Maryland's unemployment rate for July rises slightly to 7 percent

For yet another month, Maryland's unemployment rate inched upward, reaching 7 percent in July, the U.S. Department of Labor reported Friday.

Maryland, however, saw an increase in 800 jobs last month, the first gain since February.

"The fact that the decline ended is certainly good news," said Gus Faucher, senior economist with PNC Bank in Pittsburgh. "You would want to see stronger gains and you would also want to see that they improve over the next few months before you say that the weakness we had in the spring is over."

The state's unemployment has been inching upward. In June it rose to 6.9 percent, from 6.7 percent in May. Scott R. Jensen, Maryland's interim labor secretary, noted that the state's unemployment rate for July is still better than a year ago. It was also below the national average of 8.3 percent.

In July, Maryland saw job gains in professional and business services, leisure and hospitality as well as education and health services. Those were largely offset by losses in the government, finances, manufacturing and construction sectors.

These numbers are adjusted to account for normal seasonal patterns in hiring and layoffs.

The numbers typically are revised. The Labor Department originally estimated that Maryland lost 11,000 jobs in June. That number has been changed, showing the state lost 8,100 jobs in that month.

This has been a volatile year for Maryland employment. The state saw unusually high job growth in January and February when more than 9,000 jobs were added each month, followed by four months of declines, said James Bohnaker, associate economist with Moody's Analytics.

He attributed this swing to mild weather that kept employment in construction, retail and hospitality unusually strong, while those sectors didn't see their normal gains in later months.

"Now that it's worked itself out, [Maryland] will see less volatility in the job growth," he said.

Less volatile, but not robust, he added. Maryland has added 2,500 jobs during the first seven months of this year, compared with 16,300 for the corresponding period a year ago. Bohnaker said he expects the state to see a total gain of 7,000 jobs for the rest of the year.

"That's still pretty weak when it's spread out over five months," he said. "I wouldn't expect more than that. If anything, the risks are on the downside."

PNC's Faucher added that the disconcerting news is that Maryland's unemployment rate rose even though its labor force contracted.

A government survey of Marylanders found that the number of residents employed or actively looking for work in recent weeks dipped last month to 3.078 million, compared with 3.081 million the month before.

"Maryland had more unemployed and fewer people looking for work," Faucher said. "That's not a good indication."

Faucher said Maryland's employment situation has been hurt by the weak economy, loss of government jobs — 1,600 in July alone — and the layoffs of 2,000 workers Sparrows Point manufacturer RG Steel, which filed for bankruptcy in May. On Wednesday, a federal bankruptcy judge approved the auction of the steel plant to a redevelopment firm and liquidation company, which said they would try to find an operator for the mill.

Higher energy prices in the spring, concern over the European debt crisis and worries about the political outlook in the United States have been a drag on job growth in Maryland and across the country, Faucher said.

He does see signs of improvement, though. "The worries over Europe have abated; the housing market is turning around," he said.

Businesses remain cautious about hiring, but at some point they will have no choice but to add employees to keep up with rising demand for their products and services, Faucher said. Increases in worker productivity alone will no longer cut it.

Eric S. Beebe, president of MR Gaithersburg, a recruiter for government contractors, said he's noticed a hesitancy to hire. Businesses are filling midlevel management positions, but have put the brakes on hiring higher-paid senior executives, he said.

Contractors are particularly concerned about the mandated government spending cuts that are scheduled to kick in next year unless Congress acts, he said.

"They're in a wait-and-see mode," he said.