The unemployment rate in North Carolina inched higher in July, the first uptick in the closely watched economic indicator since January.
The state’s seasonally adjusted unemployment rate rose one-tenth of a percentage point to 8.9 percent last month, according to data released Monday by the state Department of Commerce’s Labor and Economic Analysis Division.
“It was a disappointing month,” said Mekael Teshome, a PNC Financial Services Group economist.
Although the jobless rate was seven-tenths of a percentage point lower than it was a year ago, North Carolina’s unemployment rate is tied with Rhode Island for the third-worst in the nation. Only Illinois, at 9.2 percent, and Nevada, where the unemployment rate is 9.5 percent, have higher unemployment rates.
The national unemployment rate for July was 7.4 percent, an improvement from June’s 7.6 percent.
“I think we have a story of two North Carolinas,” Teshome said. “We have some really strong areas in the state – the Triangle area, Charlotte – but then other parts of the state are struggling to get back on their feet from the Great Recession. Overall, the state’s recovery has been pretty modest.”
Teshome said that the decline in the labor force by 12,208 workers was particularly disconcerting. The labor force encompasses workers who have a job plus unemployed workers who are actively seeking a job.
“When people are dropping out of the labor force, it’s a sign that they are less confident about their job prospects,” he said. “So people are discouraged and leaving the labor force.”
The labor force in July sunk to its lowest level since February 2012, said Allan Freyer, public policy analyst for the nonprofit N.C. Justice Center’s Budget and Tax Center.
“That shows we are going in the wrong direction,” Freyer said.
On the plus side, the state added 8,200 jobs last month, boosting the number of jobs added over the past 12 months to 69,200. But it wasn’t a big plus.
“That’s a 1.7 percent increase,” said James Kleckley, an economist at East Carolina University. “That’s not huge.”
The unemployment rate and the jobs numbers rely on different surveys. The unemployment rate is based on a series of household interviews, while the jobs numbers are derived from surveys of employers.
The job gains were led by 5,200 new jobs in the trade, transportation and utilities sector and 2,700 additional jobs in leisure and hospitality services. Government jobs declined by 5,300.
Over the past 12 months, the leisure and hospitality sector has added 21,500 jobs, more than any other sector.
Freyer said that U.S. Bureau of Labor Statistics data shows that those jobs pay an average of $8.30 an hour.
“That says the state’s growth opportunities are in ultra-low-wage jobs,” Freyer said. “That’s not the direction we want to be going.”
Local unemployment rates for July are scheduled to be released Aug. 28. The unemployment rate in the Triangle has declined for five consecutive months and was 7.2 percent in June, according to state data seasonally adjusted by Wells Fargo economists.