Michigan Unemployment Rate Drops To 8.8 Percent, Detroit Unemployment Still 19 Percent

Michigan' unemployment rate continues to decline, dropping below 9 percent in February for the first time since 2008. But the situation is more grim in Detroit, where the unemployment rate remains much higher.

Seasonally-adjusted data from the Michigan Department of Technology, Management and Budget shows the state's jobless numbers have dropped for seven straight months. The decline is also reflected in the Detroit-Warren-Livonia Metropolitan Statistical Area, where unemployment has fallen steadily for eight months and now hovers just below 10 percent. Unemployment is also shrinking year-over-year, as rates have dropped since last February.

Jim Rhein, DTMB Economic Analyst, said he feels optimistic about the state's overall improvements, but only somewhat.

"You just don't feel like you're out of the woods yet -- at any point something could throw this off," he said. "It still seems tentative."

Seasonally-adjusted data isn't available for the city of Detroit, but the unadjusted jobless rate was 18.8 percent in January, the most recent month for which data is available. Unemployment in the city increased slightly previous months, but that rise at least partially reflects seasonal trends. Compared to January 2011, joblessness has gone down 2.5 percent in the city, and another 4.1 percent from January 2010.

While the declines seem promising, Rhein cautioned that the unemployment rates aren't the full picture.

"Yes we've seen payroll growth and job growth," he explained, "but at the same time we've seen labor force withdrawal."

Some of the shrinking labor force can be attributed to people giving up looking for work temporarily or permanently. If those people, estimated at more than a million nationwide, were counted in the figures, the unemployment rate would show an increase.

In Michigan, the labor force (seasonally-adjusted) has shrunk 0.6 percent over the last year. In Detroit, the January data show the labor force decreasing by 1 percent, a figure Rhein said is significant.

"The labor force has declined, fewer people [are] actively seeking [jobs], and even with a lower rate, that means there are problems," he said.

Rhein did say 2011 was a better year for Michigan's labor market when all the factors were taken into account. "A lot of it had to do with the auto industry," he said, adding an improvement for the car companies positively affected other sectors. "I never thought I'd say that again."

As for improvements in the workforce and unemployment rate in the coming year, Rhein took a wait-and-see approach. "You always feel hold your breath and hope this continues," he said.

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