South By North Strategies, Ltd.

CHAPEL HILL (June 17, 2011) – In May, employers in North Carolina eliminated 7,400 more payroll positions than they added, according to data released today by the Employment Security Commission. May marked the first month in 2011 in which North Carolina lost more jobs than it gained; in fact, the May losses offset 22 percent of the job growth recorded earlier in the year.

“North Carolina’s labor market continues to spin its wheels,” said John Quinterno, a principal with South by North Strategies, Ltd., a research firm specializing in economic and social policy. “The recovery has not yet delivered much in the way of meaningful job growth.”

Last month, North Carolina employers cut 7,400 more payroll positions than they added. Net losses occurred in the private (-6,400) and public (-1,000) sectors. Among private industries, professional and business services lost, on net, the most positions (-4,000), followed by other services (-2,400), and trade, transportation, and utilities (-1,400). The losses were offset by gains in financial activities (+1,500) and construction (+900).

Also, a revision to the April data found that the state gained 2,400 fewer payroll jobs than first thought (+500 versus an original estimate of +2,900). With that revision, North Carolina has lost, on net, 288,700 positions, or 6.9 percent of its payroll employment base, since December 2007.

“So far in 2011, North Carolina’s labor market has gained just 26,200 more jobs than it has lost,” noted Quinterno. “Particularly alarming is the fact that growth has slowed as the year has unfolded. The labor market is not moving in the right direction.”

Between May 2010 and May 2011, North Carolina lost, on net, 1,000 jobs (a zero percent change). All of the growth that occurred in the private sector (+31,500 positions) was more than offset by losses in the public sector (-32,500). In terms of individual private industries, professional and business services grew the most in absolute and relative terms (+19,200, +4 percent), while construction shed the most jobs in absolute and relative terms (-8,000, -4.5 percent). In the public sector, net job loss occurred at the federal level (-17,400, due to temporary census hiring), at the state level (-5,800), and the local level (-9,300).

The household data for May, meanwhile, were unimpressive. Last month, the total number of employed individuals increased by 12,040 (+0.3 percent), while the number of unemployed individuals was essentially unchanged. The size of the workforce also grew by 12,139 individuals (+0.3 percent).

Over the year, the number of unemployed North Carolinians fell by 55,097 (-11.2 percent). Unfortunately, much of this decline was attributable to individuals exiting the labor force. Between May 2010 and May 2011, the size of the labor force contracted by 39,929 individuals (-0.9 percent). Over the year, the unemployment rate fell to 9.7 percent from 10.8 percent.

“The developments of the past year have done little to close the state’s job gap or drive down unemployment to acceptable levels,” observed Quinterno. “The contraction in the size of the labor force remains a real concern. In fact, the share of the adult population with a job is lower now than it was in December 2007. In May 2011, 56.2 percent of working-age North Carolinians had jobs, compared to 62.4 percent in December 2007.”

“The May jobs report offers yet more proof that the state’s labor market is not mending itself,” added Quinterno. “Since the labor market bottomed out in December 2009, the total number of jobs in the state has increased by just 0.8 percent. Growth actually has slowed in recent months, and indicators suggest that few meaningful improvements will occur anytime soon.”