RALEIGH – The NCSU Index of North Carolina Leading Economic Indicators, a forecast of the economy’s direction four to six months ahead, rose 3.3 percent in August from its level in July and now exceeds its pre-COVID-19 level. But the editor of the index remains cautious.
That spike continues the rebound that began in April, which most economists now see as the low point of the COVID-19 recession.
All components of the Index improved, led by a 37 percent drop in initial jobless claims.
The state’s jobless rate fell to 6.1% in August, according to the US Bureau of Labor Statistics, down from a high of 11.5% in May and 7.9% in July.
“This [index data]suggests good improvement in the state economy is ahead,” said Dr. Michael Walden, NC State’s economist, who calculated the figures.
However, he’s also cautious: “This does not imply the aggregate economy has totally recovered.”
Indeed, initial jobless claims in August were still 377 percent higher than in August 2019.
“While the Index is forecasting further boosts ahead in the North Carolina economy, we should be wary of unknown movements in the virus,” Walden said. “For example, a big second wave in infections could cause the positive economic movements we’re seeing to reverse.”
The Index is composed of five components: the Economic Cycle Research Institute (ECRI)’s Weekly Leading Index, North Carolina initial claims for unemployment benefits, North Carolina building permits, average weekly hours of work of all North Carolina employees in manufacturing, and average weekly earnings of all North Carolina employees in manufacturing.
All data are seasonally-adjusted and modified for differences in prices levels where appropriate.