South By North Strategies, Ltd.

CHAPEL HILL, NC (July 19, 2013) – June marked the end to a disappointing six months for North Carolina’s labor market. Over the first half of 2013, employers added just 16,100 more jobs than they cut (+0.4 percent). That change was the worst first-half figure posted so far during the economic recovery. Moreover, the size of the state’s labor force has fallen steadily throughout the year, as has the number of employed persons.

These findings come from new data from the Labor and Economic Analysis Division of the NC Department of Commerce.

“The first half of 2013 was the most disappointing one for job growth in North Carolina since the onset of the recovery,” said John Quinterno, a principal with South by North Strategies, Ltd., a research firm specializing in economic and social policy. “While 2013 began on a positive note due to hiring in the private sector, virtually no net job growth occurred during the year’s second quarter. Since March, the state has lost 100 more jobs than it has gained.”

In June, North Carolina employers added 5,700 more jobs than they cut (+0.1 percent). That monthly change was the first positive one logged since February. Last month, private-sector payrolls netted 6,300 positions (+ 0.2 percent), while public-sector payrolls shed 600 jobs (- 0.1 percent). Within the private sector, the professional and business services sector netted the most jobs (+3,700, +0.7 percent), with 97.3 percent of the gain originating in the administrative and waste management services subsector. The construction industry added, on net, 1,800 positions (+1.1 percent), followed by the trade, transportation, and utilities sector (+1,600, +0.2 percent), with all of the gains occurring in the retail trade subsector. Meanwhile, the other services sector shed the most positions (-1,600, -1.1 percent), followed by the education and health services sector (-600, -0.1 percent) and the leisure and hospitality and manufacturing sectors (both -300, -0.1 percent).

A revision to the May payroll data found that the state lost somewhat fewer jobs than first estimated (-5,100 versus -5,900). With that revision, North Carolina now has, on net, 119,600 fewer payroll positions (-2.9 percent) than it did in December 2007. Since bottoming out in February 2010, the state has netted an average of 5,200 payroll jobs per month, resulting in a cumulative gain of 208,200 positions (+5.4 percent).

“North Carolina experienced very little net payroll growth during the first half of 2013,” noted Quinterno. “The net gain of 16,100 jobs equaled just 35.6 percent of the gain recorded during the first half of 2012. For North Carolina to net as many jobs in 2013 as it did in 2012, the state would need to net an average of 12,300 jobs per month for the rest of the year. The last time the state averaged comparable growth during the second half of a year was in 2006.”

The household data for May also pointed to the existence of a sputtering labor market. Since the start of 2013, North Carolina has experienced a steady decline in the size of the labor force, as well as the number of employed persons. The size of the labor force has returned to a level last seen in April 2012, and the number of employed persons is at the lowest level posted since October 2012. While both the number of unemployed North Carolinians and the statewide unemployment rate have fallen throughout 2013, the improvements are largely attributable to people leaving the labor market rather than finding new positions.

Another alarming development experienced during the first half of 2013 was a steadily slide in two major measures of labor utilization. The labor force participation rate has fallen by 1.1 percentage points since last December, while the employment to population ratio has dropped by 0.7 percentage points. Both indicators are trending back toward their recessionary lows.

“The first half of 2013 proved disappointing for North Carolina’s labor market,” observed Quinterno. “Job growth ground to a halt, especially in the second quarter, and sizable numbers of people left the labor market altogether. If the current pace of job growth continues during the year’s second half, 2013 could prove to be the worst year of job growth in North Carolina since the onset of the economic recovery.”