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.
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 Lieser, noting that California is generating even more jobs than projected.
Most impressive, Lieser 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.
Indeed, economists say it now appears even more likely that California this year will see more people entering the state than leaving, reversing several years of negative net migration.
Analysts say they expect California’s economy to perk along in the months ahead, although not at the sizzling pace seen last month. Even the Federal Reserve Board’s expected quarter-point interest rate hike on Tuesday should cause just a temporary ripple in the housing market, said Howard Roth, a Bank of America economist.
“This California expansion has a good head of steam now,” he said.
Friday’s report by the state Employment Development Department shows that joblessness dropped throughout the state. Orange County’s unemployment rate fell to a minuscule 3.4% from 3.7% in January, as job gains were posted notably in aircraft parts and other durable manufacturing.
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.
Mike Caplis, the state’s labor market analyst in Los Angeles, said Los Angeles County continued to pick up jobs in entertainment, services and some sectors of manufacturing. Motion picture employment in February surged to 143,200--up nearly 20% from February 1996. Apparel manufacturing also grew last month, to 118,100 jobs, a 9% jump from a year earlier.
As a result, Los Angeles County’s total nonfarm employment in February stood at 3.84 million, which was 2.5% higher than February 1996.
By comparison, the number of jobs in Santa Clara County was 4% higher, and in Sacramento, 3.7% higher. For all of California, total nonfarm employment in February was up by 2.9% from a year earlier.
Statewide, the retail trade sector expanded by 12,400 jobs last month from January. But Ted Gibson, economist for the state Department of Finance, said that partly reflected the post-holiday job cuts retailers made in January.
Gibson noted that jobs in durable-goods manufacturing continued to pick up momentum last month. The aerospace sector, for example, added 900 jobs, reflecting the increased demand for commercial aircraft instruments and other parts.
Services, agriculture and all of the other major sectors of the state’s economy posted job growth last month. But there was one notable exception: the finance and real estate industry.
Although finance jobs declined by just 100 last month, analysts don’t expect to see a turnaround any time soon.
Bank of America had previously announced plans to close 120 branches this year, and the expected sale of Great Western, to either Washington Mutual or Home Savings of America, is likely to lead to thousands of job losses. In addition, job cuts are also expected from this week’s announcement of First Bank System’s acquisition of U.S. Bancorp of Portland, which has a number of branches in Northern California.
(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)
Continued Rebound
California’s unemployment rate continued to fall in February, hitting its lowest level since October 1990.
February 1997: 6.5%
Source: Bureau of Labor Statistics
