Despite sluggish job growth in recent months, North Carolina’s unemployment rate is expected to keep falling throughout 2014 to below 6 percent, UNC Charlotte economist John Connaughton said Tuesday.
In releasing his latest quarterly forecast for the state’s economy, Connaughton said North Carolina is expected to have continued economic growth this year, thanks in part to rising home prices and low interest rates. The state’s 15 sectors are projected to post a rise in economic output, he said.
“This is really sort of the first year since the recovery began that all of our sectors are going to show growth,” he said. “2014 has the potential to be a really good year.”
Not all sectors are expected to have job growth this year. Mining will have a net loss in jobs, while employment in the government sector will be flat, according to Connaughton.
The state is projected to have a net increase of 60,000 jobs this year as certain sectors, such as construction, see strong employment gains, he said. The figure is lower than 2013’s gain by about 4,500 jobs.
According to seasonally adjusted data from the U.S. Department of Labor, North Carolina had a 6.9 percent unemployment rate in December, higher than the U.S. rate of 6.7 percent. Connaughton said he expects the rate to fall below 6 percent by December of this year.
Mecklenburg County’s unemployment rate fell to 6.7 percent in December, down from 9.2 percent a year earlier, according to data released last month by the N.C. Department of Commerce.
The state posted a “pretty good” gain of 64,500 jobs in 2013, Connaughton said. The largest percentage increases were in information; business and professional services; and transportation, warehousing and utilities.
Statewide, the construction; transportation, warehousing and utilities; and wholesale trade sectors are projected to generate the largest percentage gains in employment in 2014, he said.
The construction sector in North Carolina and nationwide has been affected by the housing downturn, which lowered demand for new homes. Connaughton said the sector is poised to ramp up, as home builders are currently acquiring sites for new construction.
“I’ve talked to several of them in town,” he said. “This summer, there are going to be a number of new homes started.” Some of those will be speculative homes, he said, meaning they are built before they have a buyer.
Connaughton is expecting the state’s construction sector to have a 4.2 percent increase in economic output this year. Growth in the sector will also benefit other industries in the state, he said.
“When you build a couple of hundred-thousand-dollar homes, you buy a lot of stuff that goes into that,” he said.
Statewide, competition for jobs is tougher than it was six years ago, at the start of the recent recession, according to Connaughton’s presentation. In the Charlotte metropolitan area, there were 0.84 people for every job opening in January 2008. As of the end of 2013, the figure was 1.22.
Connaughton said higher gasoline prices is one factor that could slow down the economic recovery nationally. Prices have risen in recent months, he said.
That’s a “little bit of a concern,” he said.