Housing, auto fallout lifts metro jobless rates

Layoffs tied to the troubled housing and autos industries clobbered the West and Midwest in May and helped raise unemployment rates in all the largest metropolitan areas for the fifth straight month.

All 372 metro areas saw joblessness rise in May from a year earlier, the Labor Department reported Tuesday. The highest rates ? of at least 15 percent ? were concentrated in metro areas in California, Michigan and Indiana.

Companies likely will remain reluctant to hire back workers even if the recession ends later this year as many expect. That means the unemployment rates in most metro areas probably will rise in the months ahead ? a potential obstacle to a hoped-for recovery.

“The themes that are dominating this worsening labor market are problems in housing and autos, which have forced companies to cut jobs,” said economist Ken Mayland, president of ClearView Economics. “Unfortunately, there are still more layoffs to come.”

Employment at factories, construction companies, retailers and financial services has been especially hard hit by the recession, which started in December 2007 and is the longest since World War II.

Kokomo, Ind., a manufacturing hub, suffered the biggest gain in unemployment in May. Its rate zoomed to 18.8 percent, up 11.7 percentage points from a year ago. Much of the loss came from furloughs at four Chrysler plants that had been shut down as part of the auto company’s bankruptcy proceedings. Local government leaders want to diversify the area’s economy and attract other industries to employ out-of-work engineers, technicians and others.

The second-largest increase occurred in Indiana’s Elkhart-Goshen, where the rate rose to 17.5 percent. That’s up 11.4 percentage points from a year earlier. Layoffs at RV makers Monaco Coach Corp., Keystone RV Co. and Pilgrim International have taken a big bite out of area employment.

Bend, Ore., saw its jobless rate rise to 15.2 percent, an increase of 8.8 percentage points, the third-largest in the country. It’s been the center of the central Oregon real estate and construction boom, powered by retirees from California. But the credit crisis and falling home prices made it harder for them to cash out of their existing homes and move. The area also has suffered from job losses in construction, retail and in the services sectors.

And North Carolina’s Hickory-Lenoir-Morganton saw its unemployment rate rise to 15.4 percent, a gain of 8.5 percentage points. About one-third of all jobs in Hickory are at manufacturing plans. Furniture makers and textile producers for years have been shifting work to low-cost overseas producers, and the region has struggled to find other employers to help broaden its economic base.

Jobs at financial companies also have been hard hit by the housing, credit and financial debacles. And the global recession has cut into demand from customers both at home and abroad for a wide range of goods.

“Shipments to Asian and other countries are down. Exports have slowed. There is less demand,” said Bernard Baumohl, chief global economist for the Economic Outlook Group.

El Centro, Calif., again posted the highest unemployment rate in the country ? 26.8 percent. Unemployment there is notoriously high because of many seasonal farm workers without jobs. Following behind were Yuma, Ariz., with a jobless rate of 23.3 percent, and Kokomo at 18.8 percent.

The U.S. unemployment rate climbed to a quarter-century high of 9.4 percent in May. Many economists predict it will rise to 9.6 percent in June. If they’re right, it would mark the highest jobless rate since 10.1 percent in June 1983, when the country was trying to recover from a severe recession. The government will release the new national employment report on Thursday.

The U.S. unemployment rate could rise as high as 11 percent by next summer before it starts to decline. The highest rate since World War II was 10.8 percent at the end of 1982.

The changes in metro unemployment from April to May were almost as bleak as the year-over-year figures. The month-to-month figures aren’t seasonally adjusted, so comparisons tend to be volatile.

The unemployment rates rose in 46 of the largest 49 metro areas. Two of the rates showed no change ? in Denver and Minneapolis. But only one ? in Buffalo-Niagara Falls ? showed a decline, dipping to 8.3 percent from 8.5 percent. Some economists said they thought seasonal hiring linked to Niagara Falls tourism factored into the dip.

Among the other bright spots was Bismarck, N.D., which registered May’s lowest jobless rate of 3.5 percent. North Dakota has been helped by the oil business. Bismarck was followed by Iowa City, Iowa, home of the University of Iowa, with an unemployment rate of 3.7 percent, and Ames, Iowa, at 3.8 percent.

Copyright 2009 The Associated Press.