NEW figures show unemployment on the Coffs Coast has fallen but business and political leaders are at a loss to explain why.

Australian Bureau of Statistics figures for March 2008 has unemployment in Coffs Harbour pegged at 6.6 per cent, a decrease of 0.9 per cent from the same time last year.

Unemployment in Bellingen and Nambucca has dropped in both areas by 0.8 per cent, to 7.4 per cent in Bellingen and 10 per cent in Nambucca.

But the figures are a surprise to Coffs Harbour Chamber of Commerce president, Maree Walden.

"Local business owners are struggling to keep their heads above water at the moment and are not employing" Ms Walden said.

"It's been a tough year and a dreadful summer, with demands on finances increasing thanks to fuel prices and interest rate rises."

Ms Walden said the recent Federal election could be a contributing factor, since uncertainty surrounding the new government has settled down.

Member for Cowper, Luke Hartsuyker, is equally surprised by the figures.

"Employment has dropped nationally by 19,000 and business confidence is the lowest it's been in years," Mr Harsuyker said.

"We also have 900 people no longer in the region's labour force - these figures are surprising."

Mr Hartsuyker said local businesses have reported a worsening in trade conditions.

A recently released ANZ Regional and Rural report shows a conflicted outlook for the North Coast economy.

While the report states that demand for labour has strengthened and employment is growing, other factors are impacting on the economy.

"Further increases in interest rates this year have been compounded by higher prices in household staples such as petrol, food, rent and utilities, sapping confidence and disposable incomes," ANZ senior economist Mark Rodrigues said.

"The impact is particularly notable in regions reliant on tourism, such as the North Coast."

The report states the population of the North Coast has increased by more than 40,000 since September last year, while the mean individual taxable income has increased to $36,835 in the same period.

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