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R.I. unemployment rate hits 10.5 percent

07:12 AM EDT on Friday, March 20, 2009

By Benjamin N. Gedan

Journal Staff Writer

Rhode Island tumbled deeper into recession last month, as the unemployment rate hit a new 30-year high.

Another 1,900 residents are hunting for a paycheck in a state that a month earlier had recorded the country’s third-highest jobless rate, 10.3 percent. Last month, the unemployment level rose to 10.5 percent, according to a report to be released today by the state Department of Labor and Training.

The U.S. unemployment rate is 8.1 percent. In Massachusetts, the jobless rate rose to 7.8 percent last month.

In all, there are 59,700 unemployed Rhode Islanders, an increase of 22,500 over the past year. More than 40,600 residents are living on unemployment payouts –– a burden that has overwhelmed the state’s unemployment insurance service center with phone calls and online filings.

“More small businesses are closing shop,” Juana I. Horton, chairwoman of the Hispanic American Chamber of Commerce of Rhode Island, said. “We’re not seeing signs of improvement.”

In Providence, the non-seasonally adjusted jobless rate was 13.1 percent in January, up from 8.5 percent a year ago. Municipal jobless rates show great variability. But things also appear grim in Central Falls; the city’s unadjusted rate was 15.9 percent in January compared with 9.1 percent last year.

There are faint signs of improvement as the state heads into spring. The rise in the unemployment rate was the smallest increase since last September. In January, unemployment spiked by 0.9 percentage points.

The number of employed residents, including those commuting across state lines, grew to 506,700, up 1,800 from the previous month. That was the first increase since September 2007 and the largest monthly jump since January 2007.

The education and health-care fields have offered the only safe harbors in the state’s wounded economy, adding 600 jobs last month. In a surprise, hotels and restaurants are also hiring. The accommodation and food-services sector added 500 jobs.

Even the state’s beaten down manufacturers came up with some good news, reporting a slight rise in hourly wages, to $14.09 per hour from $13.99.

But major weaknesses remain. Manufacturers shed 1,200 jobs last month. Workers still on the line have seen their hours cut, as plant managers slow production.

Construction equipment is collecting dust. Builders cut 700 workers last month.

“We have seen absolutely no interest in dirt-up development,” Gerald Lavallee, a partner at CB Richard Ellis, said. “People are just sitting back and waiting. There is not a lot of velocity in the marketplace.”

Though the overall number of working Rhode Islanders rose last month, the number of jobs in the state fell by 2,300, the 13th consecutive month of losses.

Restaurant owners briefly felt love in the air, enjoying strong Valentine’s Day sales, according to Jeffrey Hirsh, treasurer of the Rhode Island Convention Center Authority’s governing board and the owner of The Lobster Pot in Bristol.

Empty tables, however, quickly returned. “Everybody would be thrilled if business could stay that way every weekend,” Hirsch said. “But, in general, everyone in the hospitality industry is very concerned.”

In normal times, retailers look to warmer weather to rouse consumers from hibernation. But these days, it is layoffs and investment loses, not snowstorms and shoveling, that is dampening spending.

“People are really holding back, they don’t want to buy cars, they don’t want to buy houses,” Bryant University economist Prof. Edinaldo Tebaldi said.

Last November, Tebaldi issued a conservative forecast warning that the state’s unemployment rate would hit 10.3 percent by early next year. Now, he says the jobless level will worsen throughout 2009, blowing past 11 percent before it stops.

bgedan@projo.com

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