Business

N.C. unemployment rate dips to 10.8 percent as labor force shrinks

Posted September 18, 2009 10:37 a.m. EDT
Updated September 19, 2009 7:28 p.m. EDT

— North Carolina’s unemployment rate dipped slightly for the third consecutive month in August, but a smaller labor force and not more people working contributed to the drop, the N.C. Employment Security Commission reported Friday.

Employment actually fell by 8,330 to 4 million, but that figure was offset by a decline of nearly 15,000 in the size of the labor force to 4.52 million. Unemployment also decreased by nearly 7,000 to 488,974.

The ESC attributed drops in the labor force to people who are no longer seeking employment and have dropped out of the job market, moved out of state or are no longer receiving unemployment benefits.

Only a return of teachers to local jobs, which contributed to a surge of 20,100 in government sector employment, kept unemployment from increasing.

Job cuts hit hardest in the transportation and utilities, which shed 4,400 positions.

Another 4,100 jobs were lost in manufacturing, while the leisure and hospitality shed 2,200 jobs. Professional and business services firms cut 1,200 jobs.

“A small loss in the labor force led to the decrease in the rate,” said ESC Chairman Moses Carey Jr.

“Much like previous months, we have not experienced a lot of change in the labor force one way or the other. These small changes have resulted in slight decreases throughout the past few months.”

North Carolina’s unemployment hit 11.1 percent in May but since then, has slowly slid to 11 percent in June, 10.9 percent in July and 10.8 percent in August.

However, economists such as Mike Walden at North Carolina State University and John Connaughton at UNC Charlotte are predicting that unemployment will increase before year’s end as the economy continues to struggle.

U.S. unemployment increased in August to 9.7 percent from 9.4 percent in July.