Va. labor market stayed strong in February

Virginia’s labor market remained strong in February, although growth is slowing, according to employment data from the Federal Reserve Bank of Richmond.

Virginia had a net gain of 3,200 jobs in February. The Virginia state government employment was previously 12,000 jobs below the February 2020 level, but the state government nearly halved that deficit last month by adding 6,200 jobs becoming the sector with the largest employment increase. Total private employment fell by about 3,000 jobs, however.

The data pointed to slowed job growth. Virginia had stronger job gains in January, with more than 16,000 jobs added that month.

“The gain in February is considerably less than we saw in January, but it may not be altogether a bad thing for the overall economy and the inflation situation,” Richmond Fed Regional Economist Joe Mengedoth said Friday. “Slower job growth and less turnover should help ease pressure on wages, and then in turn, overall inflation.”

Two private sectors added jobs: Health care added 2,200 jobs, and transportation and warehousing added 1,000, according to Mengedoth. The Virginia Employment Commission adds utilities to its categorization of the transportation sector and counted 1,100 new jobs in trade, transportation and utilities.

The professional and business services, leisure and hospitality, and construction industries shed jobs last month. The administrative and support subsector accounted for most of the 2,600 jobs lost in the professional and business services sector.

In January, the quits rate in Virginia fell to 2.3%, according to preliminary data from the U.S. Bureau of Labor Statistics’ Job Openings and Labor Turnover Survey. That’s the lowest level since February 2021, close to the pre-pandemic rate, Mengedoth said.

Although Virginia employers saw less turnover in January, the labor market remains tight, Mengedoth said. Job openings haven’t dropped significantly, and there are more than two job openings per unemployed person seeking a job.

In February, Virginia’s seasonally adjusted unemployment rate was 3.2%, according to VEC data released Friday.

The Virginia labor force participation rate — the proportion of the civilian population ages 16 and older that is employed or actively looking for work — ticked up in January and February and is almost equal to the pre-pandemic rate, Mengedoth said. In February, Virginia’s labor force participation rate stood at 65.6%, according to the VEC.

Rising inflation doesn’t seem to be having much effect on employment in Virginia, Mengedoth said: “There’s a lot of talk about a possible slowdown, but we haven’t really seen any sort of indicators that are pointing to any kind of recession,” and that seems to hold in the labor market.

Businesses don’t seem to have a large appetite to cut employment, even if business slows, because of the difficulty of recruitment, he added.