Unemployment rises despite yearly job gains

Unemployment rises despite yearly job gains

July 19th, 2013 by Dave Flessner in Business Around the Region

Unemployment tile

Unemployment tile

Photo by WRCB-TV Channel 3 /Times Free Press.

Jobless in June

* 7.6 percent - U.S. average unemployment rate

* 8.5 percent - Tennessee unemployment rate

* 8.6 percent - Georgia unemployment rate

Source: Tennessee Department of Labor and Workforce Development, Georgia Department of Labor

Unemployment rose last month in Tennessee and Georgia despite jobs gains in both states over the past year.

The jobless rate rose during June by 0.2 percent in Tennessee to 8.5 percent and increased by 0.3 percent in Georgia to 8.6 percent. Both states reported higher unemployment rates last month than the U.S. average of 7.6 percent.

"We're seeing improvement in most areas of the economy and I think we're moving in the right direction despite what the unemployment rate might suggest in the short term," said David Penn, director of the Business and Economic Research Center at Middle Tennessee State University. "We're in one of those periods where we are getting different signals. Auto sales, building starts, home sales and sales tax collections are all headed higher but unemployment is also going up."

Over the past year, employment grew by 1.2 percent, or 32,000 jobs in Tennessee, and grew by 2.2 percent or 85,200 jobs in Georgia, according to figures released Thursday by the Georgia Department of Labor and the Tennessee Department of Labor and Workforce Development. Nonetheless, employment fell in both states in June, due primarily to cuts in government, manufacturing and social services.

Unemployment in Tennessee has risen in each of the past three months and was 0.9 percent above the national rate in June. The jobless rate in Georgia rose last month to the highest level since February as graduating students flooded the job market at the same time most schools were on summer breaks.

Dr. William Fox, director of the Center for Business and Economic Research at the University of Tennessee, said he expects the economy and job growth to accelerate by the end of the year after the effects of the January tax increases and March start of budget sequestration begin to fade over time.

Tennessee should be slightly better than the U.S. average with its heavy presence of health care and manufacturing, which are both expected to grow in the next year, Fox said.

Gov. Bill Haslam said Tennessee continues to rank high nationally for job growth and personal income growth.

"Tennessee is a place where people are willing to risk capital and make investments," Haslam spokesman David Smith said. "That's what creates jobs. Initiatives like tort reform, worker's compensation reform and lowering taxes are important to Tennessee's economic health."

Georgia Labor Commissioner Mark Butler said unemployment in the Peach State rose last month primarily because of two factors.

"A large number of education workers are unemployed during the summer and new graduates are considered unemployed until they find a job," he said.

The seasonal impact on the unemployment rate was compounded because Georgia lost 600 jobs and the number of people in the labor force declined by 1,341.

"There is a silver lining in this new data because this was the best May-to-June job performance we've had since 2002, " Butler continued. "And, if you factor out the loss of 10,000 government jobs and just look at the private sector, we would have actually gained 9,400 jobs last month because our private sector employers continue to hire."

Georgia's jobless rate in June was still below the 9.1 percent rate of a year ago.

Contact Dave Flessner at dflessner@timesfreepress.com or at 757-6340.