State jobless rate dips

Drop reflects fewer folks hunting work

The state unemployment rate dropped in August for the first time in seven months, but the decline was partly the result of fewer people looking for work.

North Carolina's jobless rate dipped to 4.8 percent in August from 5 percent in July, the first month-over-month decline since February, according to figures released Friday by the state Employment Security Commission.

North Carolina's unemployment rate remains slightly above the national average of 4.6 percent.

"Most economists would argue that a rate under 5 percent is considered full employment, so these numbers are pretty good," said Harry Davis, a professor at Appalachian State University and an economist for the N.C. Bankers Association.

The August jobs report for the Triangle, due next week, is expected to show a lower unemployment rate as companies such as Quintiles and Fidelity continue to add jobs.

But Davis and others say a seasonally adjusted drop of about 12,000 people in the state's labor force, coupled with problems in the national economy, could mean a slowdown in the coming months.

The national economy has slowed as consumers and investors wrestle with a slowdown in the housing market and upheaval in the mortgage industry. Those problems came to a head last month as the financial-services industry, especially, shed thousands of jobs amid a fallout in subprime mortgages. Some economists worry that the nation is headed for recession.

The Federal Reserve this week cut its benchmark interest rate by half a point, the first cut in four years, to help stave off problems and re-ignite growth.

"It's not time to hit the panic button, but there are likely to be some lean months ahead," said N.C. State University economist Mike Walden. "We could be crawling along for a while."

A closer look at the figures helps illustrate Walden's predictions.

Despite a lower jobless rate, total employment fell by about 3,514 workers from July to August, according to household surveys. A separate employment survey suggested that nonfarm jobs increased by 9,700.

It's not unusual for the two surveys to produce different results, Walden said, because they use different forms of sampling.

Surveys involving nonfarm jobs are based on payroll numbers and include more workers. Household surveys are done by phone and reach a broader range of workers, such as the self-employed and startup-company employees.

"The two surveys usually move in the same direction," Walden said. "When they don't, it could indicate the economy is entering a transition period."

Both surveys show that total employment grew during the past 12 months, even though unemployment rates have been higher than the national average since March.

Seasonally adjusted growth was at the slowest pace since September 2003.

"North Carolina is still in good shape," Davis said. "There are still plenty of good signs in here."