Forecasters Worried by Job Losses

April showers brought a bouquet of bad news on the California employment front, raising concerns that the state’s economy is slowing.

The state lost a net 2,600 jobs in April, the second month of employment declines after a revised loss of 13,400 jobs in March, the state Employment Development Department reported Friday. Much of the job declines occurred in the construction industry, the state’s strongest job creator last year.

State officials blamed at least some of the two-month decline on rains that shut down home-building sites and slowed hiring among garden supply and do-it-yourself retailers in much of the state.

But that explanation did not quell concerns that the end of the housing boom was slowing California’s economy and could eventually spell trouble for the state government’s ambitious spending plans.

The last time the state lost jobs for two months in a row was August and September 2004. The Employment Development Department also reported Friday that California’s unemployment rate was 4.9% in April, up from 4.8% in March.

The report capped a week of economic turmoil, with stocks selling off amid fears of higher inflation, higher interest rates and a slowing economy.

Economists said it was too early to tell whether California was an outlier or on the leading edge of a broader housinginduced economic slowdown. The state led the nation’s housing boom five years ago, so it wouldn’t be surprising if it led a housing downturn as well.

Friday’s jobless report left little doubt that the exuberance in housing is ending. On the heels of a 20% drop in home-building permits in the first quarter, the state’s construction sector shed a seasonally adjusted 8,300 jobs in April, leading five sectors that reported losses.

Manufacturing, which added a net 4,200 jobs, led the sectors making gains. But the rest of the economy couldn’t make up for the losses in construction.

California had enjoyed strong job growth through the early part of the year. The state gained an average of 24,000 jobs a month last year and 20,000 a month in 2004. In January, 16,800 jobs were added, followed by 31,400 in February.

Most economists had anticipated that job growth would begin slowing as rising interest rates and high prices cooled the housing market. But the declines came as a surprise.

“Most of us thought that the minus 13,400 [in March] was a blip,” said Stephen Levy, director of the Center for Continuing Study of the California Economy in Palo Alto.

“What we’re looking at now is two months of small job losses,” he said. “It’s unexpected. If any part of it is real, it’s a very serious signal.”

Levy said the reversal in employment was a sign that the economy was cooling off.

“I think we’re into a slowing economy because people are getting more cautious in spending,” he said. “They are facing higher interest rates. They are facing higher energy prices.... We’re moving into some head winds.”

Levy said he had expected job growth to shrink to 10,000 to 15,000 a month. State financial planners were more bullish, factoring almost 20,000 new jobs a month into the budget forecast issued this month.

“This would be a big slowdown compared to what they were assuming in the May revise for revenues for next year,” Levy said.

State officials said they were not worried that California’s economy would come up short of expectations -- yet.

Thanks to a surge in tax receipts flowing from the robust earnings of oil companies, sales of Google Inc. shares and other sources, the state has grown less dependent on revenue tied to payrolls, said Brad Williams, director of fiscal forecasting for the state legislative analyst’s office.

“This is not a great report, and it may be a sign of something more worrisome,” Williams said. “But I don’t know that it’s something that would immediately translate into a downward adjustment” of the state’s spending plan.

Williams said he was concerned by the loss of 3,800 jobs in the trade, transportation and utilities sector, which included many department store positions. That could be a troubling indication that consumers were growing skittish about spending, he noted.

Some of that may have been related to the rain. Over the last seven years, garden and do-it-yourself stores in California had added more than 5,000 jobs in March and April, said Howard Roth, chief economist for the Department of Finance, quoting an analysis of nonseasonally adjusted data. This year, such stores added just under 2,000 jobs during that period, he said.

Roth said the next couple of months would tell how much the weather had to do with the losses -- and whether the state’s spending plan was too optimistic.

“We’re only in trouble if this kind of thing continues,” he said. “If [job growth] comes back next month or shortly thereafter, then we’re OK.”

In Southern California, the locales that saw the greatest job growth in the home construction boom are keenly feeling its falloff, said Lisa Grobar, an economist at Cal State Long Beach.

In Riverside, San Bernardino and Ventura counties, construction employment grew less than 3% in April on a year-over-year basis, down from more than 9% a year earlier, she said. Orange County’s building job growth dropped to 3.5% in April from 7.3% a year earlier.

In Los Angeles County, on the other hand, construction employment grew more modestly the year before, about 5.5%, and it hasn’t fallen back as much, with April registering a 4.4% rise, she said.

As a result, Grobar said, “now construction in L.A. is growing faster than anywhere in the region.... That is really unusual.”