Maryland's unemployment rate declined in August as payrolls grew, but the growth was weaker than in some previous months, signaling a possible retreat of this spring's hiring surge.
Employers added 2,700 jobs last month, while the unemployment rate fell to 5.1 percent from 5.2 percent in July, the Labor Department reported Friday
In the long term, economists expect the state's economy to grow. Strong hiring this spring lifted Maryland's numbers, keeping the state's year-over-year job creation rate in August at about 2 percent for a second month — roughly on par with the nation after months of lagging behind.
"There was some month-to-month volatility, but when you do the year-to-year calculations, Maryland's economy is gaining some traction," said Mekael Teshome, an economist with The PNC Financial Services Group.
The public sector powered Maryland's job creation in August, with government contributing 5,400 new positions.
The education and health services sector also gained 3,900 jobs, many of them in health care and social assistance fields, while the financial activities sector added 1,600 jobs. Friday's release also revised Maryland's job gains in July to 9,700 — 500 more than originally reported.
Other sectors reported losses. The professional and business services sector shed 4,200 jobs, while leisure and hospitality businesses cut 3,100 positions, and construction employers cut 1,200.
Government hiring likely was driven by colleges and local school districts gearing up for the school year, said Daraius Irani, chief economist for Towson University's Regional Economic Studies Institute.
At the same time, he said, government contractors — who fall into the professional services category — may be hedging their bets amid budget debates in Washington, dropping jobs as the end of the federal fiscal year approaches and contracts expire.
The other private-sector cuts are harder to explain, he said. The number of people working or looking for work — often interpreted as a sign of confidence in the labor market — also declined by about 900, after many months of expansion.
"We had a big boom up through June, but since then we've been steadily shedding a few jobs here and there," Irani said. "The sort-of slowdown in private-sector job creation is cause for concern."
Maryland's labor market lagged behind the rest of the nation last year, a fact many attributed to the effect of fiscal belt-tightening in Washington in a state reliant on the government to drive business.
Some companies have started to transition away from the public sector.
This summer, Orsa Corp., a small Aberdeen-based military contractor founded in 2002, began marketing its research and analysis services to private and nonprofit clients, after shrinking its workforce by about half since 2009 as competition for defense dollars intensified.
President William Yeakel, a former operations analyst for the Army, said he now hopes to be able to add employees to the 10-person workforce, as new customers, still uneasy in today's economy, seek out the cost-saving operations research and analysis his team provides.
"We will continue to work and compete for projects and try to provide whatever services we can that are of value to the government but that will not sustain us," he said. "Our analysis suggests that a lot of businesses are sort of on the fence. That tells me they're looking for opportunities to continue to save."
Economists have been watching global conditions closely, as cracks in China's growth have appeared and a strengthening dollar makes American exports more expensive. This week, the Federal Reserve held off on raising interest rates in a nod to continued weakness.
But much of the U.S. recovery right now is driven by internal factors, economists said.
Maryland was one of 29 states to see its unemployment rate decline last month and one of 32 to report job gains. The national unemployment rate was also 5.1 percent in August.
"The fears are there, they'll create volatility, they'll make it uneasy, but ultimately I expect our economy to keep pressing forward," Teshome said. "Going into 2016, we should be at about cruising speed."
Gettle Inc., a Pennsylvania-based contractor that provides electrical and related services, has roughly doubled the number of employees tied to its Baltimore-area office since buying the assets of a Maryland firm last year.
The company, which moved to a larger office in Hunt Valley this week, hopes to grow from 52 area employees to 75 in two years, said George Buss, Gettle's president and CEO. Overall, the firm employs about 270 people.
Buss said building projects have increased, but customers remain focused on the bottom line, making business development important.
"There's plenty of work out there to be had," he said, "but the competitiveness and the margins we're experiencing to be awarded that work is as tight, if not tighter, than it's ever been."