State's Jobless Rate Falls to 5.6%, Lowest Since '90

By DON LEE

March 13, 1999 12 AM PT

TIMES STAFF WRITER

The ranks of unemployed workers in California fell last month to their lowest level since mid-1990, right about at the peak of the last economic expansion, government officials reported Friday.

The state’s jobless rate dropped to 5.6% in February, from a revised 5.8% in January, as the number of unemployed workers fell by 36,000 over the month.

“We’re finally back to where we were near the last cyclical peak,” said Nancy Sidhu, an economist at Bank of America in Los Angeles. “It is coming down and it is encouraging,” she said of the jobless rate, which compares with the nationwide unemployment of 4.4% in February.

Orange County’s unemployment rate, although not adjusted for seasonal factors, also slid further last month, to 2.7% from a revised 3% in January.

However, the latest snapshot of the county’s economy suggested that employment growth is slowing from its breakneck pace of last year.

Total nonfarm employment in the county surged by 5% in 1998, but job growth early this year is running at an annual rate of 3.3%. In particular, hiring at construction and manufacturing appears to have lost some steam. And recent announcements of cutbacks by the computer distributor Ingram Micro and engineering services giant Fluor Corp., among others, may presage slower growth ahead.

Statewide, the Employment Development Department’s jobs report for February was ambiguous. Based on a separate government survey of employers, EDD officials said Friday that hiring last month was surprisingly weak. But economists viewed this number with skepticism.

By their count, employers in the state added just 1,900 to their payrolls over the month, after producing a revised 45,000 jobs in January and an average of nearly 38,000 jobs a month last year.

Manufacturing was one big culprit. Factory jobs declined by almost 5,000. Electronics, aerospace and a smattering of other high-tech employers cut back, largely reflecting weak overseas demand. The state’s apparel industry, concentrated in Los Angeles County, also shed 1,100 jobs last month.

That parallels a nationwide trend in which clothing and other manufacturers have erased 337,000 jobs since last March, even as every other industry has continued to expand at a robust pace.

“I’m not sure where the bottom is,” said Richard O’Brien, economist at Palo Alto-based Hewlett-Packard Co., referring to high-tech manufacturing. But he added, “I don’t suspect that it is this year.”

Apart from manufacturing, however, economists were not concerned about California’s anemic February job growth. They attributed a good part of it to the vagaries of the weather.

Construction employment, they said, was inflated in January because of unseasonably warm weather. And by the same taken, when the more-normal wet winter set in last month, that resulted in smaller head counts at those same firms. Overall, California’s construction payrolls last month dropped by 8,500 jobs, after gaining 14,600 in January.

Most other private industries in the state, including retail trade, finance and insurance and mining, saw employment fall noticeably last month. Mining, which dropped 600 jobs over the month, includes the oil industry, which is getting hammered by low crude prices.

The services industries in California, as a whole, reported a gain of 15,000 jobs in February, thanks to a spurt of hiring by motion picture companies and computer and other business services. Government jobs held relatively steady.

Ted Gibson, chief economist at the state Department of Finance, viewed the skimpy job growth in February as an anomaly, neither signifying nor presaging a slowdown. One big reason Gibson was suspicious of the February payroll count was that his office saw a 13% increase in payroll tax receipts in the same month.

“I think the job picture is better than these numbers portray,” he said.

Friday’s reports showed joblessness dropping in most major areas in California last month.

Unemployment in Los Angeles County edged down to 6.3%, from a revised 6.5% in January. But job growth appears to be weakening in the county. Two big concerns are garment and motion pictures--two once-leading industries.

Apparel and textile products employment stood last month at 105,000--down 3.4% from a year earlier. Anecdotal evidence suggests the decline may be even sharper.

Motion pictures, meanwhile, showed a strong increase of 9,400 jobs last month, to 152,100. But that tally was about 5,000 fewer than in February 1998.

“We’re at a major shift in [the motion picture industry],” said Jack Kyser, chief economist at the Los Angeles Economic Development Corp., a business-funded group. “It had been our growth poster child. Now all of a sudden it is losing ground.”

Overall, Los Angeles County’s job count was about 81,000 higher than February of last year--an annual growth rate of 2.1%, well below the statewide average of 3%.

In Riverside-San Bernardino counties, the combined unemployment rate, which is not seasonally adjusted, dropped to 5.4%, from 5.8% in January.

The area, known as the Inland Empire, led job growth last year, and so far this year, there is no sign that it is cooling. In the last two months, construction-related employers and manufacturers have kept hiring at a sizzling pace. Nonfarm employment overall remains about 5% above a year earlier.

“This is the most aggressive start to a year since 1990,” said John Husing, a San Bernardino economist who specializes in that region.

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Joblessness Dips

Orange County’s low unemployment rate continued in February, with a decline to 2.7%.

1998

Feb.: 2.9

March: 2.7

April: 2.7

May: 2.7

June: 3.0

July: 3.2

Aug.: 3.1