Maryland's job growth slowed in December as employers added 900 jobs, according to estimates released by the U.S. Department of Labor on Tuesday.
The modest gain left the unemployment rate unchanged at 4.2 percent, but lower than the national 4.7 percent rate.
The state's labor market decelerated in the second half of 2016, closing the year with an annual growth rate of about 1.1 percent, according to Tuesday's estimates. That lagged behind the national rate of about 1.5 percent.
Some of the slowdown is to be expected in a state where the population is increasing by about 1 percent a year, economists said. But the lukewarm growth likely also reflects uncertainty related to the federal government, which plays a major role in Maryland's economy.
Payrolls in the professional and business services sector, a category that includes temp workers and many government contractors, shrank by 1,400 in December. For the year, the sector's growth was only about 1.4 percent — lower than one might expect, said Ann Macheras, regional economist at the Federal Reserve Bank of Richmond, which oversees Maryland.
She said some contracting firms may have postponed hiring as they faced uncertainty over the federal budget.
"The state kind of is ending with some recent softness in the job numbers even though 2016 started out pretty strong," she said. "I would imagine that's one of the factors."
That effect could continue in the new year, given President Donald J. Trump's recent executive order for a federal hiring freeze for all non-military positions.
"My big concern is the red flag that was raised yesterday with the federal employees," said Daraius Irani, chief economist at Towson University's Regional Economic Studies Institute. "That's concerning for this region because a good portion of our workforce is directly tied into the federal government."
Employers in the trade, transportation and utilities sector made an estimated 3,600 net hires in December, while payrolls in leisure and hospitality grew by 1,300 over the month, according to the estimates, which are adjusted to take seasonal variation into account.
The gains in those areas suggest a solid holiday season, Irani said.
Other sectors reported losses.
Employers in education and health services shed 2,200 positions, while payrolls in financial activities shrank by 900. Manufacturing and construction showed little change.
The government sector shed about 500 jobs, a contraction that reflected declines in state and local government. Employment in the federal government increased by about 1,400.
The numbers may reflect a rush to hire before Trump entered office, Irani said. But he said they also underscore the impact the hiring freeze Trump imposed Monday could have on the state's employment picture, especially as older federal workers retire.
Federal jobs account for about 5.5 percent of the jobs located in Maryland, and even more if you consider state residents commuting to work in Washington.
"I'd be worried about federal jobs going forward," Irani said.
Nationally, average hourly wages have started to rise. But they remained stagnant in Maryland, as many of the new jobs came in lower-paying fields. The average hourly wage for private sector workers in Maryland was about $27.34 in December, down four cents from a year ago.
There were some bright spots in Tuesday's report. The number of unemployed residents fell despite an influx of people into the labor force.
The Evening Sun
Tuesday's release included a positive revision to November's figures, estimating that the state added 2,400 jobs that month instead of 100 as initially projected. The bureau updates the numbers each month as it receives more information from employers.
The Baltimore metro region, which includes Towson and Columbia, lost jobs over the month, but it was the engine of the state's growth in the past year, with year-over-year job growth of about 1.7 percent.
Philly Pretzel Factory, which has four stores in Maryland, is expanding in the region, drawn by the growth, said Tom Monaghan, the firm's chief development officer. It has one franchise under construction in Bel Air and hopes to open more than 20 in the next three years.
Opening a store means hiring 12 to 15 people for a mix of full-time and part-time roles, Monaghan said. About half the jobs typically pay in the $10 to $12 an hour range, he said.
Monaghan said the business, which emphasizes economical pricing, is "recession-proof," but he's optimistic about the business climate.
"We actually are quite bullish on the outlook for the economy going forward because of, quite honestly, the new administration, which we think is going to be very business-friendly, allowing us to make significant investments in people and in opening new stores," he said.