Unemployment rises in most metro areas

/ Source: The Associated Press

Unemployment rose in most cities and counties in December, signaling that companies remain reluctant to hire even as the economy recovers.

The unemployment rate rose in 306 of 372 metro areas, the Labor Department said Tuesday. The rate fell in 41 and was unchanged in 25. That's worse than November, when the rate fell in 170 areas, rose in only 154 and was unchanged in 48.

The metro employment numbers aren't seasonally adjusted and can be volatile. Many of the increases were due to seasonal factors.

For example, Ocean City, N.J., which bills itself as "America's Greatest Family Resort," saw its unemployment rate jump to 16.4 percent in December from 14.8 percent the previous month.

That's double the 8 percent it reported in July, even though the nation's economy was in worse shape then.

Ocean City is one of the 19 metro areas that reported unemployment rates of at least 15 percent. Twelve of those are in California and three are in Michigan, the department said.

Joblessness topped 10 percent in 138 metro areas, up from 125 in November but below last year's peak of 144 areas in June.

Improvement in the auto industry, meanwhile, saw unemployment rates drop in the metro areas around Detroit and Warren, Mich. Automakers and auto parts companies have recalled workers in recent months as they seek to replenish inventories depleted by the "Cash for Clunkers" program, which caused a jump in car sales in August.

The Detroit area saw unemployment fall to 15.7 percent from 16.4 percent, while the Warren area reported a drop to 14.3 percent from 14.8 percent. While still high, the rates are down about 2 percentage points from last fall.

Steve Cochrane, a regional economist at Moody's Economy.com, said it isn't clear if the gains are sustainable once the auto companies have rebuilt their inventories.

"There are no guarantees the unemployment rates won't go up again," he said.

The U.S. economy benefited heavily in the fourth quarter from inventory changes. Companies ramped up production and reduced inventories less in the October to December period, which accounted for about two-thirds of the 5.7 percent growth in the economy during that period.

Nationwide, the unemployment rate was 10 percent in December, unchanged from the previous month, as employers shed 85,000 jobs. The Labor Department will report January figures on Friday, and economists expect a gain of 5,000 jobs and a slight increase in the unemployment rate to 10.1 percent.

In the past year, unemployment rose in almost all of the 372 metro areas tracked by the report, except one: Troubled Elkhart, Ind., saw its jobless rate fall to 14.8 percent in December 2009 from 16 percent a year earlier.

Unemployment in Elkhart and the surrounding region in northern Indiana soared during the recession after many recreational vehicle manufacturers laid off workers and in some cases closed their doors. President Barack Obama visited Elkhart twice last year.

Recently, the area has attracted several electric car manufacturers, including Think North America, a subsidiary of Norwegian-based Think Global. The company plans to sell electric cars in the United States later this year.

Think North America said last month it will open a factory in Elkhart in a former RV plant, potentially creating 415 full-time jobs by 2013.

The lowest unemployment rates are in the upper plains states, with Fargo, N.D. reporting the nation's lowest rate, at 4 percent, followed by Grand Forks, N.D., and Lincoln, Neb., at 4.1 percent each.

The highest rate is in El Centro, Calif., with 27.7 percent, followed by Merced, Calif., at 19.8 percent. El Centro is heavily agricultural and has many seasonal farm workers that are frequently unemployed. Its jobless rate is down from 33.1 percent in August.