Big Drop in State, U.S. Jobless Rates : Employment: One-month decline is largest in 10 years. But California tally is result of fewer people seeking work.
Unemployment rates for California and the country as a whole posted the biggest one-month declines in a decade in November, with joblessness dropping to 6.4% from 6.8% nationally and to 8.6% from 9.8% in the state, the government reported Friday.
While economists hailed the national figures as a strong sign that the U.S. economic recovery may be gaining momentum, they said the improvement in the state rate occurred largely because discouraged job hunters either stopped seeking work or moved elsewhere, not because of new job growth.
The U.S. Labor Department reported that the national decline in unemployment came as employers added 208,000 jobs during the month, the most since July.
Yet according to the same closely watched jobs tally, based on a survey of employer payrolls, California lost 11,500 jobs in November, even as its unemployment rate fell.
Perhaps the only cause for optimism in California, analysts said, is that the speed of the state’s economic decline appears to be slowing.
“The numbers do not tell us the recession is over (in California). That’s clear,” said Ted Gibson, principal economist for the state Department of Finance. “Perhaps in a few months we can talk about recovery.”
Outside of the hard-hit aerospace and defense industries and related types of manufacturing, Gibson said, the drops in employment “are getting smaller. So we might possibly be stabilizing outside of manufacturing.”
The White House embraced the national unemployment report as evidence that the Administration’s economic plan was beginning to pay off. And the decline in the California jobless numbers comes at a perfect time for President Clinton, who will visit Southern California today, partly to trumpet the Administration’s defense conversion initiative and other efforts to enhance the state’s economy.
Administration officials contend that Clinton’s package of spending cuts and tax hikes intended to reduce the deficit by $500 billion over five years has brought about this year’s decline in interest rates. Those reduced rates have enabled consumers and businesses to spend and invest more freely, they say.
“All of this is very good news for the American economy, and I want to point out that this report is another in a long list recently, suggesting that the recovery has picked up pace, and the recovery is a sustainable economic recovery,” said Laura D’Andrea Tyson, chief of the Council of Economic Advisers.
She added that the economic recovery is being fueled by an upsurge in the construction industry and other sectors that respond quickly to lower interest rates--evidence that supports the Administration’s argument that its economic plan is at least partially responsible for accelerating the turnaround.
But some independent economists argued that the drop in the unemployment rate, which hit the lowest level since January, 1991, overstates the extent of the economy’s upturn. Gordon Richards, chief economist of the National Assn. of Manufacturers, said that this year’s employment gains may be a delayed result of the rapid economic growth that came in late 1992. The economy, as measured by the gross domestic product, has not returned to those levels since.
Meanwhile, economists noted that California had a significant effect on the national outlook in November. The state accounted for virtually all of the national decrease in the labor force--the total number of people working or looking for work--which helped bring down the national unemployment rate.
The jobless rate is a percentage of willing workers, so if more unemployed people leave the labor force than those with jobs, the unemployment rate will improve even if no new jobs are created.
“The jobless numbers are good, but not quite as great as they look because of the drop in the labor force,” said David Wyss, an economist at DRI-McGraw Hill, a Lexington, Mass.-based business forecasting firm.
He said it is uncertain whether the national rate can stay so low, particularly since the government is revising its unemployment surveys beginning in January in a way expected to produce a slight increase in the jobless rate.
In November, however, government data showed broad-based gains in employment, including such service industries as health care, finance and real estate. On top of that came the second straight monthly employment increase in manufacturing, long a big weakness in the monthly employment statistics.
Along with the unexpectedly strong national employment report, the government announced Friday that its chief economic forecasting gauge, the index of leading indicators, rose 0.5% in October. It was the index’s third consecutive rise. In yet another report, the government said factory orders rose 1.2% in October to a record $258.4 billion.
Wall Street took the upbeat economic news in stride. The Dow Jones industrial average inched up 1.96, to close at 3,704.07, and bond prices rose modestly.
Among the 11 big states whose jobless rates were reported Friday, California still posted the highest unemployment. Next came New York at 7.5%.
North Carolina recorded the lowest rate, 3.9%, followed by Illinois at 5.9%.
The improvement in California’s jobless rate to 8.6% from 9.8% in October was the state’s biggest one-month decline since July, 1983, when the level dropped to 9% from 10.3% the month before.
November’s rate also was the state’s best since April, when the jobless level also was 8.6%. Since hitting a recessionary high of 10% joblessness in November, 1992, the state’s unemployment rate has ranged between 8.6% and 9.8%.
Los Angeles County’s unemployment rate edged down to 9.4% in November, from 9.6% in October. The highly volatile county figure, which unlike the state and U.S. statistics is not adjusted for seasonal trends, reflected a 38,000 decline in the number of people in the labor force.
The number of unemployed in the county fell by 11,000, to 410,000, while the number of employed dropped by 27,000 to 3,934,000.
“We still have a fairly long way to go before things start improving,” said Jay D. Horowitz, a labor market analyst for the California Employment Development Department.
Risen reported from Washington and Silverstein from Los Angeles.
Jobless Rates
Here are U.S. and California unemployment rates, in percentages, over the last year:
U.S. Calif. Nov. 6.4 8.6 Oct. 6.8 9.8 Sept. 6.7 9.4 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
