South By North Strategies, Ltd.

CHAPEL HILL (August 17, 2012) – North Carolina posted no net job growth in July, as a sizable decline in public-sector payrolls erased virtually all of a modest increase in private-sector job levels. Over the month, the state gained just 1,800 more payroll jobs than it lost. Meanwhile, the number of unemployed North Carolinians and the statewide unemployment rate rose in July. These findings come from new data released by the Labor and Economic Analysis Division of the NC Department of Commerce.

“North Carolina’s labor market performed poorly in July,” said John Quinterno, a principal with South by North Strategies, Ltd., a research firm specializing in economic and social policy. “The overall number of jobs in the state stayed flat at slightly under 4 million, while the number of unemployed persons rose to the highest level recorded since March. Alarmingly, downward revisions to the June payroll numbers showed that North Carolina gained 26.5 percent fewer jobs during the first six months of the year than previously estimated.”

In July, North Carolina employers added 1,800 more jobs than they cut (+/- 0.0 percent). Private-sector payrolls netted 16,000 positions (+0.5 percent), but public-sector employment levels contracted by 14,200 positions (-2 percent), owing entirely to declines in the local government subsector (which can be quite volatile in the summer months). Within the private sector, leisure and hospitality services gained the most jobs (+5,900, +1.5 percent), with 93.2 percent of that growth occurring in the accommodation and food service subsector. Manufacturing netted 3,400 positions (+0.8 percent), thanks mainly to hiring by manufacturers of durable goods. The education and health services sector netted 2,400 jobs (+0.4 percent), followed by professional and business services (+1,700, +0.3 percent). The natural resources and mining sector was the only private-sector industry to shed jobs (-100, -1.8 percent).

A negative revision to the June payroll data found that the state gained 8,200 fewer jobs than first reported (+8,700 versus +16,900). With that revision, North Carolina now has, on net, 220,000 fewer payroll positions (-5.3 percent) than it did in December 2007. Since bottoming out in February 2010, the state has netted an average of 3,666 payroll jobs per month, resulting in a cumulative gain of 106,314 positions (+2.8 percent).

“North Carolina’s labor market started 2012 on a positive note but has lost energy over the course of the year,” noted Quinterno. “While the state has succeeded in adding jobs, particularly in the private sector, net job growth remains too weak to replace the positions lost during the downturn and to accommodate the state’s growing workforce. North Carolina needs to net approximately 6,400 jobs each month to keep pace with the growth of the state’s working age population, but so far in 2012, the state has netted an average of 3,500 jobs per month.”

The household data for July provided further evidence of a struggling labor market. Last month, the unemployment rate rose to 9.6 percent, which was the highest level recorded since March, while the number of unemployed persons grew by 1.2 percent. Compared to the prior month, 5,321 more North Carolinians were unemployed, while 13,733 fewer persons (-0.3 percent) reported having jobs. Additionally, 8,412 fewer individuals were in the labor force (-0.2 percent). Had those additional persons remained in the labor force and assuming they would have reported being unemployed, the statewide unemployment rate would have equaled 9.7 percent.

Over the past year, the total number of unemployed North Carolinians has fallen by 52,904 persons (-10.6 percent), and the number of employed persons has grown by 49,263 persons (+1.2 percent). These are overall meaningful improvements. The remaining 3,641 persons appear to have left the labor force (-0.1 percent) for one reason or another.

That said, the increase in employment is extremely weak compared in light of the magnitude of the labor market problems facing the state. North Carolina’s unemployment rate has exceeded 9 percent in every month since January 2009 and has ranged as high as 11.4 percent. Compared to December 2007, which was when the “Great Recession” began, the statewide unemployment rate is 4.6 percentage points higher, while the number of unemployed North Carolinians is 94.4 percent greater. During the first seven months of 2012, an average of 450,214 North Carolinians were unemployed in any given month.

“To place the scale of unemployment in North Carolina in context, consider how the number of unemployed North Carolinians in July was 9.3 percent greater than the population of the City of Raleigh, which is the state’s second most populous municipality,” explained Quinterno. “The number of people added to the unemployment count since 2007 is only slightly greater than the population of the City of Fayetteville, which is the state’s sixth most populous municipality.”

Other troubling labor market indicators include a statewide unemployment rate that has exceeded 10 percent in 35 of the last 43 months, a labor force participation ratio that has fallen over the course of the year and is hovering near a 36-year low, and an extremely depressed employment-to-population ratio. Last month, just 56.1 percent of working-age North Carolinians were employed, a level up only somewhat from the modern low of 55.3 percent set in late 2011.

“North Carolina’s job market has lost energy throughout 2012,” observed Quinterno. “While the private-sector has grown, the bottom line is that the state has just 0.6 percent more jobs than it did last December and only 0.9 percent more jobs than was the case one year ago. North Carolina simply lacks enough jobs for all those who want and need work, and the job market is not growing rapidly enough to alter those dynamics anytime soon.”