NC’s Labor Market Starts 2017 Slowly
CHAPEL HILL, NC (March 13, 2017) – In the first month of 2017, employers in North Carolina collectively cut 6,600 more payroll jobs than they added (-0.2 percent), with net losses occurring in both the private and public sectors. The monthly household survey, meanwhile, recorded a slight increase in both the number of unemployed North Carolinians and in the statewide unemployment rate, which rose to 5.3 percent.
These findings come from new data released today by the Labor and Economic Analysis Division of the North Carolina Department of Commerce.
“North Carolina’s labor market got off to a slow start in 2017, with the state experiencing a monthly decline in the number of payroll jobs for the first time since early 2015,” said John Quinterno, a principal with South by North Strategies, Ltd., a research firm specializing in economic and social policy. “The drop, however, was slight, and it was consistent with the pattern of slow growth that has defined North Carolina’s recovery over the past seven years.”
Between December 2016 and January 2017, North Carolina employers cut 6,600 more payroll jobs than they added (-0.2 percent). Private-sector payrolls lost, on net, 1,400 positions (-0.1 percent), and public-sector payrolls lost, on net, 5,200 jobs (-0.7 percent). Within private industry, the manufacturing sector shed the most jobs (-4,700, -1 percent), followed by the leisure and hospitality sector (-1,900, -0.4 percent), the professional and business services sector (-1,200, -0.2 percent), and the information sector (-800, -1 percent). The losses in those industries were partially offset by gains in trade, trade, transportation, and utilities sector (+1,800, +0.2 percent), the financial services sector (+1,700, +0.7 percent), the other services sector (+1,500, +1 percent), and the construction sector (+1,100, +0.5 percent).
Today’s data release from the Labor and Economic Analysis Division also reflects the annual benchmark revision, in which historical monthly estimates are adjusted to a complete job count derived chiefly from unemployment insurance tax filings. That benchmark revision showed that North Carolina gained more payroll jobs in 2016 than first thought (+94,000 vs. +85,200). Meanwhile, the state gained more jobs in 2015 than first estimated (+101,300 vs. +84,200), while adding fewer jobs in 2014 than first measured (+94,900 vs. 96,000).
“After accounting for recent data revisions, North Carolina now has 207,900 more payroll jobs, or 5 percent more, than it did when the ‘Great Recession’ began in December 2007,” said Quinterno. “Since the statewide recovery began in February 2010, North Carolina has gained an average of 6,400 jobs per month, resulting in cumulative gain of 534,700 jobs.”
Another trend revealed by the data revision is how remarkably consistent job growth has been over the last five years. Since 2012, the number of payroll jobs in North Carolina has grown at a rate of approximately 2 percent per year, with specific annual growth rates ranging from 1.8 percent in 2012 to 2.4 percent in 2015. The exact rate for 2016 was 2.2 percent.
“Although consistent, an annual rate of job growth of 2 percent coming on the heels of a brutal recession is not adequate to accommodate North Carolina’s growing working-age population,” cautioned Quinterno. “Such a modest rate of growth also is unlikely to generate any real improvements in hourly wages, household incomes, and overall living standards.”
Similar patterns emerge when considering household data related to employment. In January, the statewide unemployment rate rose to 5.3 percent from 5.2 percent, with the number of unemployed persons climbing to 260,150 from 256,852 (+1.3 percent). In January, the state’s labor force grew by 0.3 percent, rising to 4.93 million from 4.92 million, with the number of employed persons increasing by 0.2 percent, ticking up to 4.67 million from 4.66 million.
Based on the recent data revisions, North Carolina’s monthly unemployment rate averaged 5.1 percent in 2016, as compared to 5.7 percent in 2015. On average, fewer North Carolinians were unemployed in 2016 than in 2015 (248,000 vs. 271,000), while more people were employed in the typical month (4.6 million vs. 4.5 million).
A defining characteristic of the “Great Recession” and the subsequent recovery has been a sharp drop in the share of the working-age population that is even participating in the labor force. In 2016, that proportion averaged 61.7 percent, up from 61.3 percent in 2015. Yet in 2007, the rate averaged 62.4 percent. If the 2007 rate had been in effect in 2016, an additional 307,778 individuals (+6.3 percent), on average, would have been in the state’s labor force.
The same dynamic applies to the share of working-age North Carolinians who are employed. In 2016, that proportion averaged 58.9 percent, up from 57.8 percent in 2015. Yet in 2007, the rate averaged 62.4 percent. If the 2007 rate had been in effect in 2016, an additional 274,600 individuals (+5.9 percent), on average, would have been employed.
“2017 is a potential turning point for North Carolina’s slow labor market recovery,” explained Quinterno. “Left to its own devices, a 2 percent increase in payroll employment seems likely, given how that has been the case for each of the last five years. Yet a great deal of uncertainty exists in light of possible changes in the United States’ fiscal and monetary policies. Some changes could serve to accelerate growth, while others could slow it further, resulting in an even more difficult landscape for working North Carolinians to navigate.”