06.16.2017 News Releases, Policy Points

NC’s Unemployment Rate Falls To 4.5% In May

Chapel Hill, NC (June 16, 2017) — In May 2017, employers in North Carolina collectively added 18,800 more payroll jobs than they cut (+0.4 percent), with net gains in the private sector slightly offset by net losses in the public sector. The monthly household survey, meanwhile, recorded a decrease in both the number of unemployed North Carolinians and in the statewide unemployment rate, which fell to 4.5 percent, the lowest figure since early 2001.

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 turned in its best performance of this year in May,” said John Quinterno, a principal with South by North Strategies, Ltd., a research firm specializing in economic and social policy. “One comparatively strong month unfortunately doesn’t change the fact that overall job growth in North Carolina has slowed appreciably during 2017.”

Between April 2017 and May 2017, North Carolina employers added 18,800 more payroll jobs than they cut (+0.4 percent). Private-sector payrolls gained, on net, 19,300 positions (+0.5 percent), but public-sector payrolls shed, on net, 500 jobs (-0.1 percent). Within private industry, the professional and business services sector netted the most jobs (+9,600, +1.5 percent), followed by the construction (+3,300, +1.7 percent) and manufacturing (+1,900, +0.4 percent) sectors.

Since North Carolina’s labor market recovery began in February 2010, the state has netted an average of 6,400 jobs per month, resulting in a cumulative gain of 556,500 positions (+14.5%) since the worst point of the last recession. Today, the state has 4.4 million payroll jobs, up from 3.8 million in February 2010. Yet even with that gain, North Carolina has just 229,700 more payroll jobs than it did when the recession began in December 2007 (+5.5 percent).

“Despite the positive data for May, job growth in North Carolina has slowed in 2017,” noted Quinterno. “The state has netted just 15,200 payroll jobs so far this year, as compared to approximately 40,000 jobs at the same point in the calendar in both 2016 and 2015.”

Somewhat confusingly, the household survey so far in 2017 has been offering a more positive view of the state’s labor market than has the payroll survey. Since the year’s start, the unemployment rate has fallen to 4.5 percent from 5.2 percent, with the number of unemployed persons declining to 222,989 from 256,852 (-13.2 percent). For context, the rate in February 2010 was 11.3 percent, with the number of unemployed individuals totaling 522,896.

Also in 2017, the number of employed persons has risen by 0.9 percent, climbing to 4.71 million from 4.66 million. Meanwhile, the size of the labor force has increased slightly, growing by 0.2 percent to 4.93 million from 4.92 million. Compared to when the recovery began in February 2010, some 311,000 more people (+6.7 percent) now are employed or actively seeking work.

“What is sure to generate the most attention in this month’s report is the drop in the unemployment rate to 4.5 percent, which is the lowest monthly rate posted since early 2001,” observed Quinterno. “Despite similar rates of unemployment, today’s labor market arguably is worse than the one from 16 years ago, largely because there is little evidence of the kinds of widespread gains in wages, incomes, and living standards that characterized the earlier era.”

Another difference between the two periods is found in various measures of labor utilization. In early 2001, approximately 68 of every 100 working-age North Carolinians either had a job or were actively seeking one, as compared to 62 of every 100 today. Similarly, some 65% of all working-age North Carolinians had a job in early 2001, as opposed to 59% today. While some of the decline likely is tied to demographic changes, weaker economic conditions also likely are contributing. To the extent that poor prospects depress labor utilization rates, joblessness will be more pronounced than is reflected in the official unemployment rate.

“So far in 2017, North Carolina’s labor market has been of two minds,” explained Quinterno. “The unemployment rate has fallen to a remarkably low level despite a relative lack of payroll job growth. Even though North Carolina has a low rate of unemployment, the state is not experiencing the benefits typically associated with that environment; namely, improvements in wages, incomes and living standards.”

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