UCLA Raises Jobs Estimate but Expects Slowing in 2000 : Employment: Increased hiring in construction, films, computer services in state cause analysts to revise '99 figures.

By DON LEE

Sept. 22, 1999 12 AM PT

TIMES STAFF WRITER

UCLA forecasters boosted projections for California’s job growth this year, citing even stronger hiring in construction and computer services and unexpectedly robust gains in the motion picture industry.

UCLA’s third-quarter forecast Tuesday indicated that payrolls in the traditional film production category were likely to surge by a whopping 8% this year--after only modest growth last year and despite increased concerns about the so-called runaway production of Hollywood’s film and television work to Canada and elsewhere.

Overall, the UCLA-Anderson Forecast Project said California nonfarm employers would add about 470,000 net jobs this year. That’s almost 40,000 more than UCLA projected three months earlier, and just slightly less than the stellar payroll growth levels in 1998.

UCLA raised the job figures after analyzing additional state information that incorporates fresher payroll data. The data suggest the official monthly government surveys have been grossly understating job growth since late last year.

But UCLA economists, like others, are still expecting a clear deceleration in California’s economy next year. They say the big pinch will come from a slowdown in the U.S. economy.

UCLA forecasters think the Federal Reserve will bump up its key interest rate another half a percentage point this year to 5.75%. That, predicted UCLA, will shave the nation’s economic growth, as measured by the total output of goods and services, to 2.5% next year from an expected 3.9% this year.

UCLA’s California specialist, Tom Lieser, sees the state’s job growth slowing to a more moderate annual rate of 2.5% in 2000, from 3.4% this year and 3.7% last year. Other analysts said California’s employment may not slow down that much if Asia’s economic recovery boosts California’s exports, especially of manufactured high-tech goods.

This year, though, manufacturing has been a drag on California’s economy. The state’s employment boom has been fueled instead by a few industries, notably construction, which Lieser said is likely to have its biggest payroll increase in at least two decades, booming by 13%.

Moreover, related businesses such as sellers of building materials are seeing terrific growth, and they help explain why California’s taxable sales recently have been running 9% above last year’s levels.

Another leading industry where hiring is even stronger is business services, which includes software makers and Internet firms as well as temporary-help agencies. UCLA’s report shows payrolls in business services overall will rise by almost 9% this year, with slower but still rapid growth continuing well into the next decade.

Unlike construction and business services, the improved picture for jobs in movie-making came as a bit of a surprise. Over the last couple of years, workers in Hollywood have been complaining loudly about rising unemployment among their ranks as more U.S.-developed movies are being shot outside the United States, especially in Canada.

Bryan Unger, associate Western executive director of the Directors Guild of America, Tuesday did not dispute UCLA’s figures, saying the standard government category for motion picture production includes an array of work such as making videos and employee training films. Unger said that sort of production tends to pick up during a strong economy.

Unger added that television work in Southern California has been fairly strong this year. But on the whole, he and others said, employment for actors, directors and others involved directly in movie production has shown little if any growth this year.

Among other highlights in UCLA’s latest report, which includes its annual long-term forecast:

* California’s new-home building, which has lagged job and population growth, will surge in the coming years. Builders are on pace to add 148,000 new housing units this year, a very low level given the state’s robust job and population growth. Lieser is expecting the number of new residential permits to increase sharply in the coming years to 230,000 and higher--levels last reached in the overbuilding period of the late 1980s.

* The state’s population growth will average 1.6% annually through 2020. That will push California’s population from 33.6 million in 1998 to 40.7 million in 2010 and nearly 48 million in 2020.

* California’s unemployment rate will decline from an average of 5.9% in 1998 to 5.4% this year. But because of the large inflows of people and greater labor force participation, joblessness will remain above 5% over the next two decades.

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Slowdown Ahead?

California’s economy should produce almost as many jobs this year as in 1998. But forecasters at UCLA see slower growth ahead. In their view, growth in hiring will slow sharply in the booming construction industry and the volatile motion picture industry. Projected changes in payrolls, by sector:

Nonfarm employment

1998: 3.7%

1999: 3.4%

2000: 2.5%

Construction

1998: 11.1%

1999: 12.6%

2000: 4.4%

Manufacturing

1998: 2.1%

1999: -1.2%

2000: -0.2%