Raising new concerns about the state's recovery, California began losing employment again last month, even as companies across the country added a higher-than-expected 379,000 jobs to their payrolls, the government reported Friday.
The Labor Department also said a separate employment survey shows the U.S. and California jobless rates remaining unchanged in June, with the nation's level staying at 6.0% and the state's at 8.3%.
Analysts, focusing mainly on the monthly payroll jobs totals, said the figures reflect how the national economy continues to expand smartly while the state's remains wobbly.
The U.S. figures "are strong numbers by any measure, with gains in almost every industry," said Joseph A. Wahed, chief economist for Wells Fargo Bank in San Francisco. But California, he noted, suffered a sizable loss of 12,100 jobs, with declines spread across most of the state's industries.
Larry Kimbell, director of the UCLA Business Forecasting Project, dismissed the idea that California "is relapsing into recession, but we sure aren't showing any momentum toward joining the other states" in economic expansion.
"It's enough to make you nervous," Kimbell said.
Although many analysts see little sign of inflation flaring up nationally, they said the robust job statistics, combined with the dollar's recent weakness, could put renewed pressure on the Federal Reserve Board to raise interest rates for the fifth time this year.
The Fed is not expected to move immediately--its policy-setting committee signaled no intent to raise rates after holding a two-day meeting this week--but analysts say an increase is increasingly likely later this summer.
Most of the U.S. job gains came at restaurants and in other service industries, including many low-paying and temporary summer jobs. But the figures also include a 34,000 increase in factory employment, the biggest monthly jump in that category in more than four years.
Wall Street's reaction to the employment reports was mixed. Apparently concerned by the prospects for an interest rate increase, the bond market sagged, lifting yields on 30-year Treasury bonds to 7.69%, from 7.60% on Thursday.
The Dow Jones industrial average rose 20.72 points to close at 3,709.14, but losers outnumbered gainers in the broader stock market.
Clinton Administration officials quickly tried to quell fears of inflation. "Our economy is coming back on its soundest footing in decades, with more jobs and low inflation," President Clinton told reporters at the summit of the seven leading industrial nations in Naples, Italy. "In fact, we are leading the world."
The nation's 379,000 gain in payroll jobs was inflated by various statistical and data-gathering quirks, including the use of a five-week measuring period rather than the usual four weeks. Even if the normal four-week period was used, however, the gain would have been about 300,000, economists said. That is up from an average of 287,000 for the first half of 1994 and a monthly average 194,000 for all of last year.
At the same time, average hourly wages inched downward, as did the factory workweek, which has hovered at historically high levels. Factory overtime was unchanged in June, holding on to a previous decline.
"Companies have finally started to cut back on overtime and hire additional workers," said Cynthia Latta, an economist with Lexington, Mass.-based DRI/McGraw-Hill. Employers are adding workers rather than continuing to lengthen employees' hours, because of growing confidence that business demand will remain strong, she said.
The separate employment survey of U.S. households, which is used to calculate jobless rates, showed big declines in the number of people either working or looking for jobs in California and the rest of the country. But analysts generally discounted those statistics, attributing the plunging labor force figures to unresolved problems in some of the new procedures the government is using to gather employment data.
One hopeful sign from that study, however, is that the unemployment rates for both the nation and the state held steady after posting big declines in May. The U.S. jobless rate, now at a 3 1/2-year low, is down from 6.4% in April, while California's rate is down from 9.7% the same month.
Among the 11 big states whose unemployment rates were reported Friday, California's 8.3% jobless rate remained the highest, followed by New Jersey's 7.1%. North Carolina posted the lowest rate, at 3.7%, with Illinois coming in next, at 4.8%.
For California, the 12,100 loss in payroll jobs last month was coupled with a downward revision in the job totals for both April and May. All told, it left the state with a meager job gain of 6,200 for the first half of the year.
Earlier figures suggested that California was recovering somewhat more robustly after losing, by one estimate, nearly 850,000 jobs from mid-1990 through the end of last year. Kimbell said the state now seems to be moving "sideways," and the stimulus provided by post-earthquake rebuilding efforts in Southern California appear to have been minimal.
Yet various economists see indications that the state economy is strengthening. Ted Gibson, principal economist for the California Department of Finance, said payroll tax revenues have risen faster than expected.
"It seems quite clear to us from the taxes we're collecting that things are much better than the employment data indicate," he said. Wahed added that his bank's loan demand is up, and customers report that their businesses are improving.
Los Angeles County's jobless rate, which unlike the national and state figures is not adjusted for seasonal trends, rose to 10.1% in June from 9.7% in May. It is the county's highest unemployment rate since January, when the level was 11%.
But Jay D. Horowitz, a labor market analyst with the California Employment Development Department, noted that unemployment in the county generally rises in June, in part because of the large number of students looking for summer jobs. In fact, he said, the rise in joblessness last month was comparatively small.
The figures showed the number of employed falling 17,000 to 3,994,000, while the number of unemployed people rose 16,000 to 448,000.