State Gains 22,300 Jobs in July; Unemployment Shaved to 7.1%
California’s broad-based economic recovery kept chugging along last month, providing the state with a solid job increase of 22,300 and nudging the unemployment rate down to 7.1% from 7.2% in June.
The unemployment rate for July is the lowest since January 1991, marking the fourth consecutive month that joblessness has hit lows not seen in more than five years.
Although the state’s unemployment rate remains far higher than the U.S. level, analysts were impressed that California’s job growth kept outpacing the nation’s in July. Two weeks ago, the federal government reported that the U.S. jobless rate rose to 5.4% in July from 5.3% in June, with employers adding 193,000 jobs.
With the latest California report, “it’s difficult to find anything to quibble with. It looks like solid and steady and well-balanced growth,” said David Hensley, regional economist with the Salomon Bros. investment firm. “There are no dark clouds on the horizon that I’m aware of. I’d expect more of the same over the next 12 months.”
Still, for Southern California, the picture was somewhat mixed. The jobless rate for Los Angeles County, whose recovery has lagged that of the rest of the state, dipped to 8.1% from 8.2% in June but remained up from the July 1995 level of 7.8%.
Orange County, one of the stars in California’ economic recovery, had a rare off-month. Its jobless rate--which unlike the Los Angeles and state rates is not adjusted for seasonal trends--bounced up to 4.5% from 4.3% the month before.
However, the rise in joblessness and an accompanying loss of 8,500 jobs appeared to be due largely to summer school closings rather than any fundamental weakening in Orange County’s vibrant economy. In fact, the 4.5% rate for Orange County is its lowest for any July since 1990, when it stood at 3.9%.
The latest employment report reinforced the recent view among many economists that California is in the midst of a healthy expansion.
“This puts California on a stronger upturn than the rest of the country. There’s no overheating here; it’s just a good report,” said Tom Lieser, associate director of the UCLA Business Forecasting Project.
Russ DeVol, an economist who tracks California for the consulting firm WEFA Group, added: “‘The hemorrhaging in the aerospace-defense sector has ended, and that’s allowing California’s information-based industries,” such as entertainment and software, “to pull the rest of the economy along.”
DeVol noted that even home building, one of the remaining weak spots in the state economy, is beginning to rebound slightly.
Hensley--who just completed a report forecasting a further pickup in the pace of the state’s recovery--predicted that foreign trade will be an increasingly important factor. He said trade, already a key force in the recovery, will strengthen as the economies of key trading partners such as Japan, Mexico and Canada improve.
Another big factor is manufacturing employment, which, while falling nationally, is growing in California. In fact, the manufacturing sector showed the biggest employment gain in California last month, up 6,800 jobs. The increase came mainly in fruit and vegetable processing, possibly because of a later-than-usual early-summer harvest.
To be sure, there are a few discouraging or puzzling figures in Friday’s employment report. The overall gain of 22,300 jobs, although ample, is down from an average of 27,367 for the first six months of the year.
Moreover, employment in the diversified services sector, which has been booming all year, fell by 1,000 in July. But analysts discounted that decline and speculated that it stemmed from a faulty statistical adjustment.
Economists also questioned the accuracy of the 2,000-job gain in the finance, insurance and real estate sector, which is believed to still be slumping because of consolidation in the banking and savings and loan fields.
Analysts noted that the statistical adjustments that the government makes to filter out seasonal trends sometimes overstate or understate changes in particular industries. That is especially true in the summer, when the vagaries of the school year, the tourist season and agriculture are involved.
Unadjusted for seasonal trends, the jobless rates in July actually climbed in California, to 7.6% from 7.3% in June, and in Los Angeles County, to 8.9% from 8.3%. Likewise, the unadjusted jobless rates went up in all the other Southern California counties as follows:
Riverside, 9.7% in July, up from 8.2% in June; San Bernardino, 8%, up from 7.8%; San Diego, 5.7%, up from 5.5%; and Ventura, 7.9%, up from 6.6% in June.
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Jobless Rate Falls
California unemployment rate, seasonally adjusted:
August, 1996: 7.1%
* Source: Labor Department
Out of Work
Orange County monthly unemployment rate:
July 1995: 5.7%
July 1996: 4.5%
Source: California Employment Development Department
