South By North Strategies, Ltd.

CHAPEL HILL (November 19, 2010) – North Carolina recorded zero net job growth in October, according to data released today by the Employment Security Commission. At the same time, the state’s unemployment rate fell slightly, dipping to 9.6 percent. Unfortunately, this drop was attributable primarily to a decline in the size of the state’s labor force.

“There is little in the October employment report to celebrate,” says John Quinterno, a principal with South by North Strategies, Ltd., a research firm specializing in economic and social policy. “The lack of any net job growth is a worrisome development. By this point in a normal business cycle, job growth should be occurring at a brisk pace.”

Last month, employers added no more positions than they cut. A net loss of 2,100 public-sector positions was balanced by a net gain of 2,100 private-sector positions. Among private industries, education and health services added the most positions (+4,000), followed by trade, transportation, and utilities (+1,900), and professional and business services (+800). Those gains largely were offset by losses in leisure and hospitality services (-4,000), financial activities (-1,300), and information (-300).

Additionally, a revision to the September data lowered the net job growth first reported for the month. Instead of gaining 10,100 positions in September, North Carolina actually netted 9,800 positions. With that revision, North Carolina has shed, on net, 267,800 positions – 6.4 percent of its payroll employment base – since December 2007.

“North Carolina’s labor market is showing few signs of recovery,” notes Quinterno. “The gains recorded in early 2010 have disappeared. Since May, payroll employment in North Carolina has fallen by 27,100 positions. The economy clearly is proving unable to generate jobs without public policy supports like those provided through the federal recovery act.”

Since October 2009, North Carolina has gained 9,100 jobs (+0.2 percent). In terms of individual industries, professional and business services grew the most in absolute and relative terms (+18,500, +4  percent), while construction shed the most jobs in absolute and relative terms (-7,700, -4.3 percent).

The household data for October also were troubling. Last month, the labor force contracted by 0.3 percent as 12,152 individuals stopped working or seeking work. The number of employed individuals fell, as did the number of unemployed individuals. Owing largely to the contraction of the labor force, the unemployment rate fell from 9.7 percent to 9.6 percent. The reduction in the size of the labor force is disturbing and suggests that joblessness is much more widespread than reflected in official measures.

“Some 102,000 North Carolinians have left the labor force since May,” observes Quinterno. “That contraction is responsible for much of the recent decline in the unemployment rate and is a sign of an extremely unhealthy labor market. By the same point in time following the 1990-91 and 2001 recessions, the labor force was growing again.”

“The October employment report illustrates just how weak the labor market is,” explains Quinterno. “In the 13 months since the state’s labor market hit bottom, few meaningful improvements have occurred. Public policy supports provided a bounce in late 2009 and early 2010, but the economy is proving unable to create jobs without policy assistance. Little in the October report suggests that a labor market recovery is underway in North Carolina.”