North Carolina's jobless rate may have been unchanged in April, but economists cautioned yesterday that the rate staying at 10.8 percent is more a reflection of the state's economy nearing a bottom rather than beginning a recovery.
"We were in a free fall with the national and state economy for the fall and most of the winter, so it appears we may be stabilizing," said Mark Vitner, a senior economist for Wachovia Securities. "But keep in mind it may be stabilizing at a very high level of unemployment."
After rising dramatically from 5.7 percent in April 2009 to 10.7 percent in February, the jobless rate has leveled off the past three months at a 33-year high.
The N.C. Employment Security Commission said that unemployment rates before 1976 were not seasonally adjusted, so it is not comparable to data published since then.
The commission reported that the state's work force rose by 26,857 during April after declining by nearly 31,000 in March. Economists said that increase could signal that discouraged residents are getting back into the job market.
There also was a decline of 815 in the number of North Carolinians considered as unemployed, to 492,785.
Still, the number of residents unemployed and actively pursuing work remains close to an all-time high, said Moses Carey, the chairman of the employment-security commission.
"The gain in April is certainly encouraging for the state," said Michael Walden, an economics professor at N.C. State University. "However, I would want to see several consecutive months of gains before being convinced the job market has improved."
Although there was a loss of 4,600 manufacturing and 3,400 trade, transportation and utilities jobs during April, there was a net gain of 4,100 education and health-services jobs and 2,700 jobs in the other services category.
"The rate of job deterioration appears to be moderating, and the breadth of the job losses appears to be narrowing," Vitner said.
However, Walden and Vitner said they expect job losses to increase, particularly in the automotive and financial-services sector, the rest of this year. Vitner said that the state's jobless rate could peak at 12 percent.
Also, the Triad hasn't fully absorbed the blows from at least 13 major layoffs affecting more than 4,000 employees.
And questions remain about how many of Wachovia Corp.'s 2,900 local jobs will be cut or transferred as Wells Fargo & Co. merges bank operations over the next two years.
Still, Walden said he is "becoming increasingly convinced the recession will end by late 2009."
When it comes to determining the unemployment rate, the commission primarily counts people who are without a job and actively looking for work. Eventually, people who stop looking -- whether out of frustration or by choice -- are removed from the unemployment data.
They aren't the only ones unaccounted for in the data. Others include stay-at-home spouses, retirees, full-time students, people attached to their former employer through severance packages, and people without jobs who have moved into the state.
The unemployment rate also doesn't account for people who are underemployed -- those who are working in full- or part-time jobs below their skill levels.
Economists say that if all those people are factored into the jobless rate, it could be as much as three percentage points higher.
"If you look at past recessions, you'll see that unemployment continues to drift up a bit even after the economy starts to grow again, and doesn't fall until the economy reaches a growth rate somewhere around 2 percent," said Robert Whaples, an economics professor at Wake Forest University.
John Quinterno, a research associate for the N.C. Budget & Tax Center, said that there is a "real temptation to lose sight of the employment forest through the April data trees."
"We can't forget that North Carolina has an unemployment rate that is at a modern high and higher than those found in all but five other states," he said.
■ Richard Craver can be reached at 727-7376 or at rcraver@wsjournal.com.
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