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KNOXVILLE, Tenn. — The loss of manufacturing jobs in Tennessee is the main reason for an increase in the state’s unemployment rate, a University of Tennessee economist said Wednesday.

 Dr. Matt Murray said the recent rise in state unemployment points mostly to job loss and slow growth in factories and manufacturing plants.

 “It’s a pretty discouraging sign,” Murray said.

 “When you look beneath the surface of the unemployment figures you can see that the culprit is, in part, a broad-based weakness in the state’s manufacturing sectors.”

 The latest report from the State Department of Employment Security shows Tennessee’s jobless rate in October rose from 4.5 to 4.9 percent.

 Murray said more than 11,000 jobs were lost in the last year in the durable goods manufacturing sector, which produces long-lasting products like cars and appliances. Only about 1,000 new jobs were created, he said.

 “Manufacturing employment is the real source of weakness in the state’s economic picture and the labor market in particular,” Murray said.

 Other areas of state economy have grown. Service jobs, for example, have increased 56,000 in the last year, Murray said.

 Most economic growth is taking place in metropolitan areas, and rural communities are feeling the impact from manufacturing losses, Murray said. This “regional mismatch” makes it more difficult to make up for manufacturing job losses, he said.

 Murray also said the weak manufacturing sector is one reason the state is collecting fewer sales tax dollars and facing a potential $75 million budget deficit.

 “I think the contraction in manufacturing is a big part of the slowdown in sales tax revenue growth the state has experienced over the last 10 months,” Murray said.

 “The weakness in the state’s manufacturing sector is acting as a drain on the state’s overall economic activity.”


 Contact: Dr. Matt Murray (423-974-5441)