South Carolina's Employment was Up in May, but Unemployment Edged Higher
On balance, South Carolina's labor market conditions improved in May despite an uptick in the state's unemployment rate. Payroll employment rose for the first time in three months and more workers were actively seeking jobs. Our Carolinas Business Activity Index softened a bit in May, suggesting that the pace of the region's economic expansion slowed.
After falling for two months, employment in South Carolina increased by a seasonally adjusted 6,000 jobs in May. The gain helped the state recover most of the roughly 7,000 jobs that were shed in March and April. May's increase was led by an encouraging rebound in the professional and business services sector, which grew by about 4,000 jobs. Firms in this important segment had cut a similar number of workers in each of the prior two months. Nationwide, this sector has seen substantial job growth since the recovery got under way, but such firms in South Carolina have been slower to increase hiring.
Job gains were fairly widespread in other segments of the private sector as well. Even the state's hard hit construction industry added about 900 workers in May. By contrast, employment in manufacturing was flat. After increasing more or less steadily, and impressively, between December 2009 and February 2012, factory employment has given back about 1,000 jobs over the past three months. Manufacturing still outpaces other industries in year-over-year job growth, with its 7,400 net new positions accounting for more than one-third of the state's total increase since last May. The next closest industries were trade, transportation, and utilities, and professional and business services, each of which saw job gains of about 5,700. Despite modest improvement in recent months, employment levels were still down compared to a year earlier in the construction and financial services industries.
Regionally, the most noteworthy employment gains during May took place in the Columbia, Greenville, and Myrtle Beach areas. Some smaller metropolitan areas, such as Florence and Sumter, saw employment levels rise as well. By contrast, employment was off about 2,500 in Charleston during the month.
Despite the solid gain in payroll employment, South Carolina's seasonally adjusted unemployment rate (which is calculated using a different survey) moved up by 0.3 percentage point in May to 9.1 percent. It was the first increase in the state’s unemployment rate since June of last year. Part of the rise in the ranks of the unemployed, however, can be attributed to an influx of new participants into the labor market. Apparently, the increase in the number of people looking for work in May exceeded the number of net new jobs, which ultimately resulted in a higher unemployment rate. On balance, general business activity in the Carolinas continued to increase in May, according to our monthly regional survey, although the pace of expansion slowed. Our Carolinas Business Activity index fell to 20 in May from 31 in April. In spite of the decline, the index still showed that a larger share of responding firms reported an increase in business activity than noted a decrease. Importantly, the survey’s labor demand metrics (number of workers and average hours) were positive as well.