Finance network CNBC on Thursday named North Carolina the second-best state to do business in the latest edition of its influential annual rankings. Ohio passed the Tar Heel State to take the overall crown this year, but North Carolina claimed the top spot in one key indicator: the economy.  

It’s the seventh year in a row North Carolina has ranked among the top three states overall, and the fifth-straight in the top two. Virginia, which topped the rankings in 2024, ranked third this year. In 2019, North Carolina ranked third; in 2021, the state ranked second; in both 2022 and 2023 North Carolina ranked first.

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“North Carolina is growing and thriving, and remaining in the top two is just another reminder of all our state has to offer,” Gov. Josh Stein said in a statement. 

Companies consistently cite the state’s relative affordability, talent pool, quality of life, workforce development programs and business-friendly regulations as reasons for moving to or expanding in the state. The state advanced in some of those areas while retreating in others. 

Gerald D. Cohen, chief economist of the Kenan Institute of Private Enterprise at the University of North Carolina at Chapel Hill, cited an educated, skilled workforce as North Carolina's strength. 

"We are building a skilled workforce through our education and training, and we have people migrating to the state because of the quality to join that workforce," he said.

"The areas of growth in the state have been, you know, in tech, high-tech related, and in particular,  pharma and biotech," he said. 

CNBC considers more than 130 metrics in 10 categories of competitiveness in determining its rankings. North Carolina ranked first in economy (up from third last year); third in workforce (up from fourth last year) and eighth in technology and innovation (up from 13th). It also advanced in other categories, such as cost of doing business and access to capital. 

The growth in those categories signals a weakness as well, Cohen said, citing the challenge of a rising cost of living. 

"We have people who are getting educated here and want to stay, and so all of that is positive," he said. "But it's put pressure on on the cost of living, put pressure on housing affordability.

The state lost ground in a few areas, though, including business friendliness (eighth place, down from fourth); infrastructure (13th, down from 11th); quality of life (34th, up from 29th); education (12th, down from 6th) and cost of living (35th, down from 23rd). 

"We've measured affordability across all 100 counties across the state, and in all 100 counties, we've seen a a drop a drop in affordability since 2000.

"Generally, where it hurts the most on affordability are people who have lower incomes. And generally, when builders are building these days, they're building more high-end housing, and so that hurts affordability," Cohen said.

“This ranking proves that we can’t rest on our laurels,” Stein said. “Other states want what we have, and we’ve got to keep investing to build strong infrastructure, double down on our high quality of life, and make North Carolina more affordable to live, work, and raise a family.” 

North Carolina set a new record for job creation last year, as companies promised to bring nearly 34,000 new jobs to the state. Companies also promised more than $23 billion in new investments last year. 

The incoming jobs have helped keep the state’s fast-growing population employed. The state’s unemployment rate was 3.7% in May, lower than the national average of 4.3%, according to the Department of Commerce. North Carolina’s unemployment rate has been in line with or below the national rate for most of the past three years.

Cohen said North Carolina's next challenge is to make sure that growth lifts all residents of the state.

"It's not just about bringing in new businesses and from from other states or new workers from other states or educating our current workforce. It's about getting workers of all skill levels and and skilling everybody up ... getting people who are lower skilled to a higher skill level, and and that's how you kind of create really strong and equitable economic growth," he said.

The CNBC rankings provide bragging rights for the top states, giving economic developers sales-pitch ammunition for luring more companies to the state.