State Records Biggest Jobless Jump Since ’92
California’s unemployment rate unexpectedly climbed to 4.9% last month, rising from 4.6% in February and marking the state’s biggest increase in joblessness since the recession eight years ago.
Economists generally agreed that California’s economic recovery remains formidable and expressed surprise over the employment figures released Friday. Still, some analysts said the report foreshadows a somewhat slower expansion, largely because of the obstacles posed by rising home prices, higher interest rates and an increasing shortage of workers.
The March numbers show employers in the state boosting their payrolls by 15,600 workers, a moderate gain but far below the hefty increases of more than 40,000 a month during December, January and February.
One of the brighter notes in Friday’s employment report came from Los Angeles County, where unemployment declined to 5.4% in March from a revised 5.6% in February. Job growth in the county, which was one of the areas hardest hit by the state’s devastating recession in the early 1990s, was led by government hiring, particularly in the local public schools.
Orange County, one of the most economically vigorous parts of the state, posted a jobless rate of 2.3% in March, unchanged from February.
Statewide, much of the slowdown in job growth stemmed from the construction industry which, after posting substantial gains in recent months, lost 6,900 jobs in March. Analysts dismissed the notion that construction is declining, and regarded the reported job loss as largely a statistical aberration.
Still, economists noted that home building is growing more slowly than the rest of the state economy. That, in turn, is helping drive up home prices and making it harder for California companies to recruit workers from other parts of the country.
“It doesn’t appear that we’re going to be alleviating the housing shortage in many of the California coastal areas any time soon,” said Ross C. DeVol, director of regional studies for the Santa Monica-based Milken Institute.
“Housing starts aren’t rising fast enough to provide enough housing for all the new jobs that are being created.”
“There are underlying strengths throughout the California economy, but I do think we’re beginning to see some of hurdles to future growth manifesting themselves,” he added.
Lisa M. Grobar, director of the Cal State Long Beach Economic Forecast Project, noted that the two major industry categories in California that showed job losses in March--construction and manufacturing, where employment was down by 1,100--both are very sensitive to changes in interest rates. Grobar said those numbers suggest “we could be seeing the beginning of the impact” of the five interest rate increases engineered by the Federal Reserve over the past 10 months.
Until March, government figures showed California gaining jobs more quickly than the rest of the nation, and narrowing the gap between the state and U.S. unemployment rates. The latest U.S. figures, however, showed the nation’s unemployment rate holding steady at 4.1% in March and employers adding a huge 416,000 jobs in the month, including 117,000 temporary Census workers.
In fact, one of the puzzling signs in the California report was why federal government employment rose by a relatively modest 6,500 in the state, despite the Census hiring. Some analysts predicted that the figure will be revised upward in next month’s employment report.
Among the optimists was Ted Gibson, chief economist for the State Department of Finance. He noted that the state’s payroll tax receipts were again way up in March, 23% higher than the level of March 1999. He also noted that the number of building permits issued around the state rose substantially in January and February, the most recent months for which figures are available.
The unemployment rate increase reported for March, he said, “seems to counter all of the other evidence we can see about what’s going on out there. It just didn’t make sense.”
While technology companies in California and elsewhere are in the throes of upheaval on Wall Street, little sign of trouble turned up in the employment report. The business services category, which includes lots of software- and Internet-related employment, added 3,200 jobs. Electronic equipment manufacturing was off by a modest 500 jobs.
Tom Lieser, executive director of the UCLA Anderson Forecast, a closely watched economic report, said Friday’s employment report wouldn’t prompt him to revise his robust outlook for the state economy. Late last month, the Anderson Forecast projected that unemployment in California would fall to as low as around 4.5% in 2001, and that the state would produce nearly a half-million new jobs and raise overall personal income by a strong 7.6% this year. Lieser said that seasonal adjustment techniques probably were behind the big decline in construction employment in March.
The last time California’s unemployment rate climbed this much in a single month was in February 1992, when joblessness climbed to 9%, from 8.4% the previous month.
Unemployment rates among other Southern California counties:
Ventura County: 3.8% in March, down from 3.9% in February.
Riverside: 4.7%, down from 4.8%.
San Bernardino: 4.4%, up from 4.3%.
San Diego: 2.7%, unchanged.
With the exception of the figures for California and Los Angeles County, the employment numbers released by state officials are not adjusted for seasonal trends.
