California Lost 240,000 Jobs During January

California lost almost 240,000 jobs in January, a state survey of employers’ payrolls indicated Friday, as the nation’s unemployment rate remained stuck at a five-year peak of 7.1%.

The state’s jobless rate shot up to 8.1% from 7.7% in December, the U.S. Labor Department reported, as Sun Belt states in particular continued to suffer from the slumping economy. Unemployment in Florida rose to 8.7% from 7.5%, and in Texas it was 7.8%, up from 7%.

For the nation as a whole, the number of jobs fell by 91,000 as the recession took a heavy toll in the manufacturing and retail sectors.

In California, a separate household survey taken by the state government estimated that the number of unemployed climbed by 61,000 in January to 1,216,000.

“The worst has yet to hit California,” said Paul Getman, an economist at Regional Financial Associates in West Chester, Pa., who cited job losses in the defense industry, real estate and financial services. “We believe that the California economy will be one of the weakest,” with a turnaround not likely before the fourth quarter of this year, he said.

Economists said they expect jobless figures to remain high in the state because its major aerospace and commercial-construction sectors continue to decline while other industries remain flat.

Manufacturing, construction and retail trade actually showed the greatest number of job losses in January. But Lynn Reaser, a senior economist with First Interstate Bancorp in Los Angeles, said an increase in sales of new homes last month bodes well for construction and related industries.

Nationally, the Labor Department said 8.9 million Americans were jobless in January, while the number of people holding part-time jobs rose by 400,000 to 6.7 million. The increase in part-time workers indicates that more people were unable to find full-time work.

The number of discouraged workers, people who have quit looking for work, remained at about 1.1 million.

“It was a very negative and disappointing report,” Reaser said. “The recession is still with us . . . most companies are very reluctant to take on any new employees, and many in fact are still paring staff.”

The jobless report Friday initially boosted the bond market, where interest rates dropped in anticipation of Federal Reserve action to stimulate the economy. But that, and a brief stock market rally, fizzled after the Fed drained cash from the banking system, signaling that it was not ready to cut rates more broadly.

The Dow Jones average of industrial stocks fell 30.19 points to close at 3,225.40.

The unexpectedly large loss of jobs in January is a political liability for President Bush, who was campaigning Friday in California as he prepares to launch his formal campaign for reelection on Wednesday. Some analysts had expected a gain of about 30,000 jobs for the month.

Michael J. Boskin, chairman of the White House Council of Economic Advisers, said the unemployment rate may go slightly higher in February and March but should then start downward if the President’s economic package is adopted by Congress.

“It will take some time before these (job) indicators pick up and improve,” Boskin told the House Budget Committee on Friday. “It’s unlikely that there will be an instant turnaround in the next month or two.”

Sen. Paul S. Sarbanes (D-Md.) said the job picture was more grim in January than December even though the overall unemployment rate remained the same.

“There is nothing in the January report to show that the economy has started to recover from the downturn that began 19 months ago,” Sarbanes said at a hearing of Congress’ Joint Economic Committee.

A private analyst, Marco Babic of Evans Economics, said there has been encouraging growth of the money supply and an increase in department store sales despite the latest sign of falling employment.

“I don’t think we’re in a double-dip recession, but the recovery may stall a little bit to the end of the second quarter or the beginning of the third quarter,” Babic said.

The Labor Department report said the job outlook remained “weak” in January, with a rise in unemployment among adult men to 6.9%, 2 percentage points above the mid-1990 level, when the recession began. Jobless rates for blacks rose to 13.7% and for Latinos to 11.3%, while the rate for white workers was unchanged at 6.2%.

Job cutbacks in manufacturing totaled 52,000, with half of that coming from layoffs in the auto industry. Another 51,000 jobs were lost in retail trade, primarily from cutbacks at department and variety stores, the Labor Department said.

In contrast to recent trends, there was no net job growth in the service industries last month, although there was a modest gain of 17,000 jobs in health services.

In further signs of weakness, the average workweek of non-supervisory, non-farm workers edged down to 34.3 hours in January from 34.5 hours, and seasonally adjusted average weekly earnings fell to $359.12 from $361.56.

Eaton reported from Washington and Sanchez from Los Angeles.