said.

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