Indiana released its unemployment figures for August on Tuesday and the jobless rate in the state remained unchanged at 10.2 percent.
The state’s rate of unemployment is still above the national average of 9.6 percent, which increased .01 percent from July to August.
According to figures released by the state, Indiana has added 3,000 private sector jobs in August and overall private sector employment has grown by 54,700 jobs, or 2.4 percent, in 2010.
“Indiana is adding private sector jobs three-and-a-half times faster than the U.S. as a whole,” said Mark W. Everson, commissioner of the Indiana Department of Workforce Development in a press release. “Combined with new unemployment claims declining to levels not seen since 2007, we expect to see a drop in our unemployment rate in the coming months.”
But Uric Dufrene, Sanders Chair in Business at Indiana University Southeast, said in an e-mail that the private growth is not enough to have a substantial impact on the unemployment rate.
“That is similar to saying that one can run three-and-a-half times faster than a turtle,” he said in the e-mail. “It is encouraging that we are adding private sector jobs, but the addition of jobs at this level is insufficient to lower the unemployment rate.”
The employment by sector report did show strong gains in health care employment and temporary hiring, which often precedes permanent jobs, according to the release.
Declines were cited in manufacturing by 4,000 jobs and government employment declined by 9,400 jobs and were attributed to seasonal anomalies.
For Indiana, the declines in manufacturing are significant.
“Manufacturing has been driving job growth during the past year and we are now beginning to see a slow down in manufacturing,” Dufrene said in the e-mail. “Basically, manufacturers began restocking low inventory levels last year. This restocking of inventory led to production in manufacturing and subsequent hiring gains. The key now resides with consumer demand. Weak consumer demand is basically driving the slow down in manufacturing.”
Coupled with consumers slowing the rate of manufacturing, consumer spending is also affecting construction and trade and businesses are hesitant to increase spending habits while unemployment remains high.
“The small decline in trade, transportation and utilities simply reflects the continued restraint of the consumer,” Dufrene said in the e-mail. “Until consumers see a decline in the unemployment rate, and improvement in homeowner's equity, they will continue to show their reluctance to spend.”
Yesterday’s report is tempered by a study released earlier this week reporting the recession has ended.
The National Bureau of Economic Research released a report that the economic recession actually ended in June 2009. The recession that began in December 2007 lasted 18 months and marked the longest recession since World War II.
The committee that announced the end of the recession did not conclude that economic conditions have been favorable or that the economy has returned to operating at normal capacity, but only determined that the recession ended and a recovery began in that month, according to the report posted on the groups website.
The determination was based on increases in the two broadest measures of economic activity, real Gross Domestic Product and real Gross Domestic Income.
“This positive growth was primarily due to government stimulus and inventory restocking,” Dufrene said in the e-mail. “Now that we have passed these phases, the consumer must step in to sustain the recovery.”
The likelihood of consumers responding and propelling the economy to recovery is not likely.
“Due to continued reductions in household debt and lower net worth levels, we will not be able to rely on the consumer as the main engine of sustained growth,” Dufrene said in the e-mail.
However, Dufrene said in the e-mail he does not believe the country would slip into another recession.
“We will likely continue to see only slow growth and elevated rates of unemployment,” Dufrene said in the e-mail. “[Tuesday’s] report provides additional evidence of the slowness of the recovery. We will see positive growth, but at very low rates. Slower growth could actually result in a higher unemployment rate. If the economy does not grow at an appropriate rate of speed, then the nation will see a higher or elevated rates of unemployment.”
Indiana’s static unemployment figure was mirrored by its neighboring Midwest states.
Local figures, however, have yet to show the rebound the state is expecting.
Clark County’s unemployment figures increased from 9.1 percent in July to 10.3 percent in August, or 5,686 people that are out of work.
In Floyd County, the rate was similar.
The county saw its unemployment figure increase over July to August by a full percentage point, from 8.6 percent to 9.6 percent, or 3,611 workers that are unemployed.
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