North Carolinas unemployment rate fell dramatically in November, the fourth consecutive month it has dropped.
The states seasonally adjusted jobless rate in November was 7.4 percent, down from 8 percent in October, the states Commerce Departments Labor and Economic Analysis Division reported Friday. The rate has fallen 2 percentage points over the past year and is at its lowest point in five years.
But there continued to be concerns that the rapidly falling rate is in part the result of jobless workers giving up their search for employment. North Carolina lost 6,500 jobs during the month, according to a payroll survey of employers, and has added 56,800 jobs over the past year, an annual growth rate of just 1.4 percent.
A separate household survey, which estimates the size of the labor market, showed that the unemployment rate dropped at the same time that the labor force contracted. The labor force shrunk by 8,101 in November and has declined by 95,009 over the past year.
Its nice to see (the unemployment rate) go down, but it doesnt make much sense, said James Kleckley, an East Carolina University economist. ... Because when you look at the information, were just not creating the jobs to push this rate down this quickly.
The jobless rates steep decline has also coincided with North Carolinas decision to halt federally funded extended unemployment benefits. About 70,000 unemployed workers statewide recently lost those benefits as the result of a state law that went into effect July 1. Kleckley said it was unclear what effect, if any, that has had on the jobless rate.
Im not sure if that comes into play or not, he said.
The state has also seen a drop in continuing unemployment claims since early July. North Carolina had 74,243 such claims during the week of Dec. 7, down 28 percent from the same period last year.
Mark Vitner, a Wells Fargo economist in Charlotte, said less generous jobless benefits is likely one of several factors at play in the falling rate. But he said the jobless rate, for all its flaws, is still the best overall measure for capturing improvements in the labor market.
I dont think its correct to dismiss the drop in the unemployment rate, he said. ... The fact is the unemployment rate has dropped two percentage points over the last year, which is likely one of the largest drops in the country. The unemployment rate is now much more in line with what were seeing nationally and in other states.
North Carolinas jobless rate is now just four-tenths of a percentage point above the national rate of 7 percent. That gap was 1.6 percentage points 12 months ago.
Vitner said he believes the November payroll survey numbers will be revised significantly in February, estimating that the state has actually added at least 85,200 jobs over the past year. That would be about the same number of jobs the state created in 2012.
Next year we think the job growth will be stronger, he said. The quality of jobs is also likely a little bit better, the mix is likely a little bit better than what the November numbers are showing.
The largest jobs losses in November were in education and health services (4,100), manufacturing (3,300), financial activities (2,500) and government (1,500). The largest increases were in trade, transportation and utilities (2,600), professional and business services (2,200), and construction (1,600).
As for the shrinking of the states labor force, Vitner said most states are experiencing the same trend.
What I think is a little unusual in North Carolina is that were seeing a drop in the labor force at a time when population growth appears to be ramping up, he said.
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