D.C. area job market is gloomier in crucial government and contracting sectors

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The pullback in federal spending appears to be weighing more heavily than before on the region’s job growth, with a fresh round of Labor Department data showing a tepid market for new hires.

Virginia shed more than 5,000 jobs between February and March, while the District neither added nor lost any positions. Maryland saw only slight overall job growth last month, gaining 2,300 positions.

Overall, the Washington metropolitan area, which includes the District and its suburbs, added a meager 5,500 jobs in the one-year period ended in March. That’s some of the weakest job growth seen here since the recession.

“2014 is very much setting up to be a lackluster year for the Washington area economy,” said Anirban Basu, chief executive of Sage Policy Group, a Baltimore economic consulting firm.

The industries suffering the most are those that have traditionally been among the strongest in the region. The professional services sector, which includes many government contractors, lost 11,500 positions for the one-year period ended in March, while the federal government category fell 11,400. These sectors not only make up the largest shares of the local workforce, but they also tend to include relatively high-paying jobs.

Many analysts had thought the local job market would pick up steam this year after Congress reached a deal on the federal budget, giving agencies and contractors a heightened sense of clarity about spending. But so far, there’s been little evidence that that has translated into any hiring in those industries.

“It’s the same old stuff,” said Stephen Fuller, director of the Center for Regional Analysis at George Mason University. “The feds aren’t buying yet; the consequences of the sequester are continuing and accumulating.”

Paul Villella, chief executive of Reston-based staffing firm HireStrategy, said he has noticed this inertia in the kinds of job openings that are coming on the market.

“What we’re seeing this year in general is growth in employment opportunity in the commercial sector — moderate, not fast-paced,” Villella said. “But it is counteracted, in essence, by the slowdown in federal government contracting.”

Meanwhile, smaller sectors aren’t seeing especially robust growth that could make up for weakness in the area’s core industries. The region’s top source of job growth continues to be the leisure and hospitality sector, which added 8,800 jobs. Economists note that these tend to be low-wage positions, so they typically don’t add the kind of jolt to the economy that a higher-paying job might.

Other chief sources of growth include the health services sector, which added 8,300 jobs, and retail, which added 5,600. But even these job gains are not enough to push the regional economic recovery into higher gear.

“We’ve got to wait for another groundswell, and I don’t know where it’s going to come from,” Fuller said.

Fuller had previously predicted the construction industry might be a fresh source of growth this year, but with just 700 jobs added in the one-year period ending in March, that seems less likely.

“The building sector isn’t quite dead in the water, but it didn’t quite deliver in the first quarter,” Fuller said.

The Washington region also didn’t stack up favorably in March when compared to other major metropolitan areas. Of the nation’s 15 largest job markets, only Detroit and Philadelphia added fewer positions and had slower growth.


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