Labor Markets Softened in North Carolina in April, Even as Unemployment Dipped
The labor market picture in North Carolina was mixed in April as employment declined for the second month in a row, but the state's seasonally adjusted unemployment rate fell to its lowest level since February 2009. The dip in payroll jobs was disappointing in light of the relatively upbeat signals contained in our Carolinas Survey of Business Activity.
After jumping in January and February, payroll employment in North Carolina retraced its steps somewhat over the last two months, according to the state's Employment Security Commission. Employers shed an estimated 1,300 jobs in April on top of the roughly 800 that were lost in March. Still, the recent declines left total employment well above levels that prevailed at the beginning of the year. Much of the weakness was concentrated in the factory sector, where employment dropped by nearly 2,900, giving back all of the prior month's big increase. Trade, transportation, and utilities, and information services also saw notable job losses over the month. The declines in these industries offset the biggest gain in professional and business services employment since January. Education and health services added about 500 jobs, while leisure and hospitality, and financial services were effectively flat. Overall, government employment added nothing to top-line job growth, which is actually an improvement from most months in 2011. However, detailed data showed a big loss in state jobs offsetting gains in local government employment, which was somewhat of a reversal of recent trends.
Looking across the state, the decline in payrolls was most notable in the Asheville and Raleigh areas, both of which had seen relatively solid and steady increases in recent months. The Piedmont-Triad region (Burlington, Greensboro-High Point, and Winston-Salem) also lost jobs since March. On the upside, the Charlotte area's roughly 600 net new jobs led the state in April, with smaller increases reported for the Jacksonville and Hickory-Lenoir-Morganton regions. Employment was effectively flat in the state's remaining metropolitan areas during April. Over the past 12 months, employers in North Carolina have created more than 30,000 net new jobs, with about half of those occurring in the Charlotte, Durham, and Raleigh areas.
In spite of the recent declines in payroll employment, North Carolina's seasonally adjusted unemployment rate continued to trend down. In April, unemployment fell three-tenths to 9.4 percent — its lowest reading since February 2009. The number of unemployed workers dropped by nearly 13,000 in April, but the bulk of that decline resulted from an exodus from the labor force. After increasing for 17 straight months, labor force participation declined in the past two months (by 7,400 and 11,200 respectively). While a decline in the number of unemployed that results from decreased labor force participation may lower the unemployment rate in the near term, it can reduce longer-term growth potential by limiting the availability of labor. The recent declines in North Carolina's payroll employment are somewhat disappointing when compared to results from our Carolinas Survey of Business Activity. The current conditions index increased in each of the last six months through April and had reached its highest level since May 2010. And the current labor demand indicators suggested that hiring continued among responding firms, despite what is reflected in the state's jobs data.