State’s Payrolls Rise in August; Jobless Figure Dips in L.A.
Providing a breath of good news about California’s cooling economy, government officials said Friday that payrolls in the state swelled by a robust 37,100 jobs in August, after virtually no growth in July.
The number of new nonfarm jobs, most of them in services and government, was bigger than economists had expected. California contributed more than its share of the 217,000 new jobs in the nation last month, excluding the effects of the General Motors strike.
“It is reassuring,” said Bruce Smith, an economist at California’s Finance Department.
California’s jobless rate edged up to 5.8% in August from a revised 5.7% in July. Butanalysts viewed the increase as statistically insignificant, and new claims for unemployment benefits actually showed a sizable decline in August. The U.S. jobless rate in August stood at 4.5%, unchanged from July.
Los Angeles County, which not long ago had much higher unemployment than the rest of the state, continued to close the gap. Its jobless figure dropped to 6.1% from a revised 6.2% in July, reflecting expansions in apparel manufacturing, motion pictures and business services, a category that includes software firms and temporary-help agencies.
For the first eight months of the year, California’s economy has generated an average 28,000 nonfarm jobs a month. That is significantly smaller than the 41,000 monthly rate last year but still considered respectable. California’s job-formation rate, thanks to gains mostly in Southern California, continues to outstrip the nation’s and most other large states.
Still, California is feeling more pain from the Asian crisis, notably in manufacturing. Until recently, California’s factory employment had been growing vigorously even as those payrolls nationwide declined or remained stagnant. But California’s manufacturers are far more dependent on Asia, and the more recent financial troubles in Russia and Latin America present additional risks to California’s ability to export goods as well as services, such as films, software and engineering expertise.
“We’re not going to escape this stuff going all around us,” said Howard Roth, a senior economist at Bank of America.
Friday’s jobs report, although on the whole positive, did reflect the growing weakness among the state’s electronics, computer equipment and other durable-goods producers. Payrolls in the entire durable sector declined by 1,700 jobs in August, the most in recent months. Most of the loss was felt in Northern California, where the manufacturing industry and the overall rate of payroll increase has slowed to a trickle this year after three years of exceptionally strong growth.
Richard O’Brien, chief economist at Hewlett-Packard Co. in Palo Alto, said Friday that one should expect high-tech manufacturing employment in California to continue to drop--but in dribbles. O’Brien noted that even though exports to Asia will shrink, California’s high-tech makers rely mostly on the U.S. and European markets, where these products are ultimately consumed.
In August, the statewide decline in durable production employment was more than offset by gains in nondurable manufacturing, as food processors reported a burst of hiring that had been delayed by heavy rains this year.
One big concern is that weakness in manufacturing will spill into the state’s services, but so far that effect has been minimal.
In August, services accounted for the lion’s share of the 37,100 nonfarm job increase statewide, creating 16,500 jobs over the month. Although services include everything from janitorial businesses to engineering firms, state officials said the bulk of the increases came in business services and motion pictures.
The government added 13,400 jobs in August, making up almost all of the sharp decline in July.
Total construction employment statewide increased to 614,800 last month--up a whopping 9.4% from a year ago but essentially unchanged from July. Analysts said contractors may have run up against a wall in the labor supply, but data in Southern California also indicate that new-home starts in Los Angeles and Orange counties this year are lagging last year’s relatively slow pace.
Despite the slowdown in Northern California, the labor market in the Bay Area remains very tight. Orange County’s jobless figure stood at a minuscule 3.1% last month, unchanged from July. The jobless figure for Riverside and San Bernardino counties held steady at 6.7% last month, and Ventura County’s rate rose to 6.5% from 5.7%. Unlike the rates for the state and L.A. County, none of these figures are seasonally adjusted.
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Jobless Rate Up
California unemployment rate, seasonally adjusted:
August: 5.8%
Source: Labor Department
