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Unemployment in N.C. likely to rise, official says
Anxiety growing over possibility of Wells Fargo cuts
Journal Graphic by Richard Boyd II
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Published: November 22, 2008
North Carolina may have defied a national employment trend during October, posting a net gain of 5,076 jobs even as its jobless rate rose slightly to 7 percent, the N.C. Employment Security Commission reported yesterday.
The U.S. unemployment rate jumped to 6.5 percent in October from 6.1 percent. The nation also shed 297,000 jobs during the month.
However, economists warned against any thoughts that the state and Triad jobless rates could be peaking. The Triad rate was 6.8 percent in September.
"According to indicators, the number of people coming in to our offices, it cannot be too long before we see the unemployment rate go up further," said Archie Hicks, the manager of the commission's Winston-Salem office.
"As more people enter the work force in their struggle to survive economically, the unemployment rate is sure to rise given the paucity of hiring we are seeing," Hicks said.
Mark Vitner, a senior economist at Wachovia Securities, said that "there is a lag between when layoffs are announced and actual displacements occurred."
Some employers, particularly manufacturers, are spreading their job cuts over several months, which contribute to the monthly jobless rate not spiking.
That's why the Triad hasn't felt the full effect of recent major job cuts that include Hanesbrands Inc. in Winston-Salem (155 jobs) and Eden (720 at two plants), R.J. Reynolds Tobacco Co. and Reynolds American Inc. (570 combined), Furniture Brands International Inc. in High Point (300), Thomas Built Buses Inc. in High Point (up to 205), ASMO North Carolina Inc. (107 in Thomasville, 95 in Mount Airy), Ingersoll-Rand in Mocksville (110) and Triad Guaranty Inc. in Winston-Salem (more than 100).
There also is increasing anxiety about how many of Wachovia Corp.'s 2,900 local jobs will be cut or transferred as Wells Fargo & Co. merges the banks' operations over the next two years.
"The unemployment rate is clearly headed higher," Vitner said. "We expect the national unemployment rate to top out around 9 percent in early to mid-2010.
"North Carolina's jobless rate should also top out around that level."
Harry Payne Jr., the chairman of the employment-security commission, said he was encouraged by the increase in employment for the third time in four months. But he acknowledged that "both global and national trends continue to impact the state's economy and employment picture."
At 7 percent, the state's jobless rate is at its highest level since January 2002 and the aftereffects of the Sept. 11 terrorist attacks on the national economy.
The commission reported that the state had a net gain of 3,300 education and health-services jobs in October. It also had a loss of 4,300 manufacturing jobs and 5,300 in the "other services" category.
"The job market throughout the state remains a very competitive one, and we see that in our offices every day," Payne said.
Vitner said that as tough as finding a job has become in North Carolina, the state still is viewed as being a promising place for work.
"About half the 2.3 percent increase in the state's unemployment rate over the past year has been the result of job losses and the other half has come from the continued growth in the labor force," Vitner said.
The state's work force has grown by nearly 53,000 since October 2007, while the number of North Carolinians considered as employed has dropped by nearly 54,000.
"People continue to move to North Carolina because they believe the economy is better here than it is in other parts of the country," Vitner said. "While this is generally true, we are clearly being impacted by the recession, and our unemployment rate is actually well above the national average."
Hicks said that the jobless rate also is likely to rise as a by-product of Congress' passage this week of a 13-week extension of unemployment benefits.
"Just the possibility of further unemployment extensions will encourage people to resume the job search they had abandoned due to their disillusionment with the job market," Hicks said.
"More people looking for fewer available positions equals higher unemployment. That is neither profound nor insightful, just stating the obvious."
■ Richard Craver can be reached at 727-7376 or at rcraver@wsjournal.com.
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