12.20.2013 News Releases, Policy Points

NC Unemployment Rate Hits A Five-Year Low

CHAPEL HILL, NC (December 20, 2013) – In November, employers in North Carolina eliminated 6,500 more payroll positions than they added (-0.2 percent), due primarily to a net loss of 5,000 private-sector jobs. The monthly household survey, however, recorded a significant drop in the state’s unemployment rate to 7.4 percent, which was the lowest monthly figure logged since November 2008. While North Carolina’s unemployment rate fell sharply over the past year, most of the decline was attributable to a contraction in the size of the state’s labor force, which now has 95,009 fewer members (-2 percent) than it did a year ago.

These findings come from new data released today by the Labor and Economic Analysis Division of the NC Department of Commerce.

“The November jobs report offered a muddled picture of the state’s labor market,” said John Quinterno, a principal with South by North Strategies, Ltd., a research firm specializing in economic and social policy. “On the one hand, employers reported having fewer positions on their payrolls than in October, but on the other hand, more people reported being employed.”

Between October and November, North Carolina businesses shed 6,500 more jobs than they added (-0.2 percent). Private-sector payrolls cut 5,000 more jobs than they gained (-0.1 percent), and public-sector payrolls lost -1,500 jobs (-0.2 percent). Within the private sector, the educational and health services sector lost the most jobs (-4,100, -0.7 percent), followed by the manufacturing (-3,300, -0.7 percent), finance (-2,500, -1.2 percent), and other services (-1,000, -0.7 percent) sectors. The trade, transportation, and utilities sector, meanwhile, netted the most jobs (+2,600, +0.3 percent), followed by the professional and business services (+2,000, +0.4 percent) and construction (+1,600, +1 percent) sectors.

A revision to the October payroll data found that the state gained 3,600 more jobs that month than first estimated (+25,800 versus +22,200). With that revision, North Carolina now has, on net, 83,900 fewer payroll positions (-2 percent) than it did in December 2007. Since bottoming out in February 2010, the state has netted an average of 5,420 payroll jobs per month, resulting in a cumulative gain of 243,900 positions (+6.4 percent). At that rate, all else equal, it would take until March 2015 for the state to have as many payroll jobs as it did at the end of 2007.

The household data recorded in November offered a somewhat more optimistic view of the state’s labor market. Last month, the statewide unemployment rate fell by 0.6 percentage points and reached 7.4 percent, which was the lowest rate recorded since November 2008, when the rate was 7.7 percent. Additionally, 20,037 more North Carolinians had jobs in November (+0.5 percent) than in October. At the same time, the size of the labor force fell slightly (-8,101, -0.2 percent) over the month and reached a level smaller than the one posted in August 2011.

When placed in a broader context, the household data reported in November offer evidence of an underperforming labor market. Between November 2012 and November 2013, the statewide unemployment rate fell by 2 percentage points, dropping to 7.4 percent from 9.4 percent. Yet the decline was attributable to people leaving the labor force rather than finding new positions. While 101,091 fewer North Carolinians were unemployed in November compared to a year earlier (-22.7 percent), just 6,082 more people were employed (+0.1 percent). The remaining 95,009 people left the labor force altogether (-2 percent).

Continued declines in two major measures of labor utilization provide additional evidence of an underperforming labor market. In August, the labor force participation rate dipped to 61.3 percent, which was the lowest monthly figure recorded at any point since 1976. In fact, the labor force participation rate has fallen every month since January. Although another important measure, the employment-to-population ratio, rose in November, the current ratio of 56.8 percent is still 0.5 percentage points below the level recorded a year ago and just 0.5 percentage points above the 37-year low of 56.3 percent posted in the summer of 2011.

November’s labor market report provided additional insight into the effects of the extensive changes to the state’s system of unemployment insurance compensation implemented over the summer. Between October 2013 and November 2013, the number of claimants receiving regular state-funded unemployment insurance compensation declined by 4.4 percent, falling to 58,432 from 61,125. Compared to a year earlier, 42,514 fewer claimants received regular state-funded insurance in November (-42.1 percent).

Also in November, the state paid a (nominal) total of $52.6 million in regular state-funded unemployment insurance compensation, an amount 44.4 percent lower than the (nominal) total of $94.7 million paid in November 2012.

“The significant drop in the state’s unemployment rate in November should not blind observers to three troubling realities,” observed Quinterno. “First, the decline in the unemployment rate masks the fact that sizable numbers of joblessness North Carolinians have left the labor market altogether. Second, while the monthly unemployment rate of 7.4 percent is the lowest one posted in five years, the rate remains extremely high; in fact, the current rate is 0.5 percentage points greater than the highest figure recorded during the 2001 recession. Lastly, jobless North Carolinians increasingly are being left to their own devices, as evidenced by the declines in unemployment insurance payments.”

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