State jobless rate up slightly

N.C. holds steady in economic storm

North Carolina's economy is moving forward against some strong head winds.

There's the credit crunch that has roiled the housing market and hurt the nation's biggest financial companies, including Bank of America in Charlotte. Many companies are turning in some dismal quarterly financial results -- among the worst in five years.

Oil prices are hitting new records, raising the cost of energy. Then there's the drought, which is causing much consternation in North Carolina and the rest of the Southeast. If it continues unabated, some businesses might be forced to trim or change their operations.

The slowdown is apparent in the state's employment numbers. In September, statewide unemployment rose to 4.9 percent from 4.8 percent in August, according to figures released Friday by the N.C. Employment Security Commission.

"I think people should be concerned," said Mike Walden, an N.C. State University economist. "Think of the economy as a boxer. We've taken a strong punch, and it's kind of stunned us. We're not down, but we're weakened. ... I think we're going to be in a weakened state for the next six months."

The increase came, in large part, because the number of people in the labor force rose in September. Total employment in the state actually increased by almost 57,000 workers during the year that ended in September. So the state's employers are creating jobs.

But they're adding them at a slower pace.

Employment rose by only 1.3 percent between September 2006 and September 2007. By comparison, employment rose by more than 3 percent between September 2005 and September 2006. That shows growth is moderating.

Even so, "I feel pretty good about the state economy, quite frankly," said Harry Davis, a professor at Appalachian State University and economist for the N.C. Bankers Association. "I don't think we're going to have a recession anytime soon. There's enough horsepower out there to keep us out of that."

Indeed, although the state jobless rate has been above the national average for seven consecutive months -- the U.S. average was 4.7 percent in September -- it has stayed at or below 5 percent for the past year.

That's an important metric. Economists generally consider rates in that range equivalent to full employment.

Walden said he expects unemployment to rise in the coming months, likely through the beginning of next year. He, too, said he thinks the economy will avoid recession, unless an unexpected event occurs -- a major flare up in the Middle East, a significant winter storm or similar happening.