Job Growth Continues as State Posts Gains in Oct.

Led by brisk hiring in the Southland, California turned in another solid month of job growth in October, state officials reported Friday.

Employers in California added 32,800 nonfarm jobs last month, the bulk of them in construction and business services. That pushed down the state’s unemployment rate to 5.9%, from 6% in September, said California’s Employment Development Department.

Los Angeles County’s jobless rate edged up to 6.7%, from 6.6%, even though it continued to generate jobs at a respectable pace. Job formation in California last month was once again strongest in Riverside, San Bernardino and Orange counties.

Statewide, October’s payroll gains of 32,800 represented a healthy increase of 2.8% from a year ago and looked even more impressive when viewed against the more sharply slowing national economy, which added just 116,000 jobs last month.

California’s economy, reflecting its younger expansion, is now marching to a faster beat. Over the last two months, California, which accounts for about 11% of the U.S. labor force, has generated about a quarter of the country’s new jobs.

“It’s certainly a positive report,” said Brad Williams, senior economist at the Legislative Analyst Office in Sacramento. The latest report, he said, will help “allay concerns that California is going to be pulled into a recession or a serious slowdown because of the problems abroad.”

However, the overseas threat has in no way diminished. As the October jobs data showed, the Asian crisis is having an increasingly negative effect on high-tech manufacturing, the brunt of which is being borne by the Bay Area.

Last month, computer and other electronics makers cut 1,700 jobs, more than the 1,200 eliminated in September. Also, aerospace companies again chipped away at employment, reducing payrolls by an additional 500 last month. Layoffs in both those high-value industries have mounted in recent months, and those trends are likely to continue.

Even so, total manufacturing employment in California, seasonally adjusted, actually rose by 3,800 last month, whereas factory employment nationwide fell by 52,000 in October. One big difference: California’s far-reaching construction boom.

Statewide, building contractors and other construction employers directly added 8,900 jobs in October. Total construction payrolls in the state are now up 54,000, or a whopping 9.5%, from a year ago.

Indirectly, the industry is fueling growth in construction-related manufacturing, such as furniture, lumber and stone and glass, said Ted Gibson, chief economist at the state Finance Department. California’s factory payrolls in the last two months also have been boosted by late-season hiring by food processors, Gibson said.

California’s other engine of job growth last month was the services sector, where hiring has slowed only slightly from its exceptionally brisk pace over the last couple of years.

In October, the sprawling services sector added 10,600 jobs, much of that in business services, a nebulous category that includes labor supply companies, software firms and advertising agencies. Gibson, however, said that first-quarter payroll data suggest that about half of the business-services job growth is occurring at high-paying software and other computer services firms.

Retail trade employment, which has been growing slowly statewide this year, especially at restaurants, increased by a modest 3,700 in October. Wholesale trade, which has been stronger because it has been benefiting from the rise in imports, added 1,700 jobs last month. And the finance, insurance and real estate industries added 600 jobs, although banks are now cutting back.

Overall, Gibson said, “the state is looking very resilient.”

But within California, there are striking differences.

All nine counties of the Bay Area posted unemployment rates below 5% in October, but job growth in Northern California has slowed sharply this year because of its greater reliance on Asia and partly because of its tighter labor market and higher costs. On an annual basis, the Bay Area posted October job growth rates from 1.4% in San Jose to 2.7% in Oakland, with San Francisco in the middle.

By contrast, the jobless rates for regions in Southern California varied widely in October, from a low of 2.9% for Orange County to 6.2% for the combined Riverside-San Bernardino counties, known as the Inland Empire. However, payrolls have been increasing fastest in the vast Inland Empire, largely because of the strong home-building that is taking place there.

Ben Bartolotto, research director at the Construction Industry Research Board in Burbank, said that through September, residential building permits statewide have increased by 11% this year. Although activity is down in Orange and Los Angeles counties, permits pulled for Southern California were up 12%, thanks to a 30% jump in permits in Riverside County. By comparison, the Bay Area’s home-building activity was down by 2% through September.

“We expect Southern California to be a leader in terms of housing,” said G.U. Krueger, economist at the California Assn. of Realtors. He said housing activity appears to be slowing somewhat now, but he does not expect the Southland to weaken appreciably. “The downturn in Southern California, if there is any, will be very mild.”

Southern California is also benefiting more from commercial work. Total volume for office, warehouse and retail building, as measured by permit valuations, was up 45% in Los Angeles County, 32% in Orange County and 41% in the Inland Empire.

In Los Angeles County, total nonfarm employment exceeded 4 million last month--almost 30% of all the wage and salaried workers in the state. While job growth in October was up slightly less than the statewide average, the county’s overall manufacturing employment has held up better. The county’s services sector has not grown as fast, largely because motion picture employment has slowed somewhat. But other state data indicate that the hard-to-track film industry has added more jobs than recorded monthly.

On an annual basis, payrolls in Orange County were up sharply in almost all industries, especially manufacturing, retail trade and the finance sector. Finance and real estate have also been a leading growth sector in Ventura County, where the jobless rate stood at 5.8% in October, down from 6.7% the previous month.

The state’s county jobless rates are extremely volatile and based on a small sample. And unlike the unemployment figures for the U.S., California and Los Angeles County, the county rates are not seasonally adjusted.