Retail slump hits DC labor market even as Boeing and Amazon push hiring
A worrying sign for the state’s recovery, hiring in Washington stagnated last month amid fears over inflation and consumer spending, even as big players like Boeing stepped up hiring drives.
Washington lost 2,300 jobs in May, the first month in the red since January 2021, according to data released Wednesday by the state Department of Employment Security.
Although May’s numbers are likely to be revised slightly higher in future reports, the overall trend suggests that “you’re probably seeing the economy transition to a slower growth path,” said Paul Turek, an economist at Status at ESD.
Washington’s unemployment rate in May was 3.9%, down from 4.1% in April. The US unemployment rate in May was 3.6%.
Several factors are behind the slowdown, including the absence of the federal pandemic stimulus that had boosted consumer spending and rising interest rates as the Federal Reserve tries to contain inflation, a said Turek. On Wednesday, the Fed announced a 0.75% interest rate hike, the biggest hike since 1994.
As a result, even as Washington saw strong gains from technology and manufacturing employers — Boeing actually overtook Amazon in the number of job openings posted — hiring came in the other way around for employers who rely on consumer spending.
The state’s biggest job losses came in retail, which shed 6,600 jobs in May, the most since the first big pandemic-related layoffs in April 2020.
A slowdown in retail often signals a drop in consumer confidence as “people make adjustments due to rising prices,” Turek said.
Retailers’ woes were also reflected Wednesday in the federal government’s monthly report on retail and foodservice sales for May, which fell 0.3% from April.
“The retail sector has been rocked by shifts in buying and location habits since the pandemic,” said Jacob Vigdor, an economist at the University of Washington Evans School of Public Policy who has studied markets. state and local labor. “A stroll through downtown Seattle is all you really need to conclude that this area has yet to find its new normal.”
Although tourism and foot traffic in downtown have increased steadily in recent months, downtown offices are still only one-third full, according to Placer.ai cellphone location data released by the Downtown Seattle Association.
Significant job losses were also recorded by professional and business services firms, which shed 3,800 jobs in May. The decline could be a sign of the accumulated economic damage caused by the pandemic, supply chain disruptions, labor shortages and now inflation and war in Ukraine, Vigdor said.
Given that many professional and business services firms are highly dependent on contracts from other firms, the sector “can be a good leading indicator of whether the business community as a whole is optimistic or pessimistic,” added Anneliese Vance. -Sherman, Regional ESD Economist who covers the Seattle Region.
While a single month’s job losses may be an outlier, Vance-Sherman said, “this is an area I’ll be watching closely over the coming months.”
Another mixed result: Leisure and hospitality businesses added more jobs than any other sector – 2,400 – but are still nearly 22,000 jobs, or 6%, below pre-employment levels the pandemic.
The May jobs report had some bright spots. The state’s tech industry continues to create jobs. And manufacturing continues to rebound.
Boeing is trying to add so many engineers and machinists that the company actually posted more job openings statewide than Amazon did from February through May (26,759 to 19,290) to take the top spot on the state’s employer demand chart.
Boeing has also stepped up its efforts to keep existing workers. According to the workers’ union, the Society of Professional Engineering Employees, engineers and technicians have seen their raises, retention bonuses and other compensation increased. This year, workers represented by SPEEA received $21 million in raises, about $15 million more than union contracts require, the union said.
“Boeing is doing everything it can to retain engineers and technical talent.” said SPEEA spokesman Bill Dugovich.
More broadly, despite May’s losses, the state’s labor market is still relatively healthy. The total labor force is larger and the number of people receiving unemployment benefits has fallen slightly. The unemployment rate of 3.9% in May is the same as it was just before the pandemic.
But the potential for a recession remains high if the Federal Reserve’s efforts to rein in inflation by raising interest rates hit the economy too hard, Turek said. This would mean pain not only for slowing sectors, such as retail, but also for sectors that are still doing well.
If a global recession hits, he said, “people will stop buying airliners.”
Seattle Times aerospace reporter Dominic Gates contributed to this article.