California Jobless Rate Falls as Fewer People Seek Work
California’s unemployment rate fell by nearly a percentage point in August, reversing a three-month upswing, as the nation’s jobless rate hit a two-year low of 6.7%.
The good news was tempered, however, by the release of additional government data--including a 0.1% decline in the leading economic indicators--that blurred the economic picture.
After three straight monthly increases had pushed the California unemployment rate to 9.8% in July, the August decline to 9% was a welcome downturn. But government analysts said that the change came not because of new jobs but because the work force shrank.
While the government’s August survey of households indicated that the number of unemployed persons in California fell 131,000 from July, the ranks of the employed also dipped 83,000. That means the state’s unemployment rate declined not because job seekers were absorbed into the work force but because people had stopped looking for work, some perhaps because they had given up hope.
“It’s always good to have a lower number of people seeking jobs and unable to find them,” said Thomas J. Plewes of the Labor Department. “But you’d like to see it come from more jobs, not a shrinkage in the labor force.”
A separate survey of employers, considered a more reliable measure of labor market trends, found that California lost 22,100 jobs among non-farm industries, the state Employment Development Department reported.
More than half of those lost jobs were in the manufacturing sector, primarily in such high technology industries as aircraft and parts, guided missiles, space vehicles and instruments, the state report said.
Retail also suffered, losing 8,000 jobs from July to August.
“This is bad news,” said Joseph Wahed, an economist at Wells Fargo Bank in San Francisco. “Nationally, we’re moving forward; in California, we’re still moving sideways.”
The California service industry continued to be a bright spot, adding 4,500 jobs, mostly in business services, motion pictures and recreational entertainment.
Economists, however, pointed out that manufacturing jobs are often higher paying and of greater importance to local economies. “A job in an amusement park is not the same as an engineering job in a defense company,” said Lynn Reaser, an economist at First American Bancorp in Los Angeles.
In Orange County the unemployment rate hit 7.4% in July, the most recent month for which figures are available. That was up from 6.7% in June, largely because of seasonal factors, including the flood of teachers and students entering the summer job market. Because the monthly jobless statistics for the individual counties are computed after the state and national rates, the August figures for Orange County won’t be released until the end of September.
Los Angeles County employment mirrored statewide trends, as the jobless rate fell from 9.5% in July to 8.8% in August. Again, there was no job growth but the decline in the number of unemployed outpaced the decline in employment.
Nationwide, businesses outside the farm sector cut 39,000 jobs in August, according to the employer survey, after 211,000 jobs had been added in July. Again, manufacturing led the plunge with a loss of 42,000 jobs from the previous month.
This “largely reflects poor export performance driven by slow economic growth in our major trading partners and the short-run effects of necessary defense downsizing,” Labor Secretary Robert B. Reich said in a prepared statement.
The Labor Department also reported that the factory workweek averaged 41.5 hours in August, matching its recent record highs, as employers have tried to squeeze more production from their leaner work forces. Average weekly overtime increased from 4 hours in July to 4.2 in August.
The 6.7% national unemployment rate reported from household survey data reflected an increase in employment of 409,000 workers, and a decrease in the number of unemployed by 108,000.
Financial analysts, however, emphasized the volatility of that data and said that the net job loss reported in the employer data was more in line with current economic trends.
Employment growth has slowed considerably recently after expanding at an average rate of 196,000 jobs per month over the first five months of the year, said Stephen Roach, an economist at Morgan Stanley & Co.
“Companies are once again going back to the productivity strategies that were prevalent earlier in the recovery,” Roach said. “It’s good news for inflation, interest rates and America’s competitive position but it takes a toll on job growth.”
* SHAKY STATS: Data about the U.S. economy often is unreliable. A26
Jobless Rates
Here are U.S. and California unemployment rates, in percentages, over the last year:
U.S. Calif. August 6.7 9.0 July 6.8 9.8 June 7.0 9.1 May 6.9 8.7 April 7.0 8.6 March 7.0 9.4 Feb. 7.0 9.8 Jan. 7.1 9.5 Dec. ’92 7.2 9.8 Nov. 7.2 10.1 Oct. 7.3 9.8 Sept. 7.4 9.4 Aug. 7.5 9.8
