Washington's recovery slowed slightly in May, with a relatively modest gain of 2,900 jobs, mostly in the Seattle area. Metro employers added 2,400...

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Washington’s recovery slowed slightly in May, with a relatively modest gain of 2,900 jobs, mostly in the Seattle area.

Metro employers added 2,400 jobs, far fewer than the 6,400 gained in April, but better than the 500 created in the rest of the state.

The gain wasn’t enough, however, to keep up with the expanding labor force. The state’s unemployment rate edged up to 5.7 percent from 5.5 percent in April.

Manufacturing, the hardest-hit sector during the recession, is showing signs of life again, mostly because of 700 new hires in aerospace, which is dominated by Boeing, and 200 new jobs in the shipbuilding industry.

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The growth helped offset declines in the wood-products sector, which lost 400 jobs in May. Software and telecommunications also dropped about 400 jobs. Leisure and hospitality added 1,100 jobs last month.

The red-hot housing market is fueling some of the new jobs, according to Rick Kaglic, chief economist for the state Employment Security Department.

Residential building permits have risen for four years straight, a trend that’s expected to continue for 2005.

“With that, we’ve seen very strong gains in construction employment,” Kaglic said.

Construction-industry employment has posted dramatic gains in the past two years, adding 22,000 jobs.

The housing market’s ripples are felt in other areas. The financial sector, which includes real estate, added 400 jobs. Business services (legal, accounting and other white-collar professions), created a robust 1,500 new jobs.

Even with last month’s relatively tepid gains, the state’s economy is recovering faster than the rest of the country, with 2.1 percent year-over-year growth, compared with 1.5 percent nationwide, Kaglic noted yesterday.

The nation’s recovery slowed significantly last month. Employers added 78,000 jobs — about 100,000 fewer than economists had projected, and far fewer than the 274,000 added in April. The U.S. unemployment rate fell slightly to 5.1 percent.

Despite strong gains in recent months, the Seattle area has yet to recover the 98,700 jobs lost during the recession, which ran from January 2001 to April 2003.

The unemployment rate last month in the Seattle-Bellevue-Everett area rose to 4.9 percent from 4.5 percent.

Metro-area employers have added 54,400 new jobs in the past two years, still leaving a “jobs hole” of 44,300, according to Roberta Pauer, a regional economist with the state Employment Security Department.

The bulk of those losses occurred in manufacturing, particularly aerospace, which shaved 20,500 jobs during the recession.

The state as whole, however, has added 119,100 jobs in the past two years, recouping all the jobs lost during the recession and adding another 36,600.

Shirleen Holt: 206-464-8316 or sholt@seattletimes.com