State jobless rate records biggest jump since ’76

The Connecticut jobless rate jumped from 8.5 percent to 9 percent in August, the biggest one-month increase in 36 years, the state Department of Labor reported today. The state lost 6,800 jobs.

“It looks as if we are seeing a slowdown in growth,” said Andy Condon, director of the Office of Research at the Connecticut Department of Labor.

But while Gov. Dannel P. Malloy said Thursday that Connecticut’s economy continues to face tough challenges, he also was openly skeptical of the labor report’s accuracy for the second consecutive month.

The state’s total non-farm job estimate fell in August, marking the fourth monthly decline in 2012. The first eight months of 2012 now have produced net job growth of just 1,300 positions so far this year. That’s well below the 8,000 new jobs gained during the first eight months of 2011.

Six of the state’s 10 major industry super-sectors showed declines last month, while none of the remaining four gained more than 500 jobs. The leisure and hospitality sector lost about 3,100 positions, the largest drop, followed by: trade, transportation and utilities; construction and mining; manufacturing; government; other services; and professional and religious organizations.

Education and health services topped all growing sectors, though information, financial activities and professional and business services also enjoyed modest gains.

The August report comes on the heels of July numbers that also showed a worsening unemployment rate, and sparked some skepticism from Malloy.

“As I said last month, I’m skeptical about these numbers,” the governor said Thursday.

Malloy noted that the initial number of people filing for unemployment benefits dropped slightly in August to a weekly average of 4,779 down from 4,802 in July. Last month’s claim figures also are down from this time last year, and income tax withholdings are up 3.6 percent after adjustment for inflation, the governor said.

“Those two trends are the opposite of what you would expect to see if the state was losing jobs at the rate suggested in this report,” Malloy said.

And Condon also acknowledged Thursday that there is some understandable confusion over the job market data.

“Both monthly labor statistics programs point toward employment losses in Connecticut,” he said. “However, to date we can find no corroborating evidence” that explains the contradictory indicators. “… We continue to monitor the situation carefully and are working closely with the Bureau of Labor Statistics to investigate every possibility.”

The governor did recognize that the state still faces economic challenges. “I am well aware that we continue to battle strong headwinds at the national and international levels,” he added. “We’ve also recently learned that the recession was far worse than we thought and had a far deeper impact than we understood at the time. And I’ve said time and again that we’re not going to reverse 22 years of job stagnation in 20 months.”

The chief economist for the Connecticut Business and Industry Association, Peter Gioia, said the August report “should be seen as a warning sign that efforts to create jobs need to be redoubled.”

Malloy also said the state is making some economic progress, estimating that his First Five business incentive program will create or retain more than 15,000 jobs and encourage as much as $1.3 billion in private investment here.

“While we’re making progress, it’s also clear we have a long way to go,” he said. “But I believe in Connecticut, I believe in its people, and I know we will get there.”

But leaders of the legislature’s Republican minority said Thursday that the Malloy and his fellow Democrats in the General Assembly are part of the state’s economic problem, and not its solution.

“I talk to small business owners all of the time and they’ve been telling me for months and months and months that the economy is not getting better,” Senate Minority Leader John P. McKinney, R-Fairfield, said. “We have a state that is taxing too much, over-regulating its businesses and we’ve seen a lot of anti-business bills pass.”

“This is bad news for Connecticut and those who are looking for work or are underemployed,” House Minority Leader Lawrence F. Cafero, R-Norwalk, said. “We must acknowledge that the policies that have been put in place have not succeeded in creating jobs and we have to re-direct our efforts. If Governor Malloy is going to take credit for success then he must also admit when he has not succeeded.”

The governor’s senior policy adviser, Roy Occhiogrosso, responded that both Connecticut’s unemployment rate, and state government’s finances, are healthier than they were when Malloy took office in January 2011 after 16 years of Republican administrations.

“For 16 years there was no discernable economic development strategy in this state. … They drove this state into a ditch.” Occhiogrosso said. “It’s going to take some time to get out of it.”

Malloy’s aide said the GOP alternative budget developed during the last legislative session would have cut funds for job training and other economic development initiatives, and only would have harmed Connecticut’s job market.

Occhiogrosso added that Cafero had referred to an April report on the state’s job market as sending “mixed messages,” and called it unfair for the GOP leader to criticize Malloy for having questions about more recent labor reports.