Washington employers added 10,600 jobs in May, the largest single-month gain this year according to the Employment Security Department.

Olympia area's government-heavy economy moved in the opposite direction: public-sector employment locally fell 1.5% over the past year, federal labor data show.

Government accounts for roughly one in three payroll jobs in the Olympia-Lacey-Tumwater metro area. The Bureau of Labor Statistics pegged local government employment at 44,600 in May, of 133,100 total nonfarm jobs in the metro area. That 1.5% year-over-year decline means roughly 680 fewer government positions than a year ago in a region where state agencies are the dominant employer.

Statewide, the picture is mixed. The ESD reported Thursday, June 18, that the 10,600-job gain followed combined losses of 8,700 jobs in March and April. The unemployment rate held at 5.2%, unchanged from April and up from 4.5% in May 2025. The national rate is 4.3%.

"A strong month of growth is welcome following two consecutive months of employment losses, but it doesn't signal any meaningful shifts on its own," said Anneliese Vance-Sherman, the state's chief labor economist. She characterized the slow, steady rise in unemployment since late 2023 as an increasingly challenging labor market for job seekers.

Leisure and hospitality led statewide gains with 4,800 jobs, followed by manufacturing (2,200), construction (1,600), and the public sector (1,600). Vance-Sherman attributed some hospitality hiring to businesses staffing up ahead of the FIFA World Cup.

For Olympia and Tumwater workers, the revenue picture adds pressure. State General Fund collections came in $103.6 million below forecast for the May 11–June 10 period, according to the Economic and Revenue Forecast Council. Cumulatively, revenues are running $135.4 million, or 1.2%, below what the February forecast projected.

That shortfall lands as state worker unions negotiate a new collective bargaining agreement with Gov. Bob Ferguson's budget office. Washington State Standard reporter Jerry Cornfield wrote on X on Sunday, June 15, that the threat of another budget shortfall "will make salary conversations tougher."

The squeeze is compounded by inflation. Seattle-area consumer prices, the nearest regional measure, rose 4.9% year-over-year in April, driven partly by a 23.7% spike in energy costs, per the ERFC. Statewide wage growth has cooled below 3%, meaning paychecks are losing ground to rising prices.

The next state revenue forecast is due Friday, June 26. A worse-than-expected number would give the governor's budget office less room to meet union wage demands at the bargaining table.