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Alabama unemployment rate rises to highest level in 15 years

Alabama’s unemployment rate jumped to 6.7 percent in December, the highest rate in more than 15 years, and economists say it’s likely to keep rising.

State Industrial Relations Director Tom Surtees announced Friday the rate had gone up from the state’s revised figure of 6.0 percent in November. The December rate was the highest since Alabama recorded 6.9 percent in July 1993.

Surtees also said individual county rates were unavailable on Friday.

The higher unemployment rate came out on the same day ThyssenKrupp announced it will delay the planned start of stainless steel production at a $4 billion plant north of Mobile, and Birmingham-based Compass Bank said it will cut 1,200 jobs, or about 10 percent of its staff, across Alabama and five other states.

Despite that, the industrial relations director said there is good news in Alabama’s rate because it remains below the national unemployment rate of 7.2 percent.

Alabama is also better off than its neighbors. Florida and Georgia announced jobless rates of 8.1 percent and Tennessee 7.9 percent. Mississippi has not yet announced its rate.

Sam Addy, director of the Center for Business and Economic Research at the University of Alabama, said unemployment traditionally declines in December due to seasonal hiring by retail businesses, but that was not the case last month due to the recession.

Addy predicted that Alabama’s unemployment picture will keep getting worse until it peaks at 8.0 percent to 8.4 percent in the last half of 2009. But he said he doesn’t expect Alabama’s rate to get as bad as the national rate.

Joe Sumners, director of the Economic and Community Development Institute at Auburn University, agreed. He predicted Alabama’s unemployment will remain about a percentage point below the national rate.

Surtees reported Alabama lost 14,400 jobs during December.

From December 2007 to December 2008, employment fell from 2,025,100 to 1,983,200 — a loss of 41,900 jobs. Manufacturing industries suffered the biggest loss, with more than 17,000 jobs going away. The trade, transportation and utilities sector dropped by 8,600 jobs and hospitality industries lost 5,000 jobs.

The hospitality losses were reflected in the state’s lodging tax from hotels and motels, which declined nearly 3 percent over the last 12 months, according to the state Department of Revenue.

No matter how bad things look, Sumners said Alabama is a long way from the 1982 economic downturn, when unemployment hit a record 14.4 percent.

“There were times when we would have been dancing in the streets to have 6.7 percent,” he said.