State jobless rate at 6-year high

The September figure is the highest North Carolina has weathered since January 2002

Statewide unemployment hit 7 percent in September, the highest since January 2002, as the fallout from the national economic downturn seeps deeper.

September was the ninth consecutive month in which the state's joblessness rose, increasing from 6.9 percent in August. Statewide unemployment remains higher than the national average, which stood at 6.1 percent last month.

The September data were released Friday by the N.C. Employment Security Commission. Jobless data for the Triangle will be released next week. The Triangle traditionally performs better than the statewide and national averages.

In all, 318,309 people were unemployed in the state last month, up from 213,973 a year before.

N.C. State University economist Mike Walden predicts that the jobless rate will rise to about 8 percent before things improve.

"It looks like this recession will be one of the worst since World War II," Walden said.

When the housing bubble burst, economists had been bullish on the state's economy because real estate values here were not overheated and the damage appeared contained. What's more, the state's economy is built on a bedrock of stable industries: health care, education and government. Even in the past year, jobs in education and health grew nearly 20 percent in the state.

But as the extent of the mortgage crisis became clear -- freezing world credit markets, bringing down financial giants on Wall Street and requiring a federal bailout -- forecasts for the region became less optimistic. Economists now predict the slump here will last at least through next year.

"We don't expect a quick turnaround from this thing," said Mike Helmar, director of industry services at Moody's Economy.com, an economic forecasting service.

The mortgage crisis has dramatically penetrated into the heart of the state. Wachovia, the banking giant in Charlotte, is being acquired by rival Wells Fargo, a move that will likely result in significant job losses in Charlotte.

Staff reductions for other businesses have already been sweeping through the Triangle. German computer-chip maker Qimonda will cut 190 workers, trimming more than half its work force in Cary. Amkor Technology will shut down its production facility in Morrisville and let go of 76 employees. Sony Ericsson is eliminating 400 positions in Research Triangle Park.

But state statistics also show that even as joblessness increased, the number of people employed also rose. Last month, 4.26 million people in the state had jobs, which is 6,668 more than in August.

"We're still attracting workers, though at a modest pace," Walden said.

Among the job losses, manufacturing has taken the biggest hit, falling nearly 22 percent in one year. Since the 2001 recession, North Carolina has lost 214,000 manufacturing jobs, according to state figures. That includes 110 jobs cut in Durham by Freudenberg Nonwovens this year amid a drop in orders from the textile maker's customers in the battered automotive and housing sectors.