'Not out of the woods' on unemployment rate

The state's unemployment rate dipped below 10 percent for the first time in 18 months, but hold the celebration.

Much of the decline may really be due to the way the rate is calculated, and not an actual drop in the number of people out of work.

As unemployment benefits ran out for thousands of workers in July, many stopped looking for jobs - an action that takes them out of the official labor pool tally and the unemployment rate.

"I don't want to rain on the unemployment rate, but we're clearly not out of the woods," said Mark Vitner, senior economist with Wells Fargo in Charlotte.

The July unemployment rate, as reported Friday by the N.C. Employment Security Commission, dropped to 9.8 percent in July from 10 percent in June. It remains above the national jobless rate of 9.5 percent.

From June to July, the number of workers counted in the state's labor force dropped by 35,612, largely because of those workers who stopped looking and were not counted.

Congress passed another extension of federal unemployment benefits at the end of July. Many people who are again eligible to receive new benefits will resurface in the labor force figures in the coming months as they reapply for benefits, Vitner said.

"I do think the absolute worst of the unemployment rate is behind us," he said. "It's not to say there's been no improvement. But by and large, companies are still not hiring. They're hoarding cash. They're not taking risk.

"The rate will very likely go back up next month and every month till the end of the year, or virtually every month until the end of the year."

North Carolina's unemployment rate peaked in February at 11.2 percent. July was the first time the state has seen a rate in the single digits since February 2009, when it was also 9.8 percent.

Caught in the middle

For people seeking jobs, the stubbornly high rate is tough to take. Many have been searching for a job for more than a year.

"I'm trying to be optimistic about it, but the jobs don't just seem to be out there," said Michael Wrinn, 59, of Raleigh, who lost his job repairing dental equipment in May 2009. "I don't think people who have jobs understand what you have to go through."

Wrinn said that right now there are just so many people looking for work that getting a job offer is exceedingly difficult. He said he feels stuck in the middle of the labor force.

"There are jobs that require less training than I have, and I'll do that job. I don't care," he said. "But they just pass you over. On the other hand, there's jobs I can't get into because I don't have enough training."

Though some industries like trade, transportation and utilities saw improvement, most industries saw a decline in employment in July, said John Quinterno, principal for South by North Strategies, a Chapel Hill research firm specializing in economic and social policy.

Other sectors saw significant decreases, notably government, which lost 27,300 jobs from a month ago.

"Basically every major payroll category either declined or posted minimal gains," he said.

A double whammy

The tumultuous market has hit Myron Upchurch twice.

On Thursday, he was laid off from his job as an electrician with Waco Electrical Co. On Friday morning, he was at the Raleigh ESC office applying for unemployment benefits.

It's the second time he's been on unemployment during this recession. Previously, he was laid off by another company that went bankrupt.

"There's just not enough building going on right now," said Upchurch, 54, of Garner. "There's only so many electrical companies in the area. ... I don't want to draw unemployment. I'd rather work. But it's rough."

Unfortunately, things may not improve any time soon.

Wells Fargo is predicting at least three more quarters of slow growth statewide, though Vitner said the Raleigh and Charlotte markets are seeing the strongest private-sector job growth.

Data on the Triangle's job market for July are scheduled to be released next Friday. In June, the local rate rose slightly to 8 percent.

Regional data likely will mirror what happened with the state rate, Vitner said.

"We think a genuine recovery will come from the private sector, which is strengthening slightly," Vitner said. "By the middle of next year, the private sector should be growing."