Unemployment in California Lowest in Year

California’s economy showed encouraging signs of revival in April as the unemployment rate fell to 8.6%, the lowest level in a year, the Labor Department reported Friday.

The big drop, from 9.4%, is particularly helpful because the state’s job market has been stagnant, mired in high unemployment for months. In Los Angeles County, the jobless rate dipped to 9.4%, down from 10.4%, the best performance since November.

Although both California and Los Angeles might be awakening from deep recession, they still lag far behind the nation, which had a 7.0% jobless rate, unchanged for the third month.

Economists offered a note of carefully worded optimism.

“We are approaching a bottom and building the blocks for future growth,” said Joseph Wahed, chief economist at Wells Fargo Bank in San Francisco. “But if you nail me down, I think we are still in a recession. I don’t want to give you the impression that all is gloom and doom, but I also don’t want to say we can go out and open a bottle of Dom Perignon just yet.”

The situation is “improving slowly,” said Adrian Sanchez, regional economist at First Interstate Bancorp in Los Angeles. “I’d like to see some other indicators of a turnaround before we say the whole California economy is participating (in a recovery), but the . . . numbers are encouraging.”

California’s jobless rate of 8.6% was the lowest since a figure of 8.2% in April of last year. Ever since the summer, the state had been limping through a range of 9.5% to 10% joblessness.

The national economy suffers from the same problem it has had during the entire two years of the current recovery: Business is expanding its output of goods and services without creating any significant number of jobs.

Companies rely increasingly on overtime rather than hiring. “It’s cheaper to do that than to put on new workers,” Rep. David R. Obey (D-Wis.), chairman of Congress’ Joint Economic Committee, said at a hearing Friday.

Factory overtime was at record levels in April, 3.4 hours a week, offering strong evidence that businesses are reluctant to increase hiring.

The country is going through some wrenching economic changes that make the current recovery different from anything seen in the post-World War II era. After each of the six other significant recessions, employment grew steadily and substantially. Two years after the recessions ended, the average job gain was 4.8 million.

The most recent recession officially ended in March, 1991--that’s when economic output began growing again. But only 969,000 jobs have been created in the two years since then, representing just over half the jobs lost during the recession, said William G. Barron Jr., deputy commissioner of the Bureau of Labor Statistics.

“That’s an extraordinary comparison,” said Sen. Paul S. Sarbanes (D-Md.). “This underscores the need to provide some impetus to the economy.”

Unions and management, normally adversaries, agreed Friday that the recovery is anemic when it comes to creating jobs.

“The economy appears to be stuck in slow motion,” said Jerry Jasinowski, president of the National Assn. of Manufacturers. “The unemployment rate has remained stubbornly immobile for the last three months, while job increases were hardly awe-inspiring.”

The heads of major manufacturing companies “have also indicated to me that concerns about increased taxes and health care costs have caused them to place a virtual freeze on new hiring,” Jasinowski said.

At the AFL-CIO, President Lane Kirkland said: “A recovery without strong job growth is not a real recovery.” He offered a plug for President Clinton’s job stimulus program, which was recently killed by a Senate filibuster, saying that “the county needs a good dose of job-creating fiscal stimulus, and the gridlock gang in Congress should start thinking about the needs of the country instead of partisan politics.”

There were 118.4 million Americans working last month, a drop of 149,000 from March. Unemployment totaled 8.9 million, an increase of 61,000.

In addition to the jobless, there were 6.5 million people who worked only part time, although they wanted full-time work.

Despite the gloomy numbers, the Clinton Administration hopes that lower interest rates will promote consumer spending in the second half of the year. Many Americans are refinancing their mortgages to take advantage of lower rates, giving them more disposable income, Laura D’Andrea Tyson, chairwoman of the President’s Council of Economic Advisers, told reporters Friday.

In California, there were 14 million people at work last month, a gain of 23,000 from March. Unemployment totaled 1.3 million, down 135,000 during the month.

Although the big decline in the state jobless rate was obviously welcome, some skeptics said they want to see several months of improving figures before agreeing that the state is indeed moving into a business rebound.

“I’m cautious about accepting those numbers at face value,” said Stephen Levy, senior economist and director of the Center for Continuing Study of the California Economy in Palo Alto. “I’d like to see corroborating evidence in job figures or retail sales or construction.”

David G. Hensley, director of the UCLA Business Forecasting Project, was dubious about the April report and suggested that state unemployment might quickly rise again. “It could be a measurement issue or that the sample size is so small that from month to month the rate could vary a lot.”

In Los Angeles County, there were 4.1 million people at work in April, a gain of 58,000 from March. Unemployment totaled 429,000, a drop of 42,000.

Rosenblatt reported from Washington and Lee from Los Angeles.