State, U.S. Jobless Rates Fall Sharply : Economy: National unemployment drops to 6.4% and California’s to 8.3%. But the Southland’s recovery continues to lag behind that of the rest of the country.
The unemployment rate fell sharply in both the nation and California in May as the economy continued to generate steady job growth, the Labor Department reported Friday.
The national jobless figure fell to 6%, down from 6.4% in April. But government officials said that the sizable decline appears to overstate the actual improvement in the nation’s labor market last month.
In California, unemployment dropped to 8.3%, down from 9.6%, in another large statistical move that masks a more moderate pickup in job creation, according to analysts. And Southern California, although recovering, continues to trail the rest of the state and the nation as a whole in the economic expansion. In Los Angeles County, the jobless rate edged down only slightly to 9.7% in May, compared with 9.9% a month earlier.
“Northern California is marching along to the national tune,” while Southern California is still lagging, said Thomas Plewes, associate commissioner of labor statistics.
In Orange County, the unemployment rate was 6.2% in April, the most recent month for which figures are available. That was up from 5.9% in March. Because the monthly jobless statistics for individual counties are computed after the state and national rates, the May figures for Orange County will not be released until mid-June.
While the declines in the official unemployment rates were impressive, a separate calculation of the number of people working across the country showed that the economy generated fewer than 200,000 new jobs in May. The figure was smaller than expected, and some economists said it could signal that the pace of the recovery is slowing to a more moderate level.
The prospect of more restrained growth appeared to reassure the stock and bond markets, where investors have expressed growing concern that the robust growth of recent months could lead to a resurgence of inflation.
The Dow Jones Industrial Average rose 13.23 points to close at 3,772.22, while the yield on the Treasury’s 30-year bonds, a key indicator of long-term interest rates, fell to 7.26%, from 7.34% a year earlier. Lower yields suggest that investors are more confident that inflationary pressures remain under control.
Clinton Administration officials welcomed the job report, insisting that their policies will lead to steady growth without significant price increases.
“The economy is entering the summer in exceedingly good shape,” Labor Secretary Robert B. Reich said at a White House briefing. “We are deep in a jobs recovery, a jobs expansion.”
But Reich expressed concern about the widening gap between the prospects of skilled, high-wage Americans and those workers who lack the necessary education and training to fully enjoy the benefits of the economic resurgence. He noted that 20% of Americans currently without jobs have been unemployed for six months or more.
The sharp drop in the national jobless rate is somewhat exaggerated because the government has changed the way it conducts its monthly surveys and adjusts the results to reflect conditions affecting the nation’s total labor pool of more than 130 million workers.
Such statistical changes could account for as much as half of last month’s decline, said Katherine Abraham, Commissioner of Labor Statistics, suggesting that the true rate of unemployment could be closer to 6.2%.
The agency’s separate survey of business payrolls showed a net increase of 191,000 jobs in May, a figure that includes 71,000 people who returned to work after the end of the trucking industry strike. The payroll survey is considered a more reliable measure of employment conditions than the household poll used to calculate the unemployment rate.
While the employment figure signaled that the recovery is still on track, it was slightly smaller than expected and fell short of the average monthly job growth of 247,000 so far during 1994.
An increase of 191,000 jobs “is not the type of figure that should panic the markets,” said Martin Regalia, chief economist for the U.S. Chamber of Commerce. “This is a continued verification of our expectation that the economy is slowing somewhat from the pace at the end of last year and during the first quarter.”
Nationwide, job growth was noticeably more robust in April, when the economy added a revised 358,000 non-farm jobs, and in March, when payrolls swelled by 379,000.
In California, meanwhile, “we’re seeing slow, steady increases in the number of payroll jobs, which is encouraging,” said Ted Gibson, principal economist for the California Department of Finance.
California’s recovery picked up speed slightly, with 7,100 jobs added to employers’ payrolls. The government revised upward, to 7,900, the number of jobs gained in April, bringing the overall increase to 15,000 over the last two months and 30,400 for all of 1994.
Larry Kimbell, director of the UCLA Business Forecasting Project, said that the May data makes him “feel more secure” that the state is in the midst of a genuine recovery.
Still, he noted, the job gains continue to be modest. And he expressed disappointment at the slow pace of the improvement. “I want to see 30,000 to 40,000 jobs added a month . . . before I shout, ‘Hooray! We’re in a vigorous recovery! It’s better to be getting some gains than none, but it still looks pretty weak.”
In California, last month’s job gains came mostly in services, particularly the motion picture industry and retailing. Job losses continued in manufacturing, especially defense and aerospace-related fields, along with finance, insurance and real estate.
The “hemorrhage” of defense jobs, which disappeared at a rate of 15,000 jobs a month last year, has slowed to about 8,000 monthly, according to Plewes of the Bureau of Labor Statistics.
Los Angeles County recorded a net employment gain of 26,000 in May, with the number of jobholders rising to more than 4 million. It posted a decline of 4,000 in the number of jobless workers, with the total dipping to 432,000. Unlike federal and state statistics, the county numbers are not adjusted to reflect seasonal trends.
Jay D. Horowitz, labor market analyst for the California Employment Development Department, said that he is mildly encouraged by the county totals. “More or less, we’re going to follow in the footsteps of the nation in coming back, but it’s a very slow process.”
Horowitz said that employment in construction, retailing and other services appears to be growing in the county. While job losses continue in aerospace and other high-tech fields, he said the rate of shrinkage appears to be slowing.
Times staff writer John O’Dell contributed to this report.
Jobless Rates
Here are U.S. and California unemployment rates, in percentages, over the last year:
U.S. Calif. May 6.0 8.3 April 6.4 9.6 March 6.5 8.6 Feb. 6.5 9.0 Jan. 6.7 10.1 Dec. 6.4 8.7 Nov. 6.5 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
BY GROUP IN U.S.
Category May Apr. Men 5.2 5.6 Women 5.4 5.6 Whites 5.2 5.6 Blacks 11.5 11.8 Latinos 9.5 10.8 All Teens 18.3 19.9 Black Teens 36.5 31.3
