Washington Adds 10,600 Jobs in May as Unemployment Holds at 5.2%

Q: Washington's job numbers grew in May, so why did its official bond outlook suddenly turn negative?

Washington’s bond outlook turned negative because rating agencies were reacting to the state’s budget structure, not to one month of job gains. Moody’s kept Washington’s top Aaa rating but revised the outlook to negative in May because it sees a growing risk that the state’s finances are becoming structurally imbalanced. The main concern is that recurring spending is rising faster than recurring revenue, forcing heavier reliance on reserves and other one-time budget fixes. Moody’s said reserves could shrink to about $1.3 billion by June 2027, reducing the state’s cushion against an economic slowdown or other shocks. The agency also pointed to funding uncertainty around the new tax on high earners, including a legal challenge and the fact that the revenue is not expected to help the budget until fiscal 2029 even if it survives in court. At the same time, Washington faces rising costs from tort claims and health and human services, which are expected to keep pressure on the general fund through at least fiscal 2027. That means May’s addition of 10,600 jobs did little to change the broader picture. State economists themselves warned that one month of hiring does not signal a meaningful shift, especially with unemployment still at 5.2%, above the national rate, and total employment still below a year earlier. In short, the negative outlook reflects concern about long-term fiscal flexibility and budget balance, not a judgment that Washington’s economy suddenly weakened in May.

3 articles · Updated · KOMO News · Jun 17

Washington added an estimated 10,600 jobs in May, reversing two straight months of losses while the statewide unemployment rate stayed at 5.2%.
9,000 of the gains came from private employers and 1,600 from government, led by leisure and hospitality with 4,800 jobs, manufacturing with 2,200, and construction with 1,600.
212,412 Washington residents were unemployed in May, slightly more than in April, and state economists said one strong month does not yet mark a meaningful shift after unemployment rose through 2025 and early 2026.
Seattle-Bellevue-Everett unemployment fell to 124,679 from 126,368, and unemployment benefits dropped to 65,353, with the biggest claims declines in construction, transportation and warehousing, and accommodation and food services.
7,700 fewer jobs than a year earlier still left Washington down 0.2% from May 2025, even as the U.S. unemployment rate held at 4.3%.