By James T. Hammond
jhammond@scbiznews.com
Published July 20, 2010

About 8,600 South Carolinians stopped looking for work in June, contributing to a seasonally adjusted decline in the unemployment rate to 10.7% in June, down 0.4 percentage point from a revised 11.1% in May.

“The four-month decline in the labor force continues to be a major concern,” said John L. Finan, executive director of the Department of Employment and Workforce.

“The drop in our state’s jobless rate has been largely driven by the unemployed dropping out of the labor force. We still have a long way to go in increasing consumer confidence which will lead to increased demand and more job growth.”

Lexington County’s unemployment rate, the second lowest in the state behind Aiken County, increased to 8.0% in June from 7.5% in May. Richland fared even worse with its unemployment rate jumping 0.7% from 9.3% in May to 10% in June.

Last December, Doug Woodward, who heads the research division at the University of South Carolina’s Moore School of Business, differed with other economists on the school’s annual economic outlook panel discussion and predicted that federal stimulus funding would kick in by mid-year, and unemployment would come down.

That scenario played out pretty much as Woodward predicted. His forecast for 11% to 11.5% unemployment in South Carolina was on target, down from a high so far for the recession of about 12.5%.

Now Woodward said he’s concerned about maintaining that momentum, which he said must come from the private sector.

“We’re on track for a slow second half,” Woodward said, reflecting upon the developments in the first half of 2010.

“We have had some good news,” he said, “But there’s been no recovery in construction. In this phase of the business cycle, construction is usually a leader. It’s just not happening. And there’s just not enough in the other sectors to compensate.”

Woodward pointed to new projects and expansions by Boeing, BMW and GE Aviation as good news, but said those projects won’t offset the massive downsizing that has occurred across the economic spectrum.

“It’s good to see diversity, such as the electric car maker CT&T. South Korea has a strong economy. That’s diversification that will be good for us in the long run. The South Koreans know the U.S. market even better than the Japanese,” Woodward said.

But Woodward worries that the economy could falter again before it manages a full recovery.

“There are many headwinds and we’re running out of tricks to stimulate the economy,” Woodward said. “We still haven’t seen a recover in housing, and that usually creates a lot of jobs.”

During June, the number of employed persons dropped 1,009 (-0.1%), and the number of unemployed decreased 8,609 (-3.6%).

This resulted in a decrease in the labor force (employed + unemployed) of 9,618 to 2,149,605.

That was the fifth straight month of decline in the unemployment rate, and the fourth straight month in which the civilian labor force declined.

Nationwide, June’s unemployment rate decreased 0.2 of a percentage point to 9.5%. The national civilian labor force also declined in June (-652,000), with losses in both employment (-301,000) and unemployment (-350,000).

The monthly establishment survey in South Carolina showed a loss of 3,000 nonagricultural jobs in June. The Government sector (-10,300) accounted for most of the loss as state and local schools released staff for the summer recess.

The private sector partially offset the government losses with a modest gain of 7,300 jobs in June. Leisure and hospitality added 6,200 jobs reflecting increases in tourist activity. Other private sector gains were recorded in retail trade (+1,800), construction (+900), and manufacturing (+500).

Losses in the private sector occurred in education and health services (-2,000) and professional and business services (-1,200). The overall job count was 14,100 above the year-ago level, but still almost 100,000 below pre-recession levels.

For a county-by-county unemployment rate list, go online.