South By North Strategies, Ltd.

CHAPEL HILL, NC (June 20, 2014) – In May, employers in North Carolina added 5,700 more payroll positions than they cut (+0.1 percent), due entirely to growth in the private sector. The monthly household survey, meanwhile, recorded an uptick in unemployment, with the statewide unemployment rate rising to 6.4 percent, which was equal to the rate logged this past February. Nevertheless, North Carolina still has 1.1 percent fewer payroll jobs, 31.6 more unemployed residents, and an unemployment rate that is 1.4 percentage points higher than it did almost 6.5 years ago.

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

“The May employment report contained signs of marginal progress, even though overall labor market conditions in North Carolina remained far from healthy,” said John Quinterno, a principal with South by North Strategies, Ltd., a research firm specializing in economic and social policy. “Last month, North Carolina netted relatively few payroll jobs, yet the labor force expanded, which led to a rise in unemployment and the unemployment rate. This increase must be interpreted cautiously, however, given the seasonal factors often at work at this time of year.”

Between April 2014 and May 2014, North Carolina employers added 5,700 more jobs than they cut (+0.1 percent). Private-sector payrolls netted 6,100 positions (+0.2 percent), but public-sector payrolls shed, on net, 400 jobs (-0.1 percent). Within private industry, the leisure and hospitality services sector netted the most jobs (+7,400, with 63.5 percent of the increase originating in the accommodation and food services subsector), followed by trade, transportation, warehousing, and utilities sector (+2,300, with 56.5 percent of the gain originating in the wholesale trade subsector). Meanwhile, the professional and business services sector shed 3,400 more jobs than it added (all of the losses occurred in the administrative and waste management subsector), followed by the manufacturing sector (-2,200, with losses split equally between the durable and non-durable goods subsectors).

A revision to the April 2014 payroll data found that the state gained 2,700 more jobs that month than first estimated (+18,000 versus +15,300). With the revision, North Carolina has, on net, 45,700 fewer payroll positions (-1.1 percent) than it did in December 2007. Since bottoming out in February 2010, the state has netted an average of 5,550 payroll jobs per month, resulting in a cumulative gain of 283,100 positions (+7.4 percent). At that rate, holding all else equal, it would take until early 2015 for the state to have as many jobs as it did at the end of 2007.

“While positive, the pace of payroll growth in North Carolina has not accelerated radically over the past year,” explained Quinterno. “Between May 2013 and May 2014, the total number of payroll jobs in North Carolina grew by 1.9 percent, a rate similar to those seen in prior years. Between May 2012 and May 2013, the total of number payroll jobs in North Carolina rose by 1.6 percent, while between May 2011 and May 2012, the rate of growth was 1.8 percent. The bottom line is that North Carolina has experienced the same basic rate of job growth for several years in a row.”

The household data recorded in May contained some positive news about the state’s labor market. Last month, the statewide unemployment rate rose by 0.2 percentage points to 6.4 percent, which was same rate logged in February of this year. An increase in the size of the labor force contributed to that increase. After accounting for that growth, 10,187 more North Carolinians (+0.2 percent) had jobs in May than in April, and 8,795 more persons were unemployed (+3 percent). These data, however, should be interpreted cautiously due to the seasonal dynamics often at work at the start of summer.

While the changes in household data recorded between April and May seemed positive, the data for changes over the past year were more mixed. Between May 2013 and May 2014, the number of unemployed North Carolinians fell by 90,299 persons (-23.1 percent), but 9.2 percent of the decline was attributable to people who left the labor force entirely. If those 8,307 persons were added back to the labor force and considered unemployed, the statewide unemployment rate in May would have equaled 6.6 percent. Even if 50 percent of those individuals were added back to the labor force and considered unemployed, the statewide unemployment rate would have equaled 6.5 percent.

Year-over-year declines in the statewide labor force participation rate provide additional evidence of a labor market that is performing poorly. In May 2014, the share of working-age North Carolinians participating in the labor market equaled 61.3 percent, which was up from the 61.1 percent figure logged in April but lower than the 62.1 percent figure recorded a year ago. Even though the labor force participation rose in May for the second straight month, it remains close to the lowest monthly figure recorded at any point since January 1976.

Although another important measure of labor utilization, the employment-to-population ratio, rose over the year, the current share of working-age North Carolinians with a job (57.4 percent) was just 1.1 percentage points above the 38-year low of 56.3 percent posted in summer 2011.

The May labor market report provided additional insight into the effects of the extensive changes to the state’s system of unemployment insurance implemented last summer. Between April and May, the number of claimants of regular state-funded insurance fell by 5.6 percent, dropping to 42,382 from 44,892. Compared to a year earlier, 48,476 fewer individuals received regular state-funded insurance in May (-53.4 percent).

Also in May, the state paid a (nominal) total of $35.4 million in regular state-funded unemployment insurance compensation, an amount 60 percent lower than the (nominal) total of $88.4 million paid in May 2013.

“Despite some recent progress around the margins of the state’s labor market, conditions remain far from healthy. Look beyond the important-yet-limited measure of the unemployment rate, and one will see a labor market that is netting jobs at the same sluggish pace that has characterized the past few years. North Carolina simply still is struggling with the consequences of the last recession”