Rising O.C. Payroll Numbers Leave Analysts Wondering

Economists are a bit rattled by recent employment data, including a state report that showed payrolls in Orange County posted a big 4.1% gain in September from a year earlier.

Previously, year-to-year job growth had been slipping as the year progressed. That was expected, because the global economic crisis has begun to squeeze corporate profits and expansion and hiring plans.

So why was the county’s job report so strong? “It’s puzzling,” said Esmael Adibi, director of Chapman University’s Anderson Center for Economic Research. “All we can draw is the conclusion that our economy is not affected as much by the developments both at the national level and internationally.”

One probable reason for that is the continued strength of the construction sector, which is still responding to demand for new housing and rising prices. The number of jobs in the building trades has soared more than 10% to 66,700 since September 1997.

The most curious finding, however, is that the manufacturing sector also continues to grow at a very healthy pace, with employment up 4.3% to 234,400 in September. Manufacturers, particularly makers of high-tech products, have been hit hard by the global economic troubles because a big percentage of their sales comes from exports.

Indeed, a recent Milken Institute study said about three-fourths of the county’s $8.3 billion in exports in 1996 were high-tech products. And nearly 40% of all county exports, or $3.3 billion, were to the hard-hit Asian countries.

Adibi thinks it’s likely that the current strong numbers will be revised downward later when the state revisits the data, which it does each year in March, in an attempt to exclude any jobs that might have mistakenly been counted twice.

Mark Zandi, chief economist at Regional Financial Associates in West Chester, Pa., also questioned the accuracy of the current numbers. “It doesn’t seem consistent with other evidence of slowing and corporate layoff announcements,” he said. Often, he said, such statistics are slow to pick up on shifts in the economy--both up and down.

Even so, in the next few months economists expect the data to reflect a softening in the job market as the economy reacts to external pressures.

“The international and national economy by almost every measure is slowing down,” said Adibi. “We cannot be immune to all the forces that are at work.”

*

Patrice Apodaca covers economic issues for The Times. She can be reached at (714) 966-5979 and at patrice.apodaca@latimes.com.