Surge Cuts State Jobless Rate in May to ’91 Levels

Signaling the staying power of California’s economic recovery, officials said Friday that the state gained a hefty 45,700 jobs last month and the unemployment rate dropped to the lowest level in more than five years, 7.2%, down from 7.5% in April.

The jobs increase, the biggest since February 1995, was broad-based and marked a sharp pickup from the relatively sluggish totals reported for the previous two months.

“This puts employment firmly back on track,” said David Hensley, a regional economist with the Salomon Bros. investment firm. “The weakness that had shown up in recent months, and that had caused some concern, is alleviated with this report.”

California’s employment gain even outpaced the unusually large national increase last month of 348,000 jobs, which was reported two weeks ago. Still, California’s May jobless rate remains well above the U.S. level of 5.6%, reflecting the lasting damage inflicted on the state by its economic breakdown in the early 1990s.

Moreover, joblessness remains even higher in Los Angeles County, where the recovery has not gained as much momentum as elsewhere in the state. The county’s jobless rate declined to 8.2% in May, down from 8.4% in April and back to where it stood in February.

Despite job gains in the motion picture industry and in temporary help in the county, “I don’t see the strength. I don’t see the economy turning,” said Vincent M. Canales, labor market analyst with the California Employment Development Department, which released Friday’s report.

In far more economically robust Orange County, the jobless rate held steady at a five-year low of 4.2%, the same as the revised figure for April. The May figures also show that Orange County has finally recovered all of the jobs lost during the recession, with nonfarm employment in the county up 52,000 from a low point two years ago.

(Unlike the state and Los Angeles County jobless rates, the unemployment levels for Orange and other California counties are not adjusted for seasonal trends.)

Statewide, economists said the recovery is being propelled by growth in foreign trade, electronics equipment manufacturing and tourism, along with motion pictures. What’s more, the aerospace industry--whose collapse prompted the state’s recession--has stabilized. It even added 300 jobs in May.

California also is being pulled along by the strength of the U.S. economy, along with the rebounds of such critical trade partners as Japan and Mexico.

The only important missing link in the recovery, economists said, is a resurgence in home building. But Ted Gibson, economist with the California Department of Finance, said: “I have to believe, with the kind of employment gains we’re seeing, that we should start seeing a home building rebound pretty soon.”

Other analysts concurred, so long as U.S. interest rates don’t keep rising.

Another encouraging sign, Gibson said, is that the new jobs added lately in California are in high-paying as well as moderate- and low-paying industries.

For instance, the biggest chunk of new jobs last month was the 21,500 increase in the diversified service sector, including high-paying motion picture positions, along with less lucrative tourism employment. The business services sector, including everyone from management consultants to temporary secretaries, also showed a sizable increase.

Perhaps more surprising was the addition of 7,000 jobs in manufacturing, a sector that has slumped nationally. Food processing was particularly strong.

Other sectors of the job market showing substantial increases were retail, world trade and construction.

The only sector that lost jobs was government, whose employment has been crimped by cutbacks in federal defense programs and local government services. The category’s job total declined 1,200 in May.

In another encouraging signal, the job gain for April was revised upward to 13,700 from the previously reported 10,000.

With that revision and the hefty May increase, the state’s average monthly job gain so far in 1996 is 24,940, ahead of the 1995 monthly figure of 23,917. This year’s gains also outpace the monthly average job gains of 24,175 in economically vibrant 1989, the year before recession struck California.

The last month that California gained more than the 45,700 jobs added in May was in February 1995, when the increase was 84,600. The last time the state’s jobless rate was lower was in January 1991, when the level was 7%.

Unadjusted for seasonal trends, Los Angeles County’s jobless rate fell to 8.1% in May from 8.2% in April. Outside of Los Angeles, three other Southern California counties also posted declining unemployment: Ventura, 5.9% in May, down from 6.1% in April; San Diego, 5.2%, down from 5.4%, and Riverside, 7.3%, from 7.8%.

In San Bernardino County, the jobless rate held steady at 7.4%.

Times staff writer Don Lee in Orange County contributed to this story.