Author: Andrew Berger-Gross
Welcome to the March 2024 edition of NC Economy Watch: an update on what’s happening in the North Carolina economy and what it means for you, brought to you by the Labor & Economic Analysis Division (LEAD) of the NC Department of Commerce.
In this edition of NC Economy Watch, we examine the employment data revisions just released by the US Bureau of Labor Statistics. These revisions show job growth in North Carolina slowing more than we initially thought, driven in part by downward revisions in Professional and Business Services. However, large upward revisions to Construction employment offer some cause for optimism in the year to come.
Data Revisions Point to a Steeper Employment Slowdown in 2023
In March of each year, the US Bureau of Labor Statistics publishes revised historical data on unemployment and job growth for every state in the nation, including North Carolina. These revisions, which incorporate new information that wasn’t available when the data were first reported, provide a more accurate depiction of how the economy performed last year and offer more clarity about where we might be headed in the year to come.
This year’s revisions had relatively little impact on North Carolina’s unemployment rate, which ended 2023 at 3.6% in the revised data, compared to 3.5% in the preliminary estimates. The revisions to North Carolina’s job growth estimates were more notable. As we’ve emphasized in recent months, employers in our state are still hiring, but they’ve been adding jobs at a slower pace than during the economic boomtimes of 2021 and 2022. Data revisions reveal that this employment slowdown has been even steeper than we initially thought: while preliminary estimates showed over-the-year job growth slowing from 3.8% in January 2023 to 2.0% in December 2023, the revised data show us starting the year at 4.3% and ending the year at 1.8% [Figure 1].
Figure 1
These downward revisions were driven in part by a slowdown in our Professional and Business Services sector, which saw its over-the-year growth rate decline from 4.3% in January 2023 to a low of -0.7% in October 2023 [Figure 2]. This sector—which includes professional services firms, temporary staffing agencies, and corporate headquarters, among others—was thought to be the growth engine of the pandemic-era economy, adding more jobs than any other major sector over the past four years. We’ll be watching this sector in the months ahead to determine whether these downward revisions are a sign of a more serious economic slowdown or merely a return to more typical pre-pandemic growth patterns.
Figure 2
Not all the employment revisions were downward, however. Many sectors saw more rapid employment growth than initially estimated. The largest upward revisions occurred in North Carolina’s Construction sector, which we highlighted in our January 2024 edition of NC Economy Watch. Preliminary estimates showed construction employment declining 1.5% over the year in December 2023, but the revised figures indicate the sector grew at a healthy pace, ending the year up 3.6% [Figure 3]. Construction job losses are often a warning sign of an economic recession; the fact that construction employment was increasing at the end of 2023, not decreasing, is a good sign that the economy continued to expand as we entered the new year.
Figure 3
Overall, these data revisions confirm that employment in North Carolina is slowing, but still growing. Job growth is slowing more than we initially thought, but employers are still adding jobs, and there are no signs of an imminent recession.
That doesn’t mean our economy has shaken off the challenges it has faced the past few years. Prices continue to rise at an unsustainable pace, and interest rates are likely to remain elevated for months to come, putting pressure on consumers and businesses alike. That said, our economy performed much better in 2023 than many economists predicted, and most indicators currently demonstrate continued growth as we head into 2024.
For inquiries and requests, please contact:
Meihui Bodane, Assistant Secretary for Policy, Research and Strategy
NC Department of Commerce, Labor & Economic Analysis Division (LEAD)