Job Creation Slows in State Despite Gains in Booming Tourism Industry

High gasoline prices are hurting many people’s pocketbooks, but they appear to be helping the state’s tourism industry by driving Californians to vacation closer to home.

That helped boost hiring in leisure and hospitality in June, offsetting slower job growth in the housing sector, according to data released Friday.

The cooling real estate market curbed overall California hiring in June as employers added a net 11,000 jobs, down from a revised 15,300 in May, according to the state Employment Development Department.

The slower growth was blamed almost entirely on job losses in the construction and financial sectors, which analysts said appeared concentrated in home building and mortgage lending.

But one bright spot in California’s post-home-boom economy is tourism. The leisure and hospitality sector added 1,900 jobs on a seasonally adjusted basis in June, the state said, more than offsetting the 1,500 net positions lost in construction and finance.

Tourism overall employed 1.5 million Californians in June, up 2.9% from the same month a year earlier, the state said.

In Los Angeles, where tourism employs more people than any sector other than trade, business is booming. Hotel occupancies reached an all-time high of 76% in May, and the average room charge was $118.90, up 13% from May 2005, according to LA Inc., the city’s convention and visitors’ bureau.

This is one area of the economy in which the high price of gas is paying off, industry experts said. Surveys show that the more it costs to fill up a tank, the closer to home people want to vacation. That’s good news for major metropolitan areas such as Southern California.

Auto Club of Southern California members are asking travel agents for advice on economical vacations and trips a “short drive from home,” Auto Club spokeswoman Marie Montgomery said.

“That’s one of the great things about Southern California,” she said. “You don’t have to go anywhere. You can just stay here. That is one thing our members are telling us they are definitely taking advantage of.”

More visitors to Los Angeles are traveling from within California than in the past. This year, 55% of Los Angeles visitors are fellow Californians, up from 50% in 2004 and 2005.

With that and the price of gas in mind, the Los Angeles visitors’ bureau is spending most of its advertising budget this summer trying to lure visitors from San Diego because it is less than a tank away.

“With these gas prices, people are rethinking their trips, but they still want to get away,” LA Inc. spokesman Christopher Heywood said. “It’s great for Los Angeles. We are well positioned to take advantage of this wallet distribution where people come into the city and empty their wallets.”

Tourism is not the only sector that is helping to offset the housing slowdown. The demands of booming economies in China, India and other developing countries are buoying other parts of the state’s economic engine, including mining and trade.

With the state’s unemployment rate slipping to 4.9% in June from 5% in May and most sectors still adding jobs, the state economy moderated gradually, mirroring the national trend. California remains on track for a soft landing, economists said.

“There is no reason to believe the growth of the economy will come to a stop,” said Sean M. Snaith, director of the University of the Pacific’s Business Forecasting Center. “The boom in housing laid the foundation of the current expansion, and now other sectors continue to build upon this foundation.”

State figures released Friday show that 14.9 million people were employed in California, down 39,000 from May but up 136,000 from June 2005.

Also, more than 40,414 Californians made new claims for unemployment insurance in June, about the same as a year earlier but up from 37,041 in May.

In Los Angeles County, 7,200 net jobs were created in June, down from 8,300 in May.

At the same time, a separate survey showed the unemployment rate in the county fell to 4.6% from 5.1%, indicating that more people stopped looking for jobs than launched job hunts during the month.