South By North Strategies, Ltd.

CHAPEL HILL (May 21, 2010) – The April employment report released today by the Employment Security Commission points to a state labor market in fragile condition. Job growth is insufficient to accommodate all those who wish to work; unemployment remains elevated; and uncertainty clouds future prospects.

Last month, North Carolina employers added 7,500 more positions than they eliminated. The public sector generated 80 percent of those jobs with federal hiring – mainly for temporary census positions – accounting for 51.6 percent of net public-sector payroll growth. Since December 2007, North Carolina has lost, on net, 270,000 positions or 6.5 percent of its payroll employment base.

“Few positive changes have occurred within North Carolina’s labor market so far in 2010,” says John Quinterno, a principal at South by North Strategies, Ltd., a research firm specializing in economic and social policy. “Perhaps the best that can be said is that conditions have held steady. However, job growth remains insufficient to absorb new workers, let alone those displaced earlier in the recession.”

In April, North Carolina employers added 7,500 more positions than they cut. The public sector gained, on net, 6,000 positions while the private sector netted 1,500 positions. Among private industries, professional and business services gained the most positions (+6,300), followed by education and health services (+1,900). These gains were offset by losses in trade, transportation, and utilities (-3,100); leisure and hospitality services (-3,100); and construction (-1,800). Additionally, an upward revision to the March data raised net payroll growth for that month from 3,300 to 6,000.

“So far in 2010, North Carolina employers have added 15,700 more positions than they have eliminated,” notes Quinterno. “The average monthly gain of 3,925 is insufficient to meet the natural growth of the labor force, to say nothing of generating jobs for those displaced earlier in the recession. We are not on the road to a swift recovery.”

Despite a recent moderation in job losses, conditions deteriorated over the past year. Compared to April 2009, the state had 33,600 fewer jobs (-0.9 percent). In terms of individual industries, manufacturing (-26,100) and construction (-25,600) lost the greatest number of positions over the past year, while construction also declined the most in relative terms (-13 percent). Government employment grew the most in numerical (+20,400 positions) and relative (+2.9 percent) terms.

Stabilizing labor market conditions are reflected in April’s household data. Last month, the labor force expanded by 0.1 percent as 6,220 additional people sought work. The number of employed individuals rose, and the number of unemployed individuals declined. The unemployment rate therefore dipped from 11.1 percent to 10.8 percent. Nevertheless, since the start of the recession, the number of unemployed Tar Heels has grown by 131.3 percent, and the unemployment rate has jumped from 4.7 percent to 10.8 percent.

“The next few months could be quite difficult for North Carolinians seeking work,” cautions Quinterno. “Job growth is weak, and much of the recent growth has resulted from such government actions as temporary census hiring, housing tax credits, emergency unemployment insurance payments, and recovery act funding. Many of these supports are phasing out, and it is unclear if enough private-sector demand exists to take their place.”

Warned Quinterno, “Conditions could start deteriorating again.”