Unemployment hits record 12.6%

South Carolina's economy stumbled unexpectedly in December, sending its unemployment rate to a record high of 12.6 percent.

Employers slashed jobs at an unusually high rate after several months of stability, casting broader concern over what appeared to be the start of economic recovery.

"All of a sudden there were more jobs lost at the very end of the year when the trend was for things to be stabilizing or almost improving," said economist Don Schunk of Coastal Carolina University.

November's rate was 12.3 percent, which also set a record high. Leading up to that month, the state's unemployment rate hadn't strayed more than a percentage point for nine months.

Simply put, 1 in 8 South Carolina residents want work but can't find it.

Put Daniel Goff in that category.

Despite his business management degree, computer science experience and eight years of restaurant management, the West Ashley resident has looked for a job for two years without much luck. He has taken a modest-paying job as an auto mechanic "to keep the electricity on."

"I feel like it's not getting any better," said Goff, 27, of the job market. "I don't know what the answer is, but there's reasons why businesses are closing. People don't have money."

Unemployment rates typically rise during the end of a recession as hopeful jobless residents start applying for positions at the first sign of good news. But South Carolina, which lost 9,900 jobs throughout the month, recorded an unusual and substantial loss of 4,000 jobs in the business and professional services sector.

"When you see a drop there, that's a sign of something going on," Schunk said.

Employers typically cut jobs during December as the holiday season unravels and the slow travel season takes hold.

Statewide, the tourism industry cut 5,200 workers, a figure that's in line with seasonal trends. The Charleston metro area lost 1,500 tourism jobs in December, likely the reason why the area's unemployment rate rose from 10 percent to 10.2 percent.

South Carolina reported the fourth-worst jobless rate in the country behind Michigan (14.6 percent), Nevada (13 percent) and Rhode Island (12.9 percent).

Forty-three states saw their unemployment rates worsen during December, dousing hopes that employers would begin hiring workers once consumer confidence and spending picked up.

"Businesses are just not at a point where they're going to be hiring people or investing in their business," said Mark Vitner, a Charlotte-based economist for Wells Fargo. "There's so much uncertainty in the business environment."

With health care reform unresolved, business owners don't know how much they'll have to spend on benefits for new workers, Vitner said. Manufacturers that are heavily regulated by environmental agencies are hesitant to buy equipment without knowing how cap-and-trade rules will affect their balance sheets.

Meanwhile, tight lending markets could worsen as the federal government stops buying mortgage-backed securities in a few weeks.

"I think that folks are really beginning to wonder whether the worst is past or not," Vitner said.

Reach Katy Stech at kstech@postandcourier.com or 937-5549.