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State Jobless Rate Hits 5 1/2-Year Low

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TIMES STAFF WRITER

Providing further evidence that California’s economic recovery is steaming ahead, the state’s jobless rate dropped for the third straight month in June to a 5 1/2-year low, as a broad spectrum of nonfarm employers added 32,800 jobs.

The state’s report Friday pegged unemployment at 7.1%, down from a revised 7.3% in May and 7.5% in April, blunting the latest concerns about technology companies and raising hopes that the turnaround in the housing market will continue.

“California looks like it’s really on a roll,” said David Hensley, a regional economist with the Salomon Bros. investment firm. “The breadth of the growth is very impressive.”

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Adding to the brightness of the picture, officials Friday revised the state’s job gains in May to a whopping 51,000 from the 45,700 previously reported. Analysts say they expect statisticians also to boost the June employment figures, which are preliminary.

Although California’s jobless figure remained above the 5.3% for the nation as a whole in June, the state is outpacing the country in job growth.

The state’s manufacturing sector, for example, added 4,500 jobs last month and has grown by 2% in the last year, and factory employment nationwide has continued to erode. Even California’s long-troubled aerospace sector added 600 jobs last month.

With the exception of government and mining, all of the major industries increased employment last month. The services sector led the way, adding 17,500 jobs, most of them in business services, a diverse group that includes temporary-help firms, software makers and data-management services.

“The recovery in California has become broad-based,” said Howard Roth, an economist at Bank of America in Los Angeles. “It’s good to see--finally,” he said.

In Southern California, however, the recovery remains uneven. Although joblessness in Los Angeles County also dipped, to 8.1% from a revised 8.4% in May, the figure is still above the 7.7% rate of June 1995. And last month, Los Angeles County saw an unexpected decline of about 4,000 jobs in the usually robust motion pictures industry.

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Vincent M. Canales, analyst with the California Employment Development Department, which issued Friday’s report, said he couldn’t explain the sudden decline in that industry. But he said it’s clear that Los Angeles County has yet to partake fully in the state’s recovery.

“For a large urban area, the level of unemployment [8.1%], that is unbelievable,” he said.

Orange County continued its steady growth. Its seasonally unadjusted jobless rate remained one of the lowest in California, although it ticked up to 4.3% from 4.2% in May.

Statewide during the first half of this year, nonfarm employers have increased payrolls at a rate of 2.7%--a full percentage point ahead of the nation. California is enjoying the benefits of a fresher recovery and also the economic rebounds in Japan and Mexico, two important trading partners, and a flourishing tourism industry.

In addition, the state’s electronics equipment sector remains strong, despite the turmoil in the stock market this week that was apparently triggered by under-performing technology companies, notably Palo Alto-based Hewlett-Packard Co. In fact, California makers of computers and other electronics increased their payrolls by about 1,000 last month.

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However, analysts do see an eventual slowdown in high-tech job growth in California, mainly affecting Silicon Valley, because orders for computer chips and related equipment are slipping. Still, experts say that any such job decline should be more than offset by other expanding industries.

Even the finance, insurance and real estate sectors have not been the economic drags many feared they would be.

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Despite lingering restructuring in the banking industry, most recently with the merger of Wells Fargo and First Interstate, the finance sector picked up 400 jobs last month.

The two sectors that spilled jobs last month were government and mining. Government jobs were down 1,200, reflecting continuing cutbacks in federal agencies, particularly at the Defense Department.

Ted Gibson, economist with the California Department of Finance, said the loss of 300 mining jobs also reflects a long-term restructuring and decline in petroleum production.

Gibson and other analysts say the brisk pace of job growth last month should continue for the rest of this year.

Moreover, the recovery could get an extra lift if the state’s long-sagging housing market gains more momentum, which many see happening soon.

“I think housing is poised to take off in the second half of this year,” said Gibson, noting that the state’s construction industry is now being propelled by growth in office and industrial properties. “The missing piece of this recovery may finally fall into place.”

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California Jobless

Seasonally adjusted unemployment rate for non-farm jobs: June 1996 7.1%

Source: California Employment Development Department

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