State Jobless Rate Continues to Fall
In 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 of an imminent housing recovery.
“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.”
Orange County’s jobless rate, which is seasonally unadjusted, remained one of the lowest in California, although it ticked up to 4.3% from 4.2% in May.
More than the state, the county’s job growth is being propelled by its strong tourism industry, which got a big boost this week with the announcement of a second theme park and a resort hotel to be built by the Walt Disney Co. next to Disneyland.
Orange County’s employment in construction and retail trade were also up in June, while government jobs dropped because of seasonal factors.
Adding to California’s bright economic picture, officials said Friday that they have 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 June’s employment figures, which are preliminary.
Although California’s jobless figure remains above the nation’s 5.3% 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% over the last year, while 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, 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,” observed Howard Roth, an economist at Bank of America in Los Angeles.
“It’s good to see--finally,” he added.
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In Southern California, however, the recovery remains uneven.
While joblessness in Los Angeles County also dipped, to 8.1% from a revised 8.4% in May, the figure was still above the 7.7% rate of June 1995. And last month, Los Angeles County saw an unexpected decline of almost 4,000 jobs in the usually robust motion pictures industry.
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%] is unbelievable,” he said.
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, specifically, from economic rebounds in Japan and Mexico, two key trading partners, and a flourishing tourism industry.
Also, the state’s electronics equipment sector remains strong, despite the turmoil in the stock market this week that was apparently triggered by underperforming 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.
But analysts do see an eventual slowdown in high-tech job growth in California, mainly affecting the Silicon Valley, because orders for computer chips and related equipment are slipping. Still, experts note that any such job decline should be more than offset by other expanding industries.
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Even finance, insurance and real estate have not been an economic drag that many feared it would be. 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 reflected a long-term restructuring and decline in petroleum production.
Gibson and other analysts say the brisk pace of job growth last month should continue the rest of this year. And the recovery could get an extra lift if the state’s long-sagging housing market gains momentum, which many see happening soon.
“I think housing is poised to take off in the second half of this year,” said Gibson, noting California’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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Ups and Downs
Although Orange County’s June unemployment rate increased from the previous month, it remains well below the June rate for the previous four years. Nonfarm unemployment rate, seasonally adjusted:
(please see newspaper for full chart information)
Jan. 1995: 5.4%
June 1996: 4.3%
Source: California Employment Development Department;
Researched by JANICE L. JONES / Los Angeles Times
