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

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 rate of 4.4% in February.

But the latest snapshot of California’s economy was ambiguous. Based on a separate government survey of employers, officials at the Employment Development Department said Friday that hiring last month was surprisingly weak. But economists viewed this number with skepticism.

By the EDD’s 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 token, when the more usual 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 being 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 in February of last year--an annual growth rate of 2.1%, well below the statewide average of 3%.

The jobless rate for Orange County also dipped, to 2.7%, from 3% the previous month. But the county’s construction and manufacturing employment, which was exceptionally strong last year, has slowed early this year. And overall job growth is now running at an annual rate of 3.3%, after jumping by 5% for all of 1998.

In Riverside and San Bernardino counties, the combined unemployment rate dropped to 5.4%, from 5.8% in January.