The unemployment rate in the Buffalo Niagara region jumped to a 20-year high of 9.6 percent during January, an increase that runs contrary to the improvement in job growth the state Labor Department reported last week.
The jump in the jobless rate matched the record that was set in January 2010 as a flood of new workers entered the local workforce while fewer people held jobs.
The rise in the unemployment rate, which typically jumps sharply from December to January as temporary holiday jobs come to an end, still perplexed local economists because it runs counter to the improvement in the region’s job growth that was reported in a separate Labor Department report last week.
Unemployment often will rise in the early part of a job market’s recovery as workers who previously were too discouraged to look for a job – and therefore weren’t counted as unemployed – start looking for work once again because they believe they now have a better chance of being hired.
Gov. Andrew M. Cuomo last fall raised questions about the accuracy of the unemployment statistics, joining New Jersey Gov. Chris Christie and Connecticut Gov. Dan Molloy in challenging jobless data that indicates rising unemployment at a time when job growth is improving.
“It’s people coming off the sidelines, if we go with these numbers as being legit,” said Gary Keith, M&T Bank’s chief economist.
“Those people coming off the sidelines is a sign that there’s a comfort level that there are some employment opportunities out there,” Keith said. “All in all, the number is scary at the surface, but below the surface, I think some better things are happening.”
Last week’s jobs report, which found that the region had added 3,500 jobs during the past year, showed that employers had increased the number of jobs in the region at an annual rate of 0.7 percent during January.
While that was less than half of the nationwide growth in hiring, it was a significant improvement from previous reports, based on less-comprehensive data that had indicated the region had been losing jobs since late summer.
“The unemployment rate is a good barometer for things like home sales and consumer spending,” Keith said.
“It takes a job to be able to spend,” he said. “At this point, I don’t have an inkling that we’re looking at the kind of duress that a 9.6 percent unemployment rate would indicate.”
The unemployment rate is based on the results of a statewide telephone survey of 3,100 households – a tiny fraction of the statewide total of more than 7 million. The jobs data released last week is compiled from different sources, with initial figures based on reports from employers that are later revised based on more-comprehensive Census Bureau data.
The report Tuesday showed that unemployment jumped to 9.6 percent in January from 8.4 percent in December and 9.1 percent in January 2012.
Most of the increase was caused by a big jump in the number of unemployed people, which grew by 2,900 and was nearly 6 percent higher than it was a year ago. At the same time, the number of people who were employed grew by 1,100, or 2 percent.
“It’s clear it has to do with the size of the influx of new entrants into the labor pool,” Keith said. “What’s interesting is that we actually added 1,100 people more, year over year, as being employed. At the same time, the unemployment rate went up.”
The local jobless rate was more than a full percentage point higher than the national unemployment rate of 8.5 percent and was slightly higher than the statewide rate of 9.4 percent. None of the rates have been adjusted for seasonal factors.
The Labor Department report showed that high unemployment is a persistent problem across the state. The jobless rate across upstate New York rose to 9.6 percent, matching the level in the Buffalo Niagara region.
Buffalo Niagara ranked in the middle of the pack among the state’s 13 major metro areas, with a jobless rate that was lower than the rates in Binghamton, Elmira, Glens Falls, Kingston, Syracuse, Utica and New York City.
Jobless rate jumps
Buffalo Niagara unemployment rate
January 9.6 percent
December 8.4 percent
November 7.8 percent
October 7.9 percent
September 8.1 percent
August 8.4 percent
July 8.9 percent
June 8.5 percent
May 8.2 percent
Unemployment rates in WNY counties
Allegany County 10.5 percent
Cattaraugus County 10.4 percent
Chautauqua County 10.1 percent
Erie County 9.3 percent
Genesee County 9.5 percent
Niagara County 10.6 percent
Orleans County 12.4 percent
Wyoming County 11.2 percent
Source: State Labor Department