S.C. economy watch | State’s jobless rate tumbles

South Carolina’s unemployment rate plunged to 5.5 percent in February, down from 6.1 percent in January and its lowest level since September 2001, the U.S. Bureau of Labor Statistics reported Friday.

The Columbia metro area’s jobless rate was 4.9 percent, down from 5.5 percent in January for the area encompassing Richland, Lexington, Calhoun, Fairfield, Kershaw and Saluda counties.

The unemployment rate is significant because it is one of the most closely watched indicators of the economy, as it shows how easy or difficult it is for people to find a job.

With reports in South Carolina and the nation showing the economy is weakening, Friday’s report led some economists and Gov. Mark Sanford to question the accuracy of the state’s jobless rates.

February’s unemployment-rate drop follows a small decrease in January.

The S.C. jobless rate was rising in the latter part of 2007 and was among the highest in the nation. In February, South Carolina ranked seventh-highest among the states and the District of Columbia.

Don Schunk, an economist at Coastal Carolina University in Conway, said the monthly unemployment reports often are inaccurate, and tend to show where the economy was months ago.

Better indications of where the state’s economy is headed include retail sales, tax collections and building permits. “None of them looks all that good,” but Schunk said the weakness has been mild.

“We’re not seeing the massive layoffs, the massive drops in retail sales and the massive drops in tax collections you would normally see before a recession,” he said.

The monthly jobless rates are based on a BLS survey of about 60,000 U.S. households, including about 1,000 in South Carolina. The BLS shares the results with the S.C. Employment Security Commission and the agencies release them the same day.

Sanford on Friday questioned the survey methods.

“While we’d normally be very pleased about a drop this significant in the unemployment rate, we’re beginning to develop some real concerns about the reliability and accuracy of these numbers,” he said.

The BLS’ initial reports on unemployment rates can be revised the following month or with a yearly overhaul in February, called benchmarking, which reflects more detailed information on population and jobs.

Sanford singled out the January report that the state’s unemployment rate for December 2007 was 6.6 percent, up from 5.9 percent in November.

But after the annual revision by the BLS, the numbers released a month later showed December’s jobless rate was 6.2 percent and November’s was 6.1 percent, a scant increase of a tenth of a percentage point.

Sanford put the blame on the Employment Security Commission for the benchmark revision, saying “the ESC quietly revised their numbers about a month later and realized they had undercounted 20,000 jobs last year.”

Roosevelt “Ted” Halley, the commission’s executive director, said the unemployment statistics for South Carolina continue to meet BLS standards “even given these tumultuous economic times.”

Economists Doug Woodward of USC and Bruce Yandle of Clemson said any flaws in the numbers are due to the federal agency’s methods.

Also, Yandle said annual revisions have been done for years, and most changes stem from early population estimates that were off.

“When population estimates are revised, then the unemployment number changes,” Yandle said.

“I don’t think there is anything sinister here. It is just a fact of life. Estimates provide estimates. Revised estimates yield revised estimates.”

Reach DuPlessis at (803) 771-8305.