Economic forecast shows North Carolina’s economy shrinking, including labor market

RALEIGH- All economic indicators tracked in a monthly index that predicts the future of North Carolina’s economy saw declines in May 2022.

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

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

“More and more analysts are raising their odds of a coming recession,” said Dr. Michael Walden, economist and index author and WRAL TechWire contributor.

The index tracks five components: an index of national economic indicators, the number of building permits, the number of manufacturing hours, manufacturing revenue and initial unemployment insurance claims.

“While the forecast will need to be confirmed by future index readings, the May reduction sends a clear message of slower growth for North Carolina’s economy in the months ahead,” the report said. .

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Behind the data

Each of these five indicators shows movement indicating economic decline, according to data from the report.

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

“Maybe construction will stay healthy, especially in areas where demand is quite strong, but that’s one of our early warning indicators,” Cohen noted of the decline in jobs in the city. construction.

In North Carolina, initial jobless claims also rose 30.4%, according to Dr. Walden’s latest index. In the manufacturing sector, hours fell 1.2% during the month and earnings fell 2%.

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Are we in a recession right now?

Even though the report shows receding data, slower growth does not necessarily mean the state is in or about to enter a recession, the report notes.

“If a recession happens, it will also be felt in North Carolina,” Walden said in an interview with WRAL TechWire. “Investment will slow, job growth will be reduced or halted, and consumer spending will tighten.”

So if you’re in the job market and you get a job offer, it might be a good idea to take it quickly, Walden said. Indeed, while the labor market may be competitive in some sectors and in some roles, a changing economy may mean a change in the availability of roles, as hiring may be reduced as growth slows.

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

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