California’s Jobless Rate Falls Dramatically
California’s economic expansion kicked into high gear in February, as employers across a broad spectrum of industries added 42,700 jobs, pushing the unemployment rate down dramatically to 6.5%, state officials reported Friday.
The drop in the unemployment rate, from 6.9% in January, was the biggest single monthly decline in at least a decade. And it reflected the unusually big spurt in hiring last month that lifted the state’s nonfarm employment above the 13-million mark for the first time.
In Orange County, where a turnaround in the long-besieged manufacturing industry is underway, the unemployment rate edged down to 3.4% last month from 3.7% in January.
The figures for Orange County are not adjusted for seasonal variations, unlike the state unemployment rate. Nonetheless, economists said the report confirms that the county continues to enjoy one of the healthiest labor markets in California. Unemployment usually spikes after the holidays, but in the first two months of this year, the county’s jobless rate was only slightly higher than December’s 3.1% rate.
“You’re essentially at full employment,” said Ted Gibson, chief economist at the state Department of Finance. “You’re really sucking workers in, people who would not ordinarily be in the work force.”
In February 1996, the jobless rate in Orange County was 4.5%. Since then, the economy has gained so much momentum that employment growth has well outstripped the increasing labor force.
The county has added 30,700 nonfarm jobs over the past year, a 2.6% increase. “That’s very good news for the county,” said Esmael Adibi, director of Chapman University’s Anderson Center for Economic Research.
The unemployment rate “could go up and down” in the 3% to 4% range during the remainder of the year, Adibi said. “But the economy is strong enough that it is absorbing all those new entrants or discouraged workers that are coming back to the job force.”
In perhaps the most significant development, manufacturing employment in the county appears to be headed out of its trough, said Gibson. For the past several years, the expanding service sector has carried the county’s job growth, while manufacturing lost thousands of jobs to aerospace cutbacks.
But in February, employment in the manufacturing sector grew by 7,200, or 3.5%, from a year earlier--the second consecutive monthly gain and well ahead of the 2.3% increase in service-related jobs. That includes a 13% rise in the number of aircraft industry jobs.
“So the aerospace industry is certainly making a comeback,” said Gibson.
Orange County and Santa Clara County, with its bustling Silicon Valley, are clearly the state’s two strongest job markets, Gibson said. The only drawback, he said, is that many employers are probably finding it difficult to fill positions, which could slow economic growth.
Friday’s report by the state Employment Development Department showed that job gains were spread throughout the state, although Northern California benefited more as electronics manufacturers and software companies there continued their hiring spree. Los Angeles County, though still lagging, saw its jobless rate fall sharply, to 7.2% from 7.6% in January.
Statewide, construction activity was particularly brisk last month, as employers added 10,200 jobs, because of the unusually dry weather and the increased workload following the floods in January.
“It was a very, very good month,” said UCLA economist Tom Leiser, noting that California is generating even more jobs than projected.
Most impressive, Leiser said, was the magnitude of the drop in the state’s unemployment rate, which now stands at its lowest point since October 1990, when joblessness was pegged at 6.4%.
Moreover, California’s jobless rate is now just 1.2 percentage points higher than the U.S. figure of 5.3% for February. During the recession, that gap had been closer to 3 percentage points and had prompted Californians to migrate to other states to look for work.
“What it means is that California’s ability to hold on to skilled labor improves as that gap narrows,” said Bruce Devine, chief economist for the Southern California Assn. of Governments.
The unemployment rate for Riverside County declined to 7.6% in February from 8%, and San Bernardino’s figure was down to 6.4% from 7%. These figures, unlike those for the state and Los Angeles County, are not adjusted for seasonal variations.
Los Angeles County continued to pick up jobs in entertainment, services and some sectors of manufacturing. As a result, Los Angeles County’s total nonfarm employment in February stood at 3.84 million, 2.5% higher than February 1996.
For all of California, total nonfarm employment in February was up by 2.9% from a year earlier.
