Metro jobless rates fall in September, but mostly reflects discouraged workers dropping out

Metro jobless rates fall as more workers drop out

WASHINGTON — The unemployment rate fell in September in most metro areas for the second straight month, although that’s largely because more people gave up on job searches than found new work.

“The job market is not recovering at all yet,” said Jim Diffley, regional economist for IHS Global Insight. “We’re looking at another jobless recovery.”

The September unemployment rate fell in 223 of 380 metro areas, or about 59 percent. The jobless rate rose in 123 metro areas, and was unchanged in 34.

But in many cases the drops resulted from discouraged workers leaving the labor force, perhaps to return to school. Once jobless workers stop looking for work, they are no longer counted in the unemployment rate.

That trend is likely to continue for several months, Diffley said. But as the economy slowly improves, many of the discouraged workers are then likely to return to the labor force, he added.

The government is expected to report Thursday that the nation’s economy grew at a 3.3 percent annual rate in the July-September period, ending the worst recession since the 1930s.

A growing economy will cause many people to resume job searches, increasing the size of the labor force, Diffley said. But hiring should remain weak and won’t keep up with the influx of jobseekers, which will cause the unemployment rate to rise, he said.

A third of metro areas will still have jobless rates above 10 percent in the fourth quarter of 2010, according to a forecast by IHS Global Insight, about the same proportion as last month.

Sixteen cities will top 15 percent. In September, 13 metro areas reported unemployment above 15 percent.

Most of the metro areas forecast to have 15 percent unemployment or higher will be concentrated in states hit hard by the housing and manufacturing slumps, IHS Global Insight said in estimates released Monday. Nine will be in California, 3 in Michigan, and one each will be in Arizona, Florida, Illinois and Indiana.

The unemployment rate won’t fall below 8 percent in more than half of metro areas until the end of 2012, IHS Global Insight predicts.

Nationwide in September, 600,000 people looking for work threw in the towel, the Labor Department said earlier this month.

Several metro areas in Wisconsin illustrate the trend: the state’s unemployment rate dropped to 7.7 percent from 8.4 percent in August. Three of its cities saw significant improvement in their unemployment rates: Wausau, Eau Claire and Fond du Lac.

But the work force shrunk in all three cities, while the state lost about 21,000 jobs.

“Conditions have not improved as much as the unemployment rate has,” said Morgan McGowan, an associate economist at Moody’s Economy.com who analyzes Wisconsin.

The state has suffered from widespread job losses in manufacturing, McGowan said, including more than 1,000 layoffs this year by Milwaukee-based Harley-Davidson Inc. and the closing of a Briggs & Stratton Corp. engine factory.

In Denver, the unemployment rate fell to 7.1 percent from 7.4 percent in August. Yet the metro area of Denver-Aurora-Broomfield lost more than 6,000 jobs, the Labor Department report said.

A drop in its work force of 14,600 people, or about 1 percent, reduced the unemployment rate. That’s higher than the nationwide decline of 0.4 percent.

Portland, Ore., also reported what appeared to be a large improvement in its unemployment rate, which fell to 10.9 percent from 11.6 percent in August. While the metro area of Portland-Vancouver-Beaverton did gain a small number of jobs, its work force also shrank by about 1 percent.

The metro employment figures, issued Wednesday by the Labor Department, aren’t adjusted for seasonal changes, so they tend to be volatile from month to month. And many of the changes in local unemployment rates in September resulted from seasonal trends.

For example, the areas that saw the sharpest drops were largely agricultural, including Grand Forks, N.D., Yakima, Wash., and Wenatchee-East Wenatchee, Wash., and likely benefited from harvest-related hiring.

Among the 49 metro areas with populations over 1 million, Detroit-Warren-Livonia, Mich. had the highest unemployment rate, with 17.3 percent, up from 17 percent in August. The next highest rates were in Riverside-San Bernardino-Ontario, Calif., at 14.2 percent, and Las Vegas-Paradise Nev., at 13.9 percent.

The lowest rates among large cities were in Oklahoma City, Okla., with 5.9 percent; the Washington D.C. metro region, with 6.2 percent; and Virginia Beach-Norfolk, Newport News, Va., with 6.7 percent.