While the unemployment rate in the New Haven metropolitan area remains below state and national averages, recently released data suggests that the city’s labor market is weakening.

Between December 2002 and January 2003, the New Haven metropolitan area’s unemployment rate increased from 3.8 to 5.0 percent, according to data released by the U.S. Bureau of Labor Statistics earlier this week. While the city’s economy has remained strong throughout the national economic downturn, the new data — which reports an increase of over 3,300 unemployed workers — show unemployment in the New Haven area at its highest since July 1997.

Mark Polzella, acting director of the Regional Workforce Development Board, said many employees using his labor exchange have experienced difficulty finding job openings.

“There’s been a steady increase since December,” Polzella said. “It’s been across all different occupations.”

Polzella said the employees he sees are often skilled and experienced, but need to go through retraining because no jobs are available in their current fields.

According to the state Department of Labor, almost every sector of the area’s economy saw a decrease in jobs between December and January, the last month for which New Haven employment data is available. The biggest cuts in jobs occurred within the education services and retail trade sectors.

State data also showed that the city of New Haven suffered an unemployment increase between December 2002 and January 2003 comparable to the greater metropolitan area, as the city’s joblessness rate increased from 5.1 percent to 6.5 percent.

But New Haven’s unemployment rate remains significantly lower than many other large cities in Connecticut, including Hartford (10.4 percent) and Bridgeport (9.2 percent). In January, the unemployment rate was 5.3 percent in Connecticut and 6.5 percent nationwide.

Julio Gonzalez ’99, executive assistant to New Haven Mayor John DeStefano Jr., said the city viewed any economic programs in the context of a long-term program.

“In the short term, I think we’re going to do the best job we can in creating good, sustainable growth as quickly as possible,” Gonzalez said.

Gonzalez said the city was focusing on “hitting economic singles rather than home runs” by attempting to attract smaller businesses without offering large corporate subsidies. He said the biggest strain on the city would be to maintain city services — including policing and child care — in difficult economic times. The state reported that 900 state and local government jobs were cut in the New Haven area between December 2002 and January 2003.

“We absolutely understand that like in so many areas of activity, we have to pick up for the state’s failed leadership and the federal government’s failed leadership,” Gonzalez said.

Yet while the labor market may be weakening in the area, local realtor Nelly Odenwaelder said the real estate market in New Haven remains very strong. H. Pearce Realtors, for which she is a senior vice president, had the best year in its history in 2002. She said moderately priced homes were going quickly with multiple bidders. There was also a very large demand for condominiums and multifamily homes.

“There’s not a lot of homes to choose from, no matter what price range you’re in,” Odenwaelder said.

State Sen. Majority Leader Martin Looney, who said he has discussed economic policy with DeStefano, said he was confident that the economy would recover from a “cyclical” downturn affecting the entire nation.

Despite the increase in unemployment, State Rep. William Dyson said he did not think New Haven was moving in a different direction from the rest of the state.

“Clearly, it indicates a trend in which things don’t look very well,” said Dyson, co-chair of the General Assembly’s Appropriations Committee. “I think, though, that it may be bottoming out.”