Md. job market flat in May

Unemployment rate rises to 3.8% from 3.5%

employers add just 100 positions

June 17, 2006|By JAMIE SMITH HOPKINS | JAMIE SMITH HOPKINS,SUN REPORTER

Job creation ground nearly to a halt last month in Maryland and unemployment grew, a seeming aberration that economists blamed on labor shortages and rising costs.

Employers added just 100 jobs last month, according to preliminary U.S. Labor Department numbers released yesterday. Unemployment was 3.8 percent, up from 3.5 percent in April - though it remained significantly below the national rate of 4.6 percent. Economists sometimes refer to rates under 4 percent as "full employment."

"There's softness in labor and employment growth, but the economy in general is still strong," said John Hopkins, associate director for applied economics at RESI, Towson University's research and consulting arm. "I find it just a slight bit surprising ... but it's explainable."

It is not unusual for unemployment to bump up and down, particularly when the rate is low, he said. The labor market continues to show "tightness," he said - meaning the supply of available workers is low.

Hopkins had not anticipated tepid job growth because businesses have been telling him things are going well. But he noted that increasing costs - for energy especially - could be holding employers back on job creation as they look for other places to save money.

Another factor: Employers are nervous about what is to come, said Charles W. McMillion, chief economist of MBG Information Services, a business information, analysis and forecasting firm in Washington. The housing market is slowing, and when people buy fewer homes, they have less reason to buy furniture, carpets and services such as inspections, he said.

The past few months have produced relatively lackluster employment gains in Maryland, though April - with a 2,400-job increase - was not nearly as bad as the Labor Department originally thought. In the 12 months ending in May, employers in the state added 30,700 jobs, a slowing pace that is an echo of slowdowns nationally.

"The economy's still doing about as well as the national average," McMillion said.

High energy costs are a particular issue for manufacturers. The sector, already troubled nationwide, continued to shed employment in Maryland. It was down 3,100 jobs over the past 12 months.

The professional and business services sector, a collection of industries such as accounting and engineering, created 6,300 additional jobs over the past 12 months, half as much as the average year-over-year pace in 2005.

Worker shortages seem to be coming into play there. For instance, there is plenty of demand for accountants; there is simply not enough supply, said J. Thomas Hood III, executive director of the Maryland Association of Certified Public Accountants. Firms and organizations that hire CPAs call that shortfall their "No. 1 issue," Hood said.

"There's literally hundreds of jobs that could be filled," he said - and until they're filled, the Labor Department doesn't count them.

Leisure and hospitality added 3,000 jobs over the past 12 months, also a significant slowdown. The sector showed a loss in May, though Hopkins thinks that is weather-related, the result of chilly days that month.

Mary Jo McCulloch, president of the Maryland Tourism Council and the Maryland Hotel and Lodging Association, said June should show an upturn because employers are hiring for the summer. Last year was a "banner year" for tourism, and though she expects growth now, she doesn't expect as much growth as the industry saw in 2005.

In the Baltimore area, unemployment fell on average in April, the most recent month for which local data is available.

The jobless rate was 2.9 percent in Anne Arundel, down from 3 percent in March; 3.5 percent in Baltimore County, down from 3.7 percent; and 2.5 percent in Carroll, down from 2.8 percent. Unemployment remained steady in Baltimore City, at 6 percent; in Harford, at 3.2 percent; and in Howard, at 2.5 percent. Local numbers are not adjusted for seasonal variations.

One measure of the job market - online recruitment activity - showed a small dip in the Baltimore region in May but was better than the same month last year, according to an employment index produced by Monster Worldwide Inc., an online recruitment services company.

jamie.smith.hopkins@baltsun.com

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