Raleigh, N.C. — North Carolina’s unemployment rate soared to 6.6 percent in July, the highest level since August of 2003.

In raw numbers, unemployment reached 302,717 people – an all-time high from the previous record of 271,092 in June, according to the North Carolina Employment Security Commission.

Helping drive the rate up was a surge in the state’s workforce as more people were seeking jobs. The number of people working or seeking employment climbed to 4,604,235 in July, topping the previous record of 4,561,644 set in May.

The jobless rate spiked from 5.9 percent in June and at 6.6 percent is nearly a full point higher than the national 5.7 percent rate. The U.S. rate was 5.5 percent in June.

“We were surprised by the jump in the rate,” said ESC spokesperson Larry Parker. “At the same time, there are a lot of different factors at work. We’re encouraged that employment is up for the first time since May. We also saw a sizable increase in the number of job entrants and job force re-entrants.”

N.C. State University economist Dr. Michael Walden also didn’t expect such a sizable jump. He also predicted worse is yet to come.

“I was surprised by the size of the jump, but not surprised by the upward trend in the rate,” he told WRAL.com.

Continuing challenges in the economy don’t bode well for employment, Walden said.

“I expect the seasonally adjusted unemployment rate to average 7.1% for the remaining five months of the year, with still higher rates in early 2009, peaking at near 7.5%,” he explained.

Even as the jobless rate increased, the number of people working also climbed, the ESC reported. Some 4,301,518 people were working in July, up 12,897 from June. The record for employment was set in January at 4,325,878.

Walden noted the employment improvement could be short lived.

“Yes, it was encouraging to see the rise in employment, but I don't expect this to carry through the rest of the year,” he said.

Offsetting the increase was the overall growth of the workforce – new residents, first-time job seekers and people wanting to return to work – by 92,358.

The jobless rate increase to 6.6 from 5.9 was the biggest one-month jump since October of 1981 when unemployment soared to 7.1 percent from 5.8 percent in September, Parker noted.

The surge in people out of work or seeking jobs in July followed two consecutive months at 5.9 percent. Unemployment has increased seven consecutive months and is up from 4.9 percent in January.

“North Carolina experienced significant growth in the labor force in July, with the number of individuals looking for work increasing and many of them finding jobs,” said ESC Chairman Harry E. Payne Jr. in a statement. “We also saw a rise in the number of workers either returning to the labor force or entering it for the first time.

“People believe they can find work in our state, and that is why they are out there looking for jobs,” he added. “In addition, we continue to see job announcements, such as the one made by Gov. Mike Easley on Thursday in Guilford County concerning Mack Trucks Inc., where nearly 500 new positions will be created.”

Parker noted that the numbers reflect a mixture of attitudes about the economy.

“We still see job orders being written,” he said, referring to companies seeking workers through the ESC. “Unfortunately, there are more people seeking those jobs. The job market is tight.

“It’s really not one thing you can put your finger on,” he added about the job picture. “People do feel they can get a job or that they need a job due to the economic situation.”

The biggest decrease in jobs came in the government sector, which declined by 2,600. The trade-transportation-utilities sector shed 2,000 jobs, and manufacturers cut 1,700 positions.

Employment growth included 3,800 more jobs in leisure and hospitality and educational and health services at 1,900 jobs. Professional and business services firms upped employment by 1,800.