RALEIGH – All economic indicators tracked in a monthly index that forecasts the future of North Carolina’s economy experienced a pullback in May 2022.

The NCSU Index of North Carolina Leading Economic Indicators is a monthly index that forecast’s the state economy’s direction between four and six months ahead.

And, the latest index shows a drop of 3.4%, the largest reduction in more than a year.  Still, the index is 2.9% higher than it was in May 2021.

“More analysts are increasing their odds for an upcoming recession,” said Dr. Michael Walden, an economist and the author of the index and a contributor to WRAL TechWire.

The index tracks five components: a national economic indicators index, the number of building permits, the number of manufacturing hours, manufacturing earnings, and initial jobless claims.

“While the forecast will need to be confirmed with future Index readings, the May reduction clearly sends a message of a slower growing North Carolina economy in upcoming months,” the report reads.

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Behind the data

Each of those five indicators show movement indicating an economic pullback, according to the data within the report.

Building permits, for instance, are down 14% month-over-month, as the housing market may be slowing with interest rates rising and the cost and availability of materials slowing production.  There were also fewer construction jobs in the U.S. economy in April, according to Dr. Gerald Cohen, chief economist of the Kenan Institute, who spoke in a monthly briefing in early May.

“Perhaps, construction will remain healthy, especially in areas where demand is quite strong, but it is one of our early warning indicators,” noted Cohen of the dip in construction jobs.

In North Carolina, initial jobless claims also increased by 30.4%, according to the latest index from Dr. Walden.  In the manufacturing sector, hours decreased by 1.2% in the month and earnings decreased by 2%.

UNC economist: We’re not at risk of recession despite worries

Are we in a recession now?

Even though the report shows a pullback in the data, slower growth does not necessarily mean that the state is in or is soon to enter into a recession, the report notes.

“If a recession does occur, it also will be felt in North Carolina,” said Walden in an interview with WRAL TechWire.  “Investments will slow, job growth will be curtailed or stopped, and consumer spending will tighten.”

So if you’re in the labor market and receive a job offer, it may be a wise decision to take it, soon, said Walden.  That’s because even though the job market may be competitive in some sectors, and in some roles, a changing economy may mean a shift in the availability of roles, as hiring may be curtailed as growth slows.

“One thing is certain – uncertainty about the path of the economy has escalated,” the report concludes.

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