North Carolina’s unemployment rate remained unchanged at 5.5 percent in March despite strong job growth during the month.
The 12,500 nonfarm jobs added in March ranked among the largest gains in the nation, said Wells Fargo Securities economist Mark Vitner.
However, the additional new jobs were counteracted by a hike in the labor force – the result of job seekers moving to the state plus jobless workers who had given up seeking work deciding to reactivate their job searches. Government statisticians only count people without jobs who are actively seeking work as unemployed.
Over the past 12 months North Carolina’s labor force has expanded by 2.6 percent.
Although that labor force growth is exacerbating the state’s unemployment rate in the short-term, “it allows employment to grow more so in the future,” said Richard Kaglic, an economist in the Charlotte branch of the Federal Reserve Bank of Richmond.
“I’m not concerned the unemployment rate didn’t come down,” Kaglic said.
The state’s unemployment rate has fallen three-tenths of a percentage point over the past 12 months, but it remains above the national rate of 5 percent.
The number of unemployed people actually fell slightly in March to 265,918, a decrease of 131, “but it wasn’t enough to pull the unemployment rate down,” Vitner said.
Over the past 12 months the state has added 104,300 nonfarm jobs, an annual growth rate of about 2.5 percent. That’s better than the national job growth rate of 2 percent, Kaglic said.
The sectors that added the most jobs in March were trade, transportation and utilities, which added 6,600, and profession and business services, which added 3,900. Education and health services also added 1,100 jobs.
The largest job losses were reported in government, which lost 1,500, and construction and information, which each lost 800.
Vitner projects that the state unemployment rate will “slowly grind lower” over the rest of the year.
“I don’t think job grow is going to get much stronger than it’s been, and labor force growth seems to be accelerating,” he said. “That’s going to make it tougher to reduce the unemployment rate.”
One wild card going forward, said Vitner, is the economic impact of HB2, the new state law that limits the legal protections afforded LGBT individuals.
“I do wonder, as we see the announcements pile up rated to HB2, what impact that will have on the state,” said Vitner.
Among those announcements are Deutsche Bank’s decision to halt its plan to create 250 jobs in Cary and PayPal scrapping plans for a new Charlotte operations center that would have employed 400 people. Two other companies, Red Ventures and Braeburn Pharmaceuticals, have said they are re-evaluating expansion plans because of the law.
“One of the key competitive advantages that North Carolina has had is that we have had a well-deserved reputation that businesses and government tended to work together to promote economic growth and well-being,” Vitner said. “This whole mess really calls that into question.”
“My assumption is,” he added, “that (the government is) going to fix this, mainly because of the pressure they are probably hearing from the business community.”
The employment data, which is adjusted for seasonal factors, was issued Friday by the N.C. Department of Commerce.