Jobs Surge a Sign of State's Recovery

By DON LEE

Feb. 24, 1996 12 AM PT

TIMES STAFF WRITER

Providing the strongest evidence yet that the state’s economy is rebounding strongly, officials said Friday that California added 285,000 jobs across a broad range of industries in 1995, far more than state economists had originally estimated.

And the robust activity continued into January, the state Employment Development Department said. Another 20,200 jobs were added to payrolls in the same month that the swooning national economy lost 201,000 jobs, largely because of frigid weather.

State economists also revised Orange County’s job growth for last year, saying that the area added some 23,000 nonfarm jobs, 14,000 more than previously estimated.

In January, however, total nonfarm jobs dropped in the county. Besides losing seasonal jobs in retail trade and government, the report Friday showed Orange County had payroll losses in business services, construction and transportation and public utilities.

Still, Orange County’s economy continues to grow at a moderate pace, said Cal State Fullerton economist Anil Puri. “And this year looks better than 1995,” he added.

For all of California, the revised figures indicated that the state has more than recovered 500,000-plus jobs lost during the severe recession of the early 1990s.

“Things were even better than we thought in 1995,” said Howard Roth, director of regional economics at Bank of America in Los Angeles. Noting that January was exceptionally strong, Roth added: “If this continues, we may have to revise up our forecast.”

The January increase in California jobs was led by services and construction but also included the second straight month of gains in aerospace--the first such occurrence in the 1990s.

The employment increases pushed down the state’s seasonally adjusted jobless rate to 7.7% from a revised 7.8% in December, but that was still well above the U.S. figure of 5.8%. (California’s rate is now reported two weeks later than the nation’s because of budget cutbacks at the federal level.)

Orange County’s jobless rate, which is not adjusted to account for seasonal fluctuations, bounced up to 5.1% in January from a five-year low of 4% the previous month. The figure was 5.4% in January of 1995.

Analysts attributed the latest rate hike to seasonal factors, such as retailers eliminating holiday jobs and the closing of public schools for the winter vacation, which reduced local government employment.

For the state, government and private economists had expected a significant increase in the annual adjustment of payroll data, which more accurately captures hiring by new firms and smaller businesses missed in earlier estimates.

But the revision added almost 107,000 additional jobs last year, 60% more than previously thought and far exceeding experts’ predictions. Leading the way in the new-job creation were construction, services, and wholesale and retail trades.

Ted Gibson, economist for the California Department of Finance, said the revised payroll growth for last year was 15,000 higher than he expected. “It shows California’s economy is recovering very nicely, and 1995 and early 1996 is running counter to national trends,” he said.

Indeed, the report Friday confirmed that California’s recovery is accelerating despite lackluster growth nationally. California had 12.57 million nonfarm jobs at the end of last year, 2.3% higher than at the end of 1994.

Total nonfarm employment in Orange County last year also grew at the same rate, closing the year with 1.17 million jobs.

The national economy, which is in advanced stages of a long expansion, is being hampered by weakness in auto manufacturing and the consumer sector. But California’s recovery, now in its third year, is relatively young, analysts said.

“We still have some pent-up demand left,” said Chris Taylor, an economist at Wells Fargo Bank in San Francisco. California, she noted, continues to enjoy growth in entertainment, tourism and international trade, as well as services, including engineering and professional services.

The January jobs report, which is based on estimates, showed the state’s services sector added almost 12,000 jobs. Construction employment was up 6,000, bringing January’s total to 511,900--a whopping 12% growth from 12 months ago.

Analysts said the construction industry’s spurt was consistent with the 10% increase last year in new building permits, reflecting a resurgence in commercial real estate. Seasonally adjusted data also showed the wholesale and retail trade sector added 7,500 jobs between December and January.

Even durable goods manufacturing, which has long been in decline, held steady last month. And the aerospace industry, after posting a gain of 200 jobs in December, followed with an increase of 500 jobs in January.

“I don’t know if it’s a trend or not,” said Gibson, the state economist. “But the message is that it’s stabilizing and not a drag on the economy it once was. And that to me is a piece of very, very good news.”

Two sectors, government and nondurable goods manufacturing, mainly food products, accounted for the brunt of the 5,300 job lost last month.

Regionally, the jobless rate for Los Angeles County, newly calculated on a seasonally adjusted basis, held steady in January at 8.2%.

Tom Lieser, associate director of the UCLA Business Forecasting Project, said all major areas of California appeared to be sharing in the job expansion, though he noted that the Los Angeles-Long Beach area was lagging a bit.

“We should continue to do better than the nation,” Lieser said, noting that California is continuing to benefit from the formation of jobs by new firms.

In fact, analysts say, hiring by new firms is what accounted for much of the increase in the revised job growth figure in 1995. Every year, state statisticians revise monthly jobs data that were based on a sample of employers.

In tabulating the official numbers for the year, analysts refigure the job counts by examining tax records of all employers in the state, thus counting smaller businesses and new firms that were missed in the sample.

Under another change beginning this month, the unemployment rates for California and 10 other large states will no longer be reported by the U.S. Labor Department at the same time the national figure is released.

Because of recent federal cutbacks, the large states are developing their own jobless numbers using a different model that incorporates more state-specific information such as payroll data and unemployment insurance statistics. Analysts say the change will likely reduce the month-to-month volatility often seen in the state’s jobless rate.

* ECONOMIC SLOWDOWN

U.S. economic growth almost halted in the last three months of the year, gaining 0.9%. D1

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January Jobless

Reflecting a drop in hiring after the holidays, Orange County unemployment rose more than a point in January. The rate, however, was somewhat lower than last January:

1995

Jan.: 5.4%

Feb.: 5.1%

March: 4.7%

April: 5.4%

May: 5.9%

June: 5.5%

July: 6.0%

Aug.: 5.5%

Sept.: 5.1%

Oct.: 5.2%

Nov.: 5.2%