Unemployment in Washington jumped sharply last month, but the state's top labor economist said it was too soon to say if the state's economic...

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Unemployment in Washington jumped sharply last month, but the state’s top labor economist said it was too soon to say if the state’s economic fortunes have finally turned.

The statewide seasonally adjusted jobless rate rose to 4.9 percent in March from 4.5 percent in February, according to today’s report from the state Employment Security Department. Although the overall employment level held mostly steady, the unemployment rate was pushed up by an influx of new entrants into the labor market.

In addition, nonfarm employers shed 3,200 payroll jobs in March, the first monthly decline since September 2007; most economic sectors posted declines. And the 3,500-job gain for February that was reported last month was revised down to a more modest 1,300-job increase.

All in all, the March jobs report showed Washington’s jobs engine downshifting into first gear. But Employment Security economist Evelina Tainer said she didn’t think the state was necessarily heading into reverse.

“I think we’re going to see a few months where things are very sluggish, but I’m still not convinced we’re due for a recession in the state,” Tainer said.

The March increase in joblessness comes after 14 straight months in which the state unemployment rate hovered around 4.5 percent. The last time the jobless rate was this high was in November 2006.

Still, the state continues to be better off than the nation as a whole. The U.S. unemployment rate rose three-tenths of a percentage point in March to 5.1 percent.

In metro Seattle, the seasonally adjusted rate ticked up a tenth of a percentage point, to 3.7 percent, last month.

The unemployment rate is derived from a survey asking people whether they’re working or looking for work — not, as is sometimes thought, from a count of how many people are collecting unemployment benefits. The nonfarm payroll figures, which many economists consider more reliable, come from a separate survey of employers.

Payroll losses in March were spread across nearly all sectors of the economy; only the retail, information and business-services sectors recorded gains. Retail added 500 jobs, mostly in clothing and general merchandise stores; 400 new software jobs paced the information industries; and employment services added 400 jobs.

Aerospace added 400 jobs in March, but overall the manufacturing sector lost 200 jobs, mainly due to declines at food processors, paper mills and other nondurable goods manufacturers.

The biggest declines were at bars and restaurants, which shed 1,100 jobs in March. However, Tainer noted that those employers have grown strongly: Between February 2007 and February 2008, that industry added 6,800 jobs.

Given that, she said, the drop in March looks more like a “correction” than an indication of lower demand.

The intertwined housing, mortgage and credit crises have taken their toll on financial-services jobs. Since March 2007, lenders across Washington have cut 2,000 jobs, and real estate and rental leasing employers 400 more.

As for construction, the residential segment lost 900 jobs in March and 3,400 over the past 12 months; heavy and civil engineering has lost an additional 2,000 jobs since March 2007. However, gains in the nonresidential sector — 500 jobs last month and 4,600 over the past 12 months — so far have offset much of the pain.

But, Tainer warned, “we are now starting to see a consistent drop in construction employment.”

Drew DeSilver: 206-464-3145 or ddesilver@seattletimes.com