State Posts Strongest Job Gain Since 1984

Reflecting exceptionally strong growth in a broad spectrum of industries, California’s economy created 479,800 jobs last year, far above the 364,800 that had been previously estimated and the most since 1984, state officials reported Friday.

The momentum carried into January, the Employment Development Department said, as the state showed no ill effects from financial turmoil in Asia. California’s unemployment rate continued its descent, falling below 6% for the first time since 1990 to 5.9% in January, down from 6% the previous month.

But the big news was the state’s revised annual data, which showed that tens of thousands more jobs were added in 1997 by retailers and wholesalers, manufacturers, finance and software companies--most of them smaller and newer businesses.

However, in a sobering sign for Southern California, state officials said that employment in the bellwether motion picture industry flattened last year and that the apparel industry grew at a slower pace than originally thought.

Analysts said the state’s garment industry appears to be shifting more sewing work to Mexico because of competitive pressures, which may intensify as the state’s minimum wage rises to $5.75 an hour on Sunday.

Economists were less clear about what was happening in the motion picture industry, which is also concentrated in Los Angeles County and has led the recovery in Southern California. James Gikas, senior economist at Recon Research Corp. in Los Angeles, said that even though employment isn’t growing, the motion picture industry continues to do quite well, judging by box-office receipts, film production, stock prices and other indicators that his firm tracks.

“It’s not clear to me that this is entirely a bad omen,” Gikas said of the apparent stall in motion picture employment.

Overall, California’s revised data for 1997 boosted the confidence of economists. Noting that the state’s nonfarm employment jumped by 3.6% last year, well ahead of the 2.7% rate for the nation, analysts said there is little doubt that California will be the country’s pacesetter for the next several years.

“California is truly the Pacific powerhouse,” Gov. Pete Wilson boasted Friday in releasing the numbers.

The state labor agency Friday did not release employment data for counties and metropolitan areas, blaming a programming error. Those numbers are expected to be reported Monday.

But Friday’s statewide figures suggested that the Bay Area, and to a lesser extent Orange County and the Inland Empire, gained significantly in the agency’s annual revision--an audit that is done once a year to pick up start-ups, small businesses and other companies that are often difficult to track on a month-to-month basis.

Stephen Levy, director of the Center for the Continuing Study of the California Economy in Palo Alto, said he was particularly impressed by the numbers for California’s manufacturing employment, which were revised upward by 30,000 jobs and closed the year at 1.94 million, an increase of about 3.5% from December 1996.

“It is very, very positive and goes counter to the national trend,” Levy said of the state’s factory job growth.

Specifically, state officials said their revisions added 9,000 jobs in electronic equipment manufacturing and 7,500 in industrial machinery. Most of those additions were likely to boost already-strong gains in the Silicon Valley area. In nondurable manufacturing, employment in food production and printing and publishing also saw sizable additions.

Wholesale and retail trade, however, was by far the biggest winner in the annual revision. State statisticians raised California’s retail payrolls by 45,000, which left the industry’s total employment 3.3% higher than at the end of 1996. Employment in the higher-paying wholesale industry was boosted by 13,000 jobs, a healthy sign heading into the new year because many in the industry are engaged in foreign trade, which is expected to suffer in the months ahead because of Asia’s troubles.

Ted Gibson, the state Finance Department’s chief economist, said he had expected a sharp upward revision in retail trade because employment seemed to be trailing the rise in taxable sales.

“Retail sales have been running around 6%,” he said of the increase. “But employment has not been growing along with the rest of the economy, and that wasn’t making a lot of sense.”

The state’s finance, insurance and service industry also performed much better last year, thanks to companies benefiting from the booming stock market and the resurging real estate market. The industry as a whole is now growing at an annual rate of 3.7%.

Perhaps the state’s most robust industry, business services, grew even faster last year than previously thought. The revision added 10,000 jobs for a total of 1.1 million--up 11% from a year ago. The industry includes software companies and multimedia firms.