South By North Strategies, Ltd.

CHAPEL HILL, NC (November 22, 2013) – The release of new state-level labor market information following a long delay caused the shutdown of the federal government provides little evidence that conditions have improved materially across North Carolina. While employers added 30,100 more payroll jobs (+0.7 percent) than they the eliminated between August and October, the size of the state’s labor force fell by 18,369 persons (-0.4 percent) during the same period. And the state’s labor force participation rate—a key measure of labor utilization—fell steadily over that time to the lowest monthly figure recorded at any point since 1976.

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

“North Carolina’s labor market has experienced few meaningful improvements since August,” said John Quinterno, a principal with South by North Strategies, Ltd., a research firm specializing in economic and social policy. “Although the state experienced some job growth and saw a sharp drop in the unemployment rate, the decline in unemployment was attributable largely to people leaving the labor force rather than finding jobs. A tremendous amount of labor in North Carolina simply is sitting idle due to a lack of demand.”

Between August and October, North Carolina businesses gained 30,100 more jobs than they cut (+0.7 percent). Private-sector payrolls netted 19,200 positions (+0.6 percent), and public-sector payrolls added 10,900 jobs (+1.6 percent), due chiefly to hiring by local governments (+7,100, +1.7 percent). Within the private sector, the educational and health services sector netted the most jobs (+9,900, +1.8 percent), followed by the trade, transportation, and utilities sector (+7,000, +0.9 percent). The leisure and hospitality sector, meanwhile, lost the most jobs (-3,200, -0.7 percent), followed by the finance (-3,100, -1.5 percent) and construction (-1,800, -1.1 percent) sectors.

A revision to the August payroll data found that the state gained more jobs that month than first estimated (+2,900 versus -1,700). With that revision, North Carolina now has, on net, 81,000 fewer payroll positions (-1.9 percent) than it did in December 2007. Since bottoming out in February 2010, the state has netted an average of 5,600 payroll jobs per month, resulting in a cumulative gain of 246,800 positions (+6.4 percent). At that rate, all else equal, it would take until January 2015 for the state to have as many payroll jobs as it did at the end of 2007.

The household data recorded since August offer further evidence of an underperforming labor market. Since that time, the statewide unemployment rate has fallen by 0.7 percentage points and has reached the lowest level (8 percent) recorded since late 2008. Yet much of the decline in the unemployment rate was due to people leaving the labor force rather than finding jobs. Between August and October, the size of the state’s labor force declined by 18,369 persons (-0.4 percent) and reached a level smaller than the one posted in October 2011.

The ongoing slides in two major measures of labor utilization provide additional evidence of people exiting the labor market altogether. Between August and October, the labor force participation rate, a key measure of labor utilization, fell steadily. In fact, the labor force participation rate has fallen in every month since January, and in October, it reached a monthly level—61.4 percent—lower than any figure posted at any time since 1976. Another important measure, the employment-to-population ratio, essentially managed to hold steady between August and October, but even then, the current ratio of 56.5 percent is only 0.2 percentage points above the 37-year low of 56.3 percent posted in the summer of 2011.

“Relatively little has changed in North Carolina’s labor market in the two months since the last release of statewide labor market data,” observed Quinterno. “At first glance, the steep decline in the unemployment rate seems promising, but scratch beneath the surface, and you will find a rate that is coming down for too many of the wrong reasons. North Carolina’s labor market simply continues to disappoint.”