State Jobless Rate Plunges to 7.7% : Economy: California is buoyed by brighter employment picture. Speed, intensity of recovery remain uncertain. O.C.’s 6% September statistic is most recent one available.
California’s slow-blooming economic recovery gained speed in October as the state’s jobless rate dropped to 7.7%, the lowest in nearly three years, the U.S. Labor Department reported Friday. Nationally, unemployment edged down one-tenth of a percentage point to 5.8%, the lowest level in four years.
U.S. employment continued to grow at a solid, if unspectacular, pace last month, adding 194,000 jobs.
But Friday’s employment reports, which included news of rising wages, triggered deep fears in financial markets of renewed inflation. The Dow Jones industrial average slumped 38.36 points to 3,807.52, bringing its loss for the week to 123.14 points, the biggest weekly decline in more than two months.
Yields on the 30-year Treasury bond, a key indicator of inflationary sentiment, climbed to 8.15%, up from 8.10% and reaching the highest level in more than three years.
Strong economic growth nationally--by raising the likelihood the Federal Reserve will boost interest rates to prevent inflation--”is a risk to California, since we’re just at the beginning of a recovery phase,” said Larry Kimbell, director of the UCLA Business Forecasting Project.
The state’s performance lags far behind the recovery that has stimulated job growth nationally. The nation has added nearly five million jobs since mid-1990, but by one estimate, California has roughly 400,000 fewer people at work today than four years ago.
Los Angeles County, which along with San Diego has been the weakest link in the state’s recession-ravaged economy, is joining California’s rebound--or, at least, bottoming out.
Los Angeles County’s jobless rate fell to 7.8% in October, down from 8.3% in September, and the lowest level since April, 1992. October marked the second consecutive monthly drop, and a significant improvement in a jobless rate that averaged 10% the first eight months of the year.
Orange County’s jobless rate was 6% for September, the most recent month for which figures are available. That was up slightly from August’s 5.9%. Labor analysts said the slight rise came largely from regional drops in manufacturing and high-technology employment. October figures for Orange County are to be released Nov. 18.
“Los Angeles looks like it’s flat or barely in recovery, while the rest of the state is definitely in recovery,” Kimbell said.
Although most experts are confident that California’s job situation is getting healthier, the true speed and intensity of the state’s fledgling recovery still are being debated. And the latest reports intensified that debate.
On Friday, the Labor Department’s survey of households used to calculate the jobless rate showed the number of Californians at work rising by 239,000 in October, bringing the gain over the last two months to more than 400,000.
But a sharply contrasting situation was portrayed by the federal government’s companion survey of employer payrolls, which traditionally is considered the more precise yardstick of employment. It reported that the state’s job total dropped by 7,900 last month.
Analysts increasingly believe that the true state of the state’s economy lies somewhere in between the two monthly employment reports.
Other economic indicators, such as state tax receipts, auto sales, retail sales and housing permits “all are pointing toward a pretty good recovery,” said Ted Gibson, principal economist for the State Department of Finance.
His office estimates that the state currently is gaining a moderate 15,000 jobs a month, and many economists agree with that general assessment.
Economists fault the payroll survey for failing to count jobs created at young firms founded since 1991. But they also believe that the household survey, which was redesigned at the beginning of this year, is overstating job growth and is not yet properly accounting for seasonal trends in the economy.
Still, analysts were encouraged by California’s 7.7% jobless rate in October, down from 8.3% the month before. The state’s rate has declined three months in a row, and is down from 9% in July.
“California is just coming around now,” said Howard Roth, a senior economist at the Bank of America. “We bottomed much later than the rest of the country and are now just beginning to come back.”
The defense and aerospace industries, so prominent in the state’s economy, have finally stanched their “hemorrhage of jobs,” said Labor Department official Thomas Plewes.
Nationally, there were broad gains in retailing employment, including jobs at auto dealers, furniture stores and general merchandise stores, according to Katherine G. Abraham, commissioner of Labor Statistics.
Across the country, just as in California, job declines are moderating in defense-related industries, she said.
Defense-related jobs were disappearing at the rate of 8,000 a month this year throughout the United States. But the losses slowed to 3,000 in October. Aircraft and parts jobs, dropping at the rate of 5,000 a month, declined only 1,000 last month.
President Clinton, campaigning in Minnesota for Democratic senatorial candidate Ann Wynia, bragged about the nation’s falling unemployment rate, saying it demonstrated his Administration has “delivered what the American people have long wanted.” The country is enjoying a “terrific recovery,” Clinton said.
There were 124.2 million Americans at work during October, and unemployment totaled 7.6 million, according to the household survey.
The companion survey of payrolls put last month’s job growth at 194,000, considered a healthy gain but down from the average monthly increase of 275,000 this year.
Labor force growth is accelerating as more Americans, sensing improved opportunities, are seeking work. Just as bad times discourage people and cause them to drop out of the work force, a robust economy draws more prospective workers.
The Labor Department also reported Friday that average hourly earnings rose to $11.24, a gain of eight cents and the biggest monthly rise since an identical increase of 8 cents in September, 1983. However, a single month’s figure should not be viewed as a harbinger of inflation, according to BLS chief Abraham.
“I am disinclined to make too much of it,” she said.
Wall Street was not reassured, and the markets reacted negatively to the employment report. Interest rates rose across the board in the bond market, on the expectation that the Federal Reserve Board will have to tighten credit for a sixth time this year to try to slow the economy.
The Fed’s policy-making committee will meet on Nov. 15, amid widespread predictions that a rate hike is imminent.
Rosenblatt reported from Washington and Silverstein from Los Angeles. Times staff writer John O’Dell in Costa Mesa contributed to this report.
Jobless Rates
Here are U.S. and California unemployment rates, in percentages, over the last year:
U.S. Calif. Oct. 5.8 7.7 Sept. 5.9 8.3 Aug. 6.1 8.9 July 6.1 9 June 6.0 8.3 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
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