Unemployment in Tennessee and Georgia fell to the lowest level in more than five years in January and state economists expect the jobless rate to continue to decline this year.
But the unemployment rate in both states remained above the U.S. level at the start of 2014 and economists expect the jobless rate to remain at historically high levels compared with most economic recoveries.
January's jobless rate fell 0.5 percent in Tennessee to 7.2 percent, while unemployment in Georgia decreased by one-tenth of a percentage point to 7.3 percent, according to government figures released Thursday.
Tennessee's jobless rate was 8.1 percent a year ago, while Georgia's rate in January 2013 was 8.6 percent. While both states have had a bigger drop in unemployment than the U.S. as a whole, the national jobless rate remained lower than either state at 6.6 percent in January.
"The demographics are improving for all Sunbelt states," said Jeff Humphreys, director of the Selig Center for Economic Growth at the University of Georgia. "As the housing market thaws and people are moving more again, we're starting to see more migration south and that should help fuel more growth in the Sunbelt."
But the housing slump hit the South harder than most of the country, keeping jobless rates in most Southeastern states higher than the U.S. average over the past five years, Humphreys said.
Employment grew by 2.2 percent last year in Georgia, outpacing the 1.7 percent job growth nationwide, and he expects similar above-average growth for Georgia in 2014.
But as the job market improves, many of the discouraged workers who dropped out of the labor market are likely to return to the labor force and that could make it hard to significantly lower the jobless rate, Humphreys said. Labor force participation among adults fell to a three-decade low last year as many workers either retired early or quit looking for work.
In Tennessee, employment grew by 37,800 jobs, or 1.4 percent, over the past year, according to figures released by the Tennessee Department of Labor and Workforce Development.
"We expect employment to continue to grow this year, albeit at a slower pace than in most recoveries," Dr. Bill Fox, director of the Center for Business and Economic Research at the University of Tennessee, said last week.
The biggest job gains in Tennessee over the past year came in professional and business services, up by 14,700 jobs, and leisure and hospitality, up to 11,100 jobs.
But government in Tennessee shed 4,400 jobs over the past year and nondurable goods manufacturing was down by 1,700 jobs across the Volunteer State.
Last month was the seventh consecutive month of declining jobless rates in Georgia.
"The rate fell because 15,928 more Georgians were employed and the number of new layoffs for January fell to the lowest level in eight years," Georgia Labor Commissioner Mark Butler said.
Contact Dave Flessner at email@example.com or at 757-6340