North Carolina hit a pothole on the road to economic recovery during November.
An overall loss of 12,500 jobs — the largest in the country — led to the first monthly increase in the state jobless rate since February, the N.C. Employment Security Commission reported Friday.
The rate rose to 9.7 percent from 9.6 percent in October. The national rate is 9.8 percent. November is the first month since March 2008 that North Carolina's unemployment rate was lower than the national average. The state rate has improved from at least a 34-year peak of 11.2 percent in February.
Still, the reduction in jobs in November left some economists more pessimistic heading into 2011.
"All of the job growth made earlier in 2010 has been erased," said John Quinterno, a principal with South by North Strategies Ltd., a Chapel Hill research firm specializing in economic and social policy.
"Much of the growth experienced early in 2010 was due to temporary public policy supports. The private sector has not stepped forward to fill the void in demand left by the expiration of those supports.
"At a point in the business cycle when prospects should be improving, they instead have worsened," Quinterno said.
Two areas each contributed 5,200 jobs to North Carolina's loss column in November: trade, transportation and utilities as well as tourism-related businesses. State Employment Security Commission spokesman Larry Parker said his agency expects the trade numbers, which include retail outlets, to reflect holiday hiring in the December report.
There was little positive news in the unemployment report:
•Nearly 4,900 more North Carolinians — a total of 433,240 — were listed as unemployed during November.
•The employed ranks dropped by 8,216 to 4.03 million.
•In addition to the losses in the trade, transportation and utilities and the tourism-related businesses, an additional 3,600 jobs were lost in professional and business services, 2,300 in construction and 1,600 in manufacturing.
The state's labor force, at 4.47 million, is at its lowest level since July 2006, according to South by North Strategies.
The only bright spot was a net gain of 4,800 jobs in education and health services.
Michael Walden, an economics professor at N.C. State University, said that when factoring in the fact that the average manufacturing work week dropped by two hours to 39.4, "it was just a bad report."
"We could very well see more of the same in the next few months. But I do forecast employment gains for the state and a drop in the unemployment rate in 2011."
The relevance of the unemployment rate has been questioned during the recession.
When calculating it, the commission does not include several categories of people: those who have stopped looking for work, those who are underemployed for their skills, those who are able to work full time but can land only part-time work, those who are receiving severance packages after the elimination of their job, and those who have exhausted their state and federal unemployment benefits.
A rate compiled by the U.S. Bureau of Labor Statistics — the U6 index — includes those people. State data are updated quarterly, while the national data are updated monthly.
The latest data showed that 17.6 percent of adults in North Carolina were without jobs on Sept. 30, compared with 17 percent nationally in November.
Since the recession began in December 2007, the state has lost 284,300 jobs, or 6.8 percent of its payroll employment base.
"Some 107,000 North Carolinians have left the labor force since April," Quinterno said.
"That contraction is responsible for much of the recent decline in the unemployment rate and is a sign of an extremely unhealthy labor market."
The Associated Press contributed to this story.
rcraver@wsjournal.com
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