After three months of holding steady, North Carolina’s unemployment rate rose in July as the economy continues to struggle.
The N.C. Division of Employment Security reported Friday that the state’s unemployment rate rose two-tenths of 1 percentage point to 9.6 percent after seasonal adjustments.
July marked the first month in 2012 that the unemployment rate rose. Previously, it either fell or was unchanged.
The state unemployment rate remains well above the national rate, which rose one-tenth of one percentage point to 8.3 percent in July.
The uptick in the state unemployment rate is bad news for President Barack Obama’s re-election hopes. North Carolina is a swing state that could influence the election, and the state of the economy is a major campaign issue.
Just four states have higher unemployment rates than North Carolina: Nevada, Rhode Island, California and New Jersey. North Carolina is tied with South Carolina for fifth-worst.
Still, Mike Walden, an economist at N.C. State University, said of the monthly data: “My take on this is that it’s not as bad a report as it looks.”
Although the numbers that factor into the unemployment rate show that the number of people employed fell by 13,733 in July – which is why the unemployment rate rose – by another count the state actually added 1,800 jobs.
The discrepancy comes from the two different surveys that are conducted each month. The first is a survey of households, which is used to compute the unemployment rate. The second is a survey of employers.
Although in a perfect world those two numbers should be in alignment, “This is one of those months, unfortunately, when the two reports aren’t saying the same thing,” Walden said.
So which survey deserves more weight?
“Economists tend to put more focus on the employer survey because it’s a broader survey,” Walden said.
Both of the surveys are based on sampling. In other words, said Walden, “The government doesn’t go to every household. It doesn’t go to every business.” But the employer survey involves a larger sample, so economists have greater confidence in those numbers.
The employer numbers show that private-sector jobs actually rose by 16,000 in the quarter.
“That’s a very robust number,” Walden said. “Private-sector employers added people … pretty much across the board.”
Much of that growth, however, was undercut by a loss of 14,200 government jobs. All that loss was at the local government level; state and federal jobs rose slightly.
Local governments are struggling the most because they rely heavily on property taxes, which have taken a hit since the recession took its toll on real estate prices, Walden said.
The industry sector with the largest monthly increase was leisure and hospitality services, which added 5,900 jobs even after adjusting for seasonal factors.
The N.C. job market got off to a good start in the first quarter of this year but has been struggling since, said John Quinterno of South by North Strategies, a Chapel Hill firm specializing in economic and social policy.
To keep pace with the growth of the labor force, Quinterno said, the state needs to add about 6,400 jobs a month. But so far this year the state has added about 3,500 jobs monthly.
“We’re not really where we need to be to keep pace … and work our way out of that hole,” Quinterno said.