South By North Strategies, Ltd.

CHAPEL HILL (August 21, 2009) – After pausing briefly at the beginning of summer, job loss in North Carolina resumed its upward climb in July. Last month, employers eliminated 26,400 more positions than they created. Furthermore, downward revisions to the June payroll data erased the slight employment gain that initially had been reported for that month. July consequently marks the 10th consecutive month in which North Carolina recorded a net loss of jobs. These findings come from data released today by the Employment Security Commission.

“The pace of job loss has slowed in recent months, but the overall trajectory remains a downward one,” says John Quinterno, a principal at South by North Strategies, Ltd., a research firm specializing in economic and social policy issues. “An easing in the pace of job loss isn’t the same thing as a labor market recovery.”

In July, North Carolina employers shed 26,400 more jobs than they added. The overwhelming majority of those job losses occurred in the public sector (-21,300) with local governments responsible for most of those losses. Private-sector employers, meanwhile, recorded a net loss of 5,100 positions. While employment in most private industries declined or held steady, net hiring in professional and business services and leisure and hospitality services managed to offset many of the other losses.

“No meaningful labor market recovery will occur without private-sector hiring,” notes Quinterno. “Since last October, North Carolina’s private-sector employers have eliminated, on net, 194,400 positions. While the pace of private-sector job loss recently has moderated, little evidence points to a robust turnaround. Recent reductions in public-sector employment only will compound the problems tied to the reduction of private-sector opportunities.”

For additional perspective on private-sector employment, compare payroll figures from July 2009 to those from July 2008. Over the year, private employers eliminated, on net, 214,400 positions. With the exception of education and health services (+11,200), every major non-governmental industry contracted. The greatest numerical declines occurred in manufacturing (-77,400); construction (-47,600); and professional and business services (-40,700). Relative to payroll sizes, construction employment fell the most, down 19.8 percent.

Job losses have contributed to the sharp rise in North Carolina’s unemployment rate. In July, 496,867 individuals were unemployed. Over the year, the number of unemployed North Carolinians has nearly doubled while the unemployment rate has climbed to 11 percent.

“North Carolina’s high unemployment rate actually understates the extent of the employment problems facing North Carolinians,” adds Quinterno. “July was the third straight month in which the size of the labor force declined. This suggests that jobless individuals abandoned their employment searches, yet such individuals are not included in official unemployment count.”

“Little in the July employment report points to an imminent recovery,” cautions Quinterno. “High levels of joblessness likely will persist and will serve to restrain consumer spending. Unless demand for goods and services returns, private-sector employers are unlikely to begin adding positions in meaningful numbers.”

“While it appears that the worst job losses might be behind North Carolina, thanks in part to the federal recovery package, that does not mean that economic growth is just around the corner,” he adds. “A jobless recovery appears to be taking shape.”

Contact: John Quinterno, Principal, (919) 622-2392