17 states report lower unemployment figures

August 22, 2009 at 12:00a.m.

WASHINGTON (AP) — A rebound in the auto industry and federal stimulus money helped lower unemployment rates in many of the 17 states that reported drops in July — a hopeful sign after only five states had seen their jobless rates dip in June.

Still, the Labor Department report Friday showed that joblessness remains widespread as 26 states reported higher unemployment rates. Many economists expect jobs to remain scarce nationwide and the unemployment rate to top 10 percent by the end of the year, up from 9.4 percent in July.

Fifteen states and the District of Columbia are suffering from unemployment rates above 10 percent. Michigan’s rate was 15 percent in July, down from 15.2 percent in June — the first time any state’s jobless rate had topped 15 percent since 1984.

The states with the next-highest jobless rates in July were: Rhode Island, at 12.7 percent; Nevada, 12.5 percent; California, 11.9 percent; and Oregon, also at 11.9 percent. Four reached state record highs: Rhode Island, Nevada, California and Georgia.

But the report also showed that 21 states added jobs last month, compared with only 10 in June. Some states, such as Texas, added jobs but still saw their unemployment rates increase. That tends to happen as more jobless people enter the work force.

“This is just a further indication that the worst is over and the recession is coming to an end,” said Gus Faucher, an economist at Moody’s Economy.com.

Faucher said the Obama administration’s $787 billion stimulus package, which helped pay many states’ Medicaid and other costs, allowed many state governments to avoid laying off more workers.

“The question is, will the economy be strong enough to sustain the expansion once the stimulus starts to fade?” he said.

New York state added 62,100 jobs, the most of any state, and saw its unemployment rate drop to 8.6 percent from 8.7 percent. A New York state official, Peter Neenan, said federal stimulus-funded projects helped boost employment in the construction sector. That money also helped boost the number of young people hired for government- funded summer jobs, he said.

The effects of an improving auto industry were widespread in July. General Motors and Chrysler reopened many factories that had been shut down in May and June as the companies emerged from bankruptcy protection.

Automakers also are benefiting from the government’s Cash-for-Clunkers program, which provides rebates of up to $4,500 to consumers who trade in older cars for fuel-efficient new ones. The program will end Monday.

Largely as a result, Michigan’s ailing economy actually added 38,100 jobs in July, the second-most of any state.

Indiana saw its unemployment rate dip to 10.6 percent from 10.7 percent in the previous month. Though the state lost jobs overall, the auto sector’s growth benefited its manufacturers.

“Large increases in manufacturing employment ... are a direct result of Hoosier autoworkers going back to work,” said Teresa Voors, Indiana Department of Workforce Development Commissioner.

Minnesota enjoyed one of the biggest drops in joblessness, to 8.1 percent from 8.4 percent. The state added 10,300 jobs, the first gain in almost a year.

Eight of the state’s 11 industrial sectors saw gains, according to its Department of Employment and Economic Development. Leisure and hospitality led the way with 3,900 more jobs. Government, manufacturing and business services also had a strong July.

About 95 percent of employers surveyed by the department expect to keep or add jobs, though significant job growth may not come before 2010, said Dan McElroy, the department’s commissioner.

The 13 other states where unemployment in July fell were: Oregon, Virginia, Connecticut, Delaware, Hawaii, Maine, Nebraska, South Carolina, South Dakota, Vermont, Tennessee, Washington and West Virginia.

Nationwide, employers cut 247,000 jobs last month, the Labor Department said earlier this month, a large amount but the smallest total in almost a year.