Employment in NC drops for first time in ’23 – economy may be hitting a pause

Editor’s note: Dr. Mike Walden is a William Neal Reynolds Distinguished Professor Emeritus at North Carolina State University.

+++

RALEIGH – For the first time this year, non-farm employment in North Carolina decreased, dropping by 7,700 compared to September, according to new data from the N.C. Department of Commerce.

Leaders in the reduction were professional and business services – down 4,900 jobs – and construction and manufacturing – each down 2100 jobs. Importantly, these are all seasonally-adjusted numbers.

Mike Walden (NCSU photo)

Interestingly, the separate survey of households showed more people with jobs – up 5,231- but also more people unemployed – up 2,851 – compared to September.

So what do these rather confusing numbers suggest? Most economists put greater weight on the non-farm employment numbers due to its much larger survey base. The softening of these numbers likely suggest a softening of the state economy. As has been recently discussed at the national level, a moderation in economic growth is exactly what the Federal Reserve wants to continue moderating the inflation rate.

Hence, my interpretation of the October job market report tells me the labor market is becoming less robust, but it is NOT collapsing. Importantly, the household survey showed an increase in the labor force – meaning more people are working or looking for work – as well as an unemployment rate that was unchanged at 3.4%, exactly the same rate as in September.

The message is that the latest job numbers show North Carolina’s robust economy may be pausing. The good news from such a pause is that it should help to continue the downward trend in the inflation rate (meaning prices are still rising, but at a much lower rate).

If a pause is at hand, then two big questions are: how long will the pause last, and how deep will it be?

Currently, my responses to the questions are “a short time period” and “not very deep.”