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State jobless rate holds steady from June to July
11%, 1.6 points above the U.S. rate, may stay high for a while
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Published: August 22, 2009
The state jobless rate staying the same in July may be more evidence that North Carolina has seen the worse of its unemployment crunch.
But economists said yesterday that an 11 percent unemployment rate, as reported by the N.C. Employment Security Commission, remains nothing to celebrate.
The rate was above 10 percent for the sixth consecutive month. It is up substantially from 6.3 percent in July 2008.
"The numbers are a mix of relief," said Robert Whaples, an economics professor at Wake Forest University. "The unemployment rate, which was soaring upward last fall and winter, has now stabilized.
"But the unemployment rate remains at a very high rate, and the stability in the rate from June to July masks a drop of 0.3 percent in employment, as the labor force participation rate drops."
The commission reported that the state's labor market fell by nearly 13,000 North Carolinians in July, while the number of people considered as unemployed fell by 4,853. People who have dropped out of the job market eventually are not counted in the unemployment rate.
"I don't expect the unemployment rate to climb much, if any, in the coming months but it'll probably take quite a while for it to fall significantly," Whaples said.
The state's rate also is 1.6 percentage points higher than the U.S. jobless rate of 9.4 percent, which decreased slightly from 9.5 percent in June.
"We continue to feel the effects of a struggling global and national economy," Moses Carey Jr., the chairman of the commission, said in a statement.
"We experienced a slight drop in the state's labor force in July,'' Carey said. "However, this change was not enough to affect the unemployment rate."
The state had a net gain of 5,200 professional and business services jobs during July.
There also was a net gain of 3,200 in the leisure and hospitality services sector, mostly related to summer jobs.
There was a loss of 5,100 manufacturing jobs, 3,800 jobs in the trade, transportation and utilities sector and 3,400 in the category of "other services."
Some economists believe that the state and the Triad may be entering a "jobless recovery," in which jobs created by recovering and new businesses fail to offset the jobs lost to a recession.
Others, however, said they are hopeful that the limited movement in the jobless rate demonstrates that the rate may be nearing a peak, and that local hiring could begin to stir by the fourth quarter.
Jobless recovery was a phrase coined in the recession of July 1990 to March 1991, and revived with the 2001 recession, typically defined as March through November 2001. In both instances, jobs continued to be eliminated for several months after economists said that the recovery was under way.
The difference between those recessions and this one is that the Triad's unemployment rate peaked at 6.3 percent in February 1992 during the recession of 1990-91 and at 7.2 percent in June 2003 for the 2001 recession.
Both were significantly lower than the June rate of 11.7 percent, which represents at least a 41-year high.
The commission is able to track the Triad's jobless rate back only to 1968, spokesman Larry Parker said. The July rate for the Triad will reported Aug. 28.
"Little in the July employment report points to an imminent recovery," said John Quinterno, a principal at South by North Strategies Ltd., a research company focused on economic and social policy.
"An easing in the pace of job loss isn't the same thing as a labor-market recovery,'' Quinterno said.
"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."
■ Richard Craver can be reached at 727-7376 or at rcraver@wsjournal.com.
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