Unemployment Rate Drops in Industrial Midwest

January 5, 2010 - 5:51 PM
Signs of life among U.S. manufacturers helped lower unemployment rates in much of the industrial Midwest, a Labor Department report Tuesday showed. Still, jobs are likely to remain scarce in the next few months nationwide.
Washington (AP) - Signs of life among U.S. manufacturers helped lower unemployment rates in much of the industrial Midwest, a Labor Department report Tuesday showed. Still, jobs are likely to remain scarce in the next few months nationwide.
 
Unemployment rates dropped sharply in November in cities such as Peoria, Ill., Elkhart, Ind., and Fort Wayne, Ind., the department's report said.
 
Those cities and others in states such as Kentucky and Michigan have benefited as U.S. manufacturers have rebounded, said Steve Cochrane, regional economist at Moody's Economy.com. The Institute for Supply Management, a trade group of purchasing executives, said Monday that its index of manufacturing business activity rose in December to its highest level in more than three years.
 
Peoria is home to heavy equipment maker Caterpillar Inc., which said last fall that it would recall about 550 employees, out of thousands laid off, as the company benefits from rising overseas demand. Unemployment in Peoria fell to 10.8 percent in November from 11.7 percent the previous month.
 
Elkhart has seen its unemployment rate fall to 14.5 percent in November from nearly 19 percent in March, as it has regained some of the jobs at recreational vehicle manufacturers that were lost during the recession. Heartland RV, for example, has said it will add 400 jobs by this spring.
 
The region was the capital of RV manufacturing until the industry was hit hard by rising gas prices and the recession. President Barack Obama visited Elkhart twice last year.
 
The department's report also shows that unemployment in several metropolitan areas hit hardest by the housing bust may be leveling off, Cochrane said. While the housing market may not be improving in those areas, the downturn may not eliminate any more jobs.
 
Joblessness also dropped sharply in November in the Tucson, Ariz., and Las Vegas-Paradise, Nev., metro areas, as well as several other cities in the two states. Both suffered from major housing bubbles that popped in the past two years.
 
Nationwide, the Labor Department's report on metropolitan area unemployment painted a mixed picture, as the jobless rate fell in 170 metro areas and rose in 154, about the same as the previous month. The rate didn't change in 48 areas.
 
Seventeen metro areas reported unemployment rates of at least 15 percent, 11 of them in California and three in Michigan, the department said. Joblessness topped 10 percent in 125 metro areas, below the 2009 peak of 144 areas reached in June.
 
The metro unemployment data isn't seasonally adjusted and is therefore volatile from month to month. All 372 areas reported higher unemployment rates in November compared with the previous year.
 
The fact that joblessness dropped in more areas than it rose is a sign that unemployment nationwide may be peaking, said Jim Diffley, a regional economist at IHS Global Insight.
 
But there's little sign employers are hiring quickly enough to bring the rate down, he added.
 
"The real problem with unemployment is that there's no prospect of it going down very fast," he said. Many private economists and the Federal Reserve predict it will remain above 9 percent through 2010.
 
The Labor Department is scheduled to release the national unemployment report for December on Friday. Wall Street economists expect it will show the jobless rate moved up to 10.1 percent from 10 percent in November, according to a survey by Thomson Reuters. Employers likely shed 8,000 jobs, which would be the fewest in nearly two years.
 
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Associated Press Writer Charles Wilson contributed to this report.