RALEIGH, N.C. (WNCN) – North Carolina’s unemployment rate dropped to 4.6 percent in June as the state continues to recover from the COVID-19 pandemic, according to new data released Friday by the North Carolina Department of Commerce.

N.C. State University economist Mike Walden called the report “upbeat” from the 4.8 percent May report and noted the increase in the labor force as more people get vaccinated and businesses compete to try to attract workers.

“People are assessing the workforce and they’re seeing some better opportunities with many businesses having to upgrade their pay and their incentives,” he said.

Walden said he expects it could take about a year for North Carolina to return to pre-pandemic levels of unemployment and workforce participation.

In Feb. 2020, the state’s unemployment rate was 3.6 percent. About 112,000 more people were also employed at that point in nonfarm jobs, according to the North Carolina Department of Commerce.

“I’m a little more optimistic now. I think probably this time next year we’ll be very, very close,” Walden said.

Some of the industries that added the most jobs in June were government (19,800), leisure and hospitality (7,300), and professional and business services (4,700).

In total, nonfarm employment increased by 41,900 to 4,502,400 people in June, the report shows.

The report comes amid a political battle over unemployment benefits. People who qualify are receiving $300 weekly payments from the federal government on top of the benefits they receive from the state. Those payments are scheduled to end in early September.

The North Carolina Division of Employment Security says about 200,000 people are receiving weekly unemployment checks, which is down from 245,000 in mid-May.

Republicans have blamed the payments as a key reason why many businesses have struggled to hire workers.

They recently passed a bill to cut off the federal benefits, but Gov. Roy Cooper (D) vetoed it, arguing some families still need the help and that those payments provide a boost to the state’s economy.

In an interview this week, House Speaker Tim Moore (R) said it’s unlikely the legislature will try to override Cooper’s veto.

“You know, the clock’s really running out on that at this point because those benefits are going to expire anyway,” Moore said. “The one thing that’s holding us back right now is not having enough workers. It’s like having an airplane that’s ready to fly, ready to go but not having enough fuel in the tank.”

About half of the states, all led by Republican governors, moved to stop the payments early. However, Indiana is restarting them following a lawsuit. A judge in Maryland also ruled this week that payments there must continue.

Jared Bernstein, a member of the White House Council of Economic Advisors, said the checks have been vital from the time the pandemic began.

“And we don’t find that job search activity or employment outcomes or even labor supply measures have really been different in states that ended them earlier and those that kept them going,” he said. “That lifeline has been and continues to be important for folks who aren’t fully back employed.”

He noted some parents have been unable to return to work due to child care costs and how the administration has pushed for universal preschool.

Bernstein said President Biden “views this not just as an issue to help people cut back on the costs of taking care of kids, which of course is important, but to create a pathway into the labor market.”

State Sen. Kirk deViere (D-Cumberland), who voted against the bill cutting off federal unemployment benefits, said he did support a provision to fund child care.

“It’s something that we have to realize is impacting our workforce. Some people have chosen to stay home because of the cost of child care,” he said.