RALEIGH – Despite North Carolina’s economy adding more than 33,000 jobs in May and the total number of unemployed North Carolinians decreasing by 2,361, the state’s unemployment rate remained at 3.4% in May 2022.

That’s according to the latest data from the North Carolina Department of Commerce, which noted in a statement that the national unemployment rate also remained unchanged, at 3.6% in May.

This can be seen as a positive, said Dr. Michael Walden, an economist and a William Neal Reynolds Distinguished Professor Emeritus at North Carolina State University, in an interview with WRAL TechWire.

Why is it that when more people are working and fewer people are unemployed that the unemployment rate remained unchanged?

That’s because the size of the labor force also grew in May 2022.  The data from the North Carolina Department of Commerce found that the labor force in May 2021 was 4,945,544.

By April 2022, the labor force had increased to 5,056,492 with 173,331 people unemployed.

But last month, the labor force had expanded to 5,087,550 while 170,970 people unemployed.

This is best captured using the term “labor force participation rate,” explained Walden.  And in May 2022, the labor force participation rate increased from 60.1% to 60.4% in North Carolina as folks entered or rejoined the labor force.  Earlier this year, Paige Ouimet, Professor of Finance at the UNC Kenan-Flagler Business School, authored a column exploring whether workers would rejoin the labor force.

The latest data from May suggests, at least in North Carolina, some workers re-entered the labor force.

“The labor force participation rate in the state is now only 1 percentage point lower than prior to the pandemic,” said Walden.  “As more people return to the labor force, labor shortages for many firms will become less of an issue.”

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But future reports may not be rosy, cautioned Walden.  That’s because earlier this week, the Federal Reserve announced an increase in interest rates by three-quarters of a percentage point.

“The Federal Reserve is committed to additional interest rate hikes, which will translate into a slower growing economy,” said Walden.  “I suspect that by the Fall we may see an uptick in the jobless rate.”

Walden’s advice to anyone currently seeking employment is to take the first job offered that is appropriate for the worker’s skills.

“As the economy slows, job openings will shrink,” Walden said.  If the country slips into a recession, whether that’s in 2022 or in 2023, said Walden, unemployment rates could hit 5% or even 6%.

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