N.C. State economist Dr. Michael Walden has warned this year that the state’s economy is slowing. His latest analysis reiterates those concerns, although he doesn’t use the word “recession” in describing a slowdown.

Who is at fault?

Walden is blaming economic troubles overseas for the state’s challenge.

“The Index fell almost percent in June and has now displayed a downward trend for the year, hence signaling slower economic growth ahead for the state,” Walden says about the data he tracks for the NCSU Index of North Carolina Leading Economic Indicators.

“The source of the retreat appears to be issues in foreign markets, particularly China and Europe,” he says. “Economic issues in those regions adversely impact North Carolina’s manufacturing sector and entire economy.”

New jobs data out for June may point to the slowing economy. Unemployment statewide increased to 5.8 percent in June from 5.7 percent in May, according to East Carolina University’s College of Business. However, the rate a year ago was 6.2 percent.

Europe’s economy continues to struggle, and China is facing a variety of challenges.

A result of global weakness is a stronger U.S. dollar, which means U.S. exports, goods and services are more expensive. Companies such as Cary-based SAS and Durham-based Quintiles have cited a higher dollar as cutting into profits. Quintiles (NYSE: Q) on Wednesday said the dollar drove down its most recent quarterly earnings by some $60 million.

Walden uses the index as a basis for forecasting economic activity over the next four to six months.

In summing up the latest report, however, Walden did find some positive news.

“On the positive side, the national index was unchanged and initial jobless claims dropped by over 8 percent,” he explains.

“However, each of the other indicators – building permits, manufacturing hours, and manufacturing earnings slipped for the month. There has been a steady decline in the Index during the year.”

So is it time for panic?

Is another recession at hand?

“While not as precipitous as the Index’s drop prior to the Great Recession, the retreat does suggest a slowing of economic improvement,” Walden writes.

“However, the source of worry today is foreign markets, particularly in China and Europe. These markets warrant continuing attention of their impacts on North Carolina’s manufacturing sector and broader economy.”

The data from the report follows:

Dat, Change from previous month; Change from previous year

  • INDEX: -0.8%, -2.9%
  • ECRI-WLI: 0.0%, -1.2%
  • Unemployment Claims: -8.2%, -17.4%
  • Building Permits: -5.7%, +23.8%
  • Average weekly hours of work: -0.5%, -5.3%
  • Earnings: -1.1%, -3.4%

ECRI-WLI refers to the Economic Cycle Research Institute (ECRI)’s Weekly Leading Index (http://www.businesscycle.com/resources/).