North Carolina should experience continued job gains and economic growth that is better than the national average in the new year, Wells Fargo Securities economists said Wednesday in an upbeat forecast on the state’s economy.
In a performance similar to 2015, nonfarm employment is expected to rise 2.6 percent in 2016, producing nearly 110,000 net new jobs. Meanwhile, the state’s real gross domestic product is forecast to rise 3.2 percent, better than 2.4 percent in the nation as a whole.
The state’s unemployment rate will likely drop, but still stay higher than the national average, the report said. North Carolina’s seasonally adjusted unemployment rate was 5.7 percent in October, above the national rate of 5 percent.
Most of the state’s major metro areas had strong job gains in 2015, with Charlotte producing one of the strongest job markets in the nation. In the first 10 months of the year, the city averaged year-over-year employment growth of 3.5 percent, adding an average of 3,000 net new jobs per month, the report said.
The jobs have come from new companies entering the city and from expansions at existing businesses.
“Charlotte is really on a phenomenal roll,” said Mark Vitner, a Charlotte-based senior economist with Wells Fargo Securities. “Charlotte is booming in a way that in many ways eclipses even what we saw in the last decade.”
The leisure and hospitality industry has been a major producer of new jobs, but so has the financial sector, which is continuing to recover from the 2008 financial crisis, the report found. Expansions by MetLife, Babson Capital and Dimensional Fund Advisors are helping to diversify a financial sector long dominated by big banks such as Bank of America and Wells Fargo.
Home prices in the state saw some improvement in 2015, rising 5.2 percent in October year over year, the report said. But the improvement has been varied around the state.
Home prices in Charlotte have risen 7.6 percent over the year, and the metro area was the only one in the state to see home prices rise faster than the nation from October 2014 to October 2015. Raleigh has also seen strong gains, while cities such as Jacksonville, Hickory and Fayetteville aren’t faring as well as the rest of the state when it comes to price appreciation, the report said.
The Federal Reserve’s decision Wednesday to start gradually raising a key interest rate, however, could have an impact on the housing market going forward, Vitner said. The Fed made a small increase as a first step, but rates are expected to go up into 2017.
“Housing is interest-rate sensitive,” Vitner said. “With incomes growing as slowly as they have, housing affordability is going to come down. I don’t think it will reverse the rebound in housing, but it’s going to make for an even more modest rebound in housing.”