07.21.2017 News Releases, Policy Points

NC’s Unemployment Rate Falls to 4.2%

CHAPEL HILL, NC (July 21, 2017) – In June 2017, employers in North Carolina collectively added 12,600 more payroll jobs than they cut (+0.3 percent), due primarily to net hiring 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 4.2 percent, the lowest figure since late 2000.

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 a relatively solid performance for the second month in a row,” said John Quinterno, a principal with South by North Strategies, Ltd., a research firm specializing in economic and social policy. “As has been the case throughout 2017, the top-level labor market indicators for June offered a more positive view of current conditions than is supported by the underlying dynamics, which actually point to a more complex situation.”

Between May 2017 and June 2017, North Carolina employers added 12,600 more payroll jobs than they cut (+0.3 percent). Private-sector payrolls gained, on net, 3,500 positions (+0.1 percent), and public-sector payrolls netted 9,100 jobs (+1.2 percent), due mainly to hiring at the local level. Within private industry, the education and health services sector netted the most jobs (+4,300, +0.7 percent), followed by the professional and business services sector (+3,100, +0.5 percent) and the leisure and hospitality services sector (+1,500, +0.3 percent). The construction sector, meanwhile, shed 2,200 more positions than it added (-1.1 percent).

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 565,500 positions (+14.7%) 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 238,700 more payroll jobs than it did when the recession began in December 2007 (+5.7 percent).

“Despite the positive data for June, job growth in North Carolina has slowed in 2017,” noted Quinterno. “The state has netted just 24,000 payroll jobs so far this year, as compared to an average of 46,000 jobs at the same point in each of the last three years.”

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 4.2 percent from 5.2 percent, with the number of unemployed persons declining to 208,051 from 256,852 (-19 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 0.8 percent, climbing to 4.71 million from 4.66 million. Yet the size of the labor force has decreased slightly, falling by 0.2 percent to 4.91 million from 4.92 million. Compared to when the recovery began in February 2010, some 292,000 more people (+6.3 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 4.2 percent, which is the lowest monthly rate posted since late 2000,” observed Quinterno. “Despite similar rates of unemployment, today’s labor market arguably is worse than the one from 17 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. Additionally, the 4.1 percent rate posted in November 2000 was part of a rising trend of worsening unemployment rates that would lead into a recession the following year.”

Another difference between the two periods is found in various measures of labor utilization. In late 2000, approximately 68 of every 100 working-age North Carolinians either had a job or were actively seeking one, as compared to 61 of every 100 today. Similarly, some 65% of all working-age North Carolinians had a job in late 2000, as opposed to 59% today. While some of the decline likely is tied to demographic changes, weaker economic conditions also likely are contributing.

“During the first half of 2017, North Carolina’s unemployment rate has fallen to the lowest one recorded in almost 17 years even though job growth has slowed compared to recent years,” explained Quinterno. “This combination helps to explain why North Carolina is not experiencing the growth in wages, incomes, and living standards typically associated with such low rates of unemployment.”

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