State Jobless Rate Hits a 5-Year Low
California’s unemployment rate hit its lowest level in more than five years last month, edging down to 7.5% from a revised 7.7% in March, as the state’s recovering economy kept producing new jobs over a diverse spectrum of industries.
State officials also reported Friday that California employers added 10,000 jobs in April, a moderate amount by normal standards but impressive in view of the fact that the nation’s employment remained flat.
Further brightening the state’s economic picture was an upward revision in the job gain for March, which was boosted to 14,400 from the 8,600 increase reported earlier.
“It says that the state’s economy is in a good, broad-based recovery,” said Ted Gibson, economist for the California Department of Finance.
The latest figures provide new testimony that California, whose economy lagged behind the nation’s during the early 1990s, is now growing faster than the rest of the country. The state’s rebound from deep recession has been powered by such expanding industries as entertainment, foreign trade, software and tourism.
And although Los Angeles County remains a weak spot because of the lingering impact of aerospace and defense layoffs, there are signs of hope. In April, the county squeezed out a slight improvement in its unemployment rate, down to 8.4% from 8.5% the month before.
Most other Southern California counties--whose figures, unlike those for California and Los Angeles, were not adjusted for seasonal trends--also showed declines in unemployment. Leading the way was Orange County, which posted a jobless rate of 4.1%. That was down from a revised 4.3% in March, and the lowest unemployment in the county since it hit the same level in December 1990.
For all of the improvement in the state economy the last two years, unemployment remains far higher here than nationally. The nation’s jobless rate in April, as reported previously, was 5.4%, down from 5.6% in March.
Along with the continuing--though slowing--layoffs in defense and aerospace, mergers are squeezing jobs out of finance-related fields, particularly banking. Budget crunches, meanwhile, threaten employment at local government agencies.
Still, the growth in industries vital to California is raising hopes that the state’s rebound will be long-lasting.
Even foreign trade, the outlook for which was shaken somewhat this week by rising U.S.-China trade tensions, figures to keep propelling the California economy. Tom Lieser, associate director of the UCLA Business Forecasting Project, said that if the United States succeeds with its threatened sanctions in curbing Chinese piracy of intellectual property, California would be a big winner.
He said most of the goods China is accused of pirating are important California products: software, recorded music and movies.
In the near term, California also should be helped along by the generally strong national economy and improvement by two of the state’s main trading partners, Japan and Mexico, said David Hensley, a regional economist with Salomon Bros. in New York.
For California, he said, “steady growth is almost guaranteed.”
Meanwhile, the California employment numbers last month testified to the state’s continuing recovery. Services, a category including everything from management consulting to temporary office help, led the way with a 10,000-job advance.
Even manufacturing, in which employment is slumping nationally, is producing new jobs. Over the last year, California has added 21,300 manufacturing jobs, including 700 in April. The nation, by contrast, has lost 319,000 manufacturing jobs over the last two months.
On the other hand, although construction employment is growing, analysts said that it is largely the result of an improvement in commercial and industrial building. Home building remains one of the state’s main weaknesses. “If you’re looking for the recovery to move up another notch, you have to look to housing,” Hensley said.
Lieser expressed concern that a recent rise in mortgage rates and continuing job insecurity among workers is likely to chill home buying for some time. “There’s still an underlying current of anxiety that pervades every sector of society,” he said.
The main employment loser last month was retail trade, but analysts attributed the 6,100-job decline mainly to seasonal adjustment problems related to this year’s early Easter.
California’s 7.5% jobless rate was its lowest since February 1991, when the level was 7.4%.
The survey of California households on which the unemployment rate is based indicated that joblessness went down not because new jobs were created, but because many job hunters pulled out of the labor force. Economists, however, rejected that explanation, instead emphasizing the separate monthly survey of employer payrolls that showed the state gaining 10,000 jobs in April.
Moreover, analysts noted, the payroll survey tends to understate changes in employment and is probably underestimating the job gains of recent months.
For now, however, the official numbers put average monthly job growth for the first third of 1996 at a solid 18,825.
The figures for other Southern California counties showed unemployment declining in San Diego to 5.2% in April from 5.6% in March; in Ventura to 5.9% from 6.3%; and in San Bernardino to 7.2% from 7.4%. In Riverside County, joblessness was unchanged at 7.6%.
