CONCORD, N.H. — New Hampshire’s unemployment rate is 1.9 percent, the lowest rate in state history, the New Hampshire Department of Employment Security announced Tuesday.
The previous low was 2.1 percent, which the state reached in April. The state also hit that level in March and April of last year, according to Bob Cote, assistant director of economic and labor market information.
Governor Chris Sununu praised the record as an indicator of a strong economy.
“New Hampshire’s economy is heating up just in time for the summer season,” he said in a statement Tuesday. “With a No. 1 ranking for economic opportunity, record low unemployment, and no sales or income tax, New Hampshire is far and away the top state for families, employees, and businesses!”
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But the state is struggling with workforce shortages, with hospitals and childcare centers among the many employers having trouble hiring enough workers. And low unemployment can also drive inflation, as employers have to increase wages to attract workers.
“It’s extremely low. It’s the lowest that I can recall ever hearing,” said Bruce Elmslie, the chair and professor of economics at the University of New Hampshire.
He said typically a stable unemployment rate would be around 4 percent and anything lower than that can cause inflation as employers start offering higher wages to attract workers.
“If there’s really low unemployment then that would tend to increase wages, in order to increase incentive for people who are not in the labor force to get in,” he said.
The employment rate dropped slightly, going down 0.2 percent from April to May, according to the department, which estimated that around 749,300 residents are employed in the state.
The percentage of people actually participating in the workforce has been on the decline since the 1990s, according to data from the U.S. Bureau of Labor Statistics. In August of 1990, participation was at around 75 percent, compared to 64.4 percent in April 2023.
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“What we’re looking at is a long term trend of people who are not participating in the labor force,” Cote said.
There are many reasons people might choose to leave the labor force, like having a baby or retiring.
Cote said a major component is that the state is aging. “A lot of New England states are in that situation,” he said.
He said the participation rate is especially low since COVID and he expects the economy is still returning to normal in its wake.
“It just may be a matter of time to work things out and get things at least back on track to where we were and obviously over time with more young working age people back into the state,” he said.
Amanda Gokee can be reached at amanda.gokee@globe.com. Follow her on Twitter @amanda_gokee.