State’s jobless rate falls to 5.7%
California’s unemployment rate dropped slightly in February to 5.7% as the state’s economy created nearly 26,000 jobs, officials reported Friday.
The biggest gain came in the information sector as screenwriters ended the 100-day strike that paralyzed television and film production. Jobs also were created in the educational and health services categories.
The steepest decline hit construction, which has been battered by a weak housing market and the sub-prime mortgage meltdown.
February’s state jobless rate of 5.7% was down from 5.9% in January but still up from 5% in February 2007.
But most economists took little solace from the modestly upbeat monthly figures, noting that total state employment is running just slightly higher than at this time last year.
Growth is “flat at best,” said Esmael Adibi of Chapman University in Orange.
Although it called February’s numbers strong, Beacon Economics, an independent research firm, predicted that the current growth could be “transitory at best, with the labor markets growing significantly worse over the course of 2008.”
Statewide, the total number of non-agricultural workers edged up just 0.1% in February, compared with a year earlier, the California Employment Development Department said.
In the Los Angeles metropolitan area, unemployment fell to 5.3% in February from a revised 5.7% in January. That total, though an improvement, was well above 4.7% in February of last year.
The numbers appear to suggest that California is headed toward a mild recession. The direction won’t change until housing prices come down further and demand for unsold units picks up, said Stephen Levy, director and senior economist at the Center for the Continuing Study of the California Economy, a research organization in Palo Alto.
“To me, the take-away, year over year, is that job growth has stalled,” he said.
Levy credited much of the small decline in monthly unemployment to 43,000 people taking themselves out of the labor force, some because they gave up looking for work.
The new employment numbers indicate that the bottom of the housing market might still be a ways off, said Howard Roth, chief economist for the California Department of Finance. “Some of the inventories are being worked down, and that’s a good sign,” he said. “The builders are now being serious about reducing the price.”
The tempo of economic activities in the Los Angeles, Long Beach and Glendale area was “more of the same” in February, said Jack Kyser, chief economist for the Los Angeles Economic Development Corp.
“It’s a two-track economy,” he said. “Anything related to housing is struggling; the financial services sector obviously is struggling. Other industries are moving ahead at a slower pace but still growing.”
One particularly bright spot, Kyser said, is the tourist industry, with international arrivals up sharply at Los Angeles International Airport as a weak dollar lures foreigners to Southern California’s beaches and theme parks.
But Chapman forecaster Adibi said he feared that an uptick in tourism wouldn’t make up for a spreading economic malaise throughout Southern California.
Orange County and the Inland Empire, which are both dependent on strong housing and retail sales, began shedding jobs in the middle of last year, Adibi said. Los Angeles’ economy has performed more robustly in the first two months of this year, but the momentum might not be sustainable, he said.
The outlook for the rest of the year, “unfortunately for everybody, looks worse,” he said. “The weakness is spreading to different areas and becoming more broad-based . . . from housing and construction, then mortgages, less demand for furniture and appliances. Even auto dealerships are feeling the pain.”
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