South By North Strategies, Ltd.

CHAPEL HILL, NC (August 19, 2013) – In July, employers in North Carolina added 8,200 more payroll positions than they eliminated (+0.2 percent). While that monthly gain was the second-largest one recorded so far in 2013, it was insufficient to drive down unemployment in the state. Both the unemployment rate and the number of unemployed persons actually rose over the month, while the number of employed persons fell to the lowest level recorded since August 2012.

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

“July was yet another disappointing month for North Carolina’s labor market,” said John Quinterno, a principal with South by North Strategies, Ltd., a research firm specializing in economic and social policy. “While the private sector recorded its best month of job growth so far this year, payroll cuts in the public sector erased nearly 40 percent of that gain.”

In July, North Carolina employers added 8,200 more jobs than they cut (+0.2 percent). That monthly change was the second-largest one recorded so far in 2013, exceeded only by a gain of 14,100 jobs in January. Last month, private-sector payrolls netted 13,500 positions (+ 0.4 percent), while public-sector payrolls shed 5,300 jobs (- 0.7 percent) due entirely to cuts by state and local governments. Within the private sector, the trade, transportation, and utilities sector netted the most jobs (+5,200, +0.7 percent), with 59.6 percent of the gain originating in the retail trade subsector. Leisure and hospitality services added, on net, 2,700 positions (+0.6 percent), with all of the gain occurring in the accommodation and food service subsector. Every other private-sector industry added jobs, with the exceptions of natural resources and mining (no change) and education and health services (-700 jobs, -0.1 percent).

A revision to the June payroll data found that the state gained fewer jobs than first estimated (+2,700 compared to +5,700). With that revision, North Carolina now has, on net, 114,400 fewer payroll positions (-2.7 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 213,400 positions (+5.6 percent). Additionally, the overall net gain of 13,100 jobs (+0.3 percent) recorded during the first six months of 2013 was the worst first-half figure for job growth in both absolute and relative terms posted so far during the economic recovery.

“North Carolina has experienced relatively little net payroll growth during 2013,” noted Quinterno. “The net gain of 21,300 jobs recorded during the first seven months of the year is 49.3 percent lower than the number netted during the first seven month of 2012. For North Carolina to net as many jobs in 2013 as it did in all of 2012, the state would need to net an average of 13,700 jobs per month for the rest of the year. The last time the state averaged roughly comparable growth during the last five months of a year was in 2006.”

The household data for July also pointed to the existence of a sputtering labor market. Last month, the number of unemployed persons rose (+1,527, +0.4 percent), and the number of employed persons fell (-13,735, -0.3 percent). The unemployment rate increased to 8.9 percent, which was the highest figure recorded since April, when the rate also equaled 8.9 percent.

Since the start of 2013, North Carolina has experienced a steady decline in the size of its labor force, as well as a drop in the number of employed persons. The size of the labor force has fallen to the lowest level recorded since January 2012, and the number of employed persons is at the lowest level posted since August 2012. While both the number of unemployed North Carolinians and the statewide unemployment rate have fallen during 2013, the improvements are largely attributable to people leaving the labor market rather than finding new positions.

The ongoing slides in two major measures of labor utilization offer additional evidence of sagging labor market conditions. In July, the labor force participation rate fell for the sixth-consecutive month, and the current rate of 62 percent is the lowest monthly figure recorded at any point since January 1976. Similarly, the employment-to-population ratio fell again in July to 56.5 percent, a level only slightly above the 37-year low of 56.3 percent posted in late 2011.

July’s labor market report further is significant because it is the first measure of the state’s labor market to have occurred since the implementation of extensive changes to the state’s system of unemployment insurance compensation. While the number of unemployed persons and the statewide unemployment rate rose from June to July, the number of new initial insurance claims fell by 24.2 percent. Moreover, the number of individuals receiving regular state-funded insurance compensation (new and continuing claims) fell by 10.5 percent from June to July.

“North Carolina’s labor market remains battered and bruised,” observed Quinterno. “While the private sector added jobs in July, that growth was too modest to alter radically the labor market situation. Too many labor market indicators either are under-performing or are moving in the wrong direction. 2013 is well on track to be the worst year for job growth since the onset of the economic recovery.”