The number of jobs in Washington state fell in May, a sign that the recovery in the state is still struggling. Even as companies such as Boeing ramped up their recruitment efforts, concerns about inflation and consumer spending were cited as the factors that kept the hiring slowdown.
According to data released by the state's Employment Security Department, the state lost over 2,000 jobs in May. It was the first time since January 2021 that the state has experienced negative job growth.
Although the data for May will likely be revised upwards, the overall trend suggests that the state's economy is slowing down. According to Paul Turek, the state economist, the shift in the economy's trajectory suggests that it's likely that the recovery will be slower than previously expected.
Growth in tech, loss in retail
Turek noted that the various factors contributing to the slowdown include the absence of the federal stimulus program and the rising interest rates. On Wednesday, the Fed raised its key interest rate by a quarter-point, the biggest increase since 1994.
Despite the positive effects of the Fed's actions, the hiring slowdown continued in Washington state. Even though tech and manufacturing companies could boost their recruitment efforts, hiring individuals relying on consumer spending was slower.
The retail industry was the most significant job loss in the state in May, with 6,600 positions going down. It was the first major layoff in this sector since the pandemic of April 2020.
Retails struggle to grow
According to Turek, a slowdown in the retail industry usually signals a decline in consumer confidence. He said that higher prices are forcing people to make more informed decisions.
A report released by the federal government on Wednesday revealed that retail sales were down 0.3% in May. This was the second straight month that sales were down.
Jacob Vigdor, an economist at the University of Washington, said that the retail industry has been affected by the pandemic's changes. Vigdor noted that the changes in the shopping patterns and the locations of stores have not yet reached a new normal.
Data from the Downtown Seattle Association revealed that despite the increase in foot traffic and tourism, the number of people using downtown offices is still only a third full.
According to Vigdor, the professional and business services industry lost 3,800 jobs in May. This sector is expected to continue experiencing negative job growth in the coming months due to various factors. Some of these include the pandemic, the supply chain disruption caused by the war in Ukraine, and rising inflation.
Economist Anneliese Vance-Sherman noted that the professional and business services industry can be a good barometer of the optimism of the local business community. It is because many of these firms rely on contracts with other companies.
Tech, manufacturing continue to flourish
Despite the overall job decline, Washington reported that the tech industry was still growing. Also, manufacturing was able to bounce back from the previous month.
Boeing was one of the manufacturing companies to boost its recruitment efforts during the past few months by posting more job openings than Amazon. During that period, the aerospace giant could hire more than 19,300 individuals.
Despite the May job losses, the state's economy is still relatively strong. The total workforce is still larger, and the number of people collecting unemployment benefits is also down. The unemployment rate was 3.9% in May, the same as before the pandemic.