State Sees Big Increase in Private-Sector Jobs

Defying a downshift in the national economy, California gained 51,500 private-sector jobs in June, the biggest monthly increase in nearly two years.

The strong private-sector growth, much of it in Los Angeles County, raised hopes among many analysts that California’s expansion will maintain momentum even if the national economy continues slowing.

At the same time, the employment report released Friday by state officials contained some downbeat news: The California jobless rate rose to 5.2% last month, up from a revised 5.1% in May. The state’s unemployment rate now has increased two months in a row, bringing it up from a 30-year low of 4.6% in February and putting it at the same level of June 1999.

Orange County’s unemployment rate rose to 2.8%, from 2.3% in May. It was the county’s highest rate since the 3% level of last July.

Seasonal factors contributed to the increase, as did the cutback of 4,100 federal government jobs, most of them temporary Census 2000 workers. Overall, the latest report suggests that the pace of job growth in Orange County is cooling somewhat, although industries such as business services, amusement and construction remain are still hiring vigorously.

Statewide, the two main reasons for the rise in the unemployment rate led analysts to discount its significance. For one thing, the unemployment rate, which is seasonally adjusted, was pushed up by an influx of new job hunters rather than by weakness in private industry.

The figures also were skewed by the loss of 37,400 government positions in June, mainly Census 2000 workers who finished their temporary jobs.

“It’s a good report, despite the fact the unemployment rate is up,” said Ted Gibson, economist for the California Department of Finance.

He said the fast growth in the labor force, even though it is pushing up the unemployment rate, “is a sign of strength, not of weakness.”

Rajeev Dhawan, director of econometric forecasting at UCLA Anderson Forecast, said the six interest rate hikes by the Federal Reserve since June 1999 aren’t likely to slow California’s economy as much as the nation’s. His reasoning: California is being propelled largely by industries that are less sensitive to U.S. interest rates.

One high point was Los Angeles County, which bucked the statewide pattern of rising unemployment. The county’s jobless rate, which sometimes is erratic because it is based on a relatively small population sampling, fell to 5.4% in June from a revised figure of 5.7% in May. That returns it to the March level, lowest in 11 years.

All other Southern California counties, and the great majority of counties throughout the state, posted increases in joblessness.

Many of those increased jobless rates, however, largely stemmed from the loss of census jobs and the traditional influx of students and teachers into the job market.

California’s private-sector job increase last month was the biggest since September 1998, when the gain was 51,700. When the loss of government jobs is taken into account, California gained a modest 14,100 jobs overall in June. In comparison to the national job market, however, the state did well.

As previously reported, the nation added a moderate 206,000 private-sector jobs in June. But the economy’s total job gain was only 11,000 after cuts in government employment.

On the other hand, the nation has long posted lower unemployment rates than California. In June, the U.S. jobless rate was 4%, down from 4.1% in May, and near the 30-year low of 3.9% in April.

The state’s jobless rate has remained relatively high mainly because of persistent high unemployment in Central California, along with the Los Angeles area’s failure to fully recover from its loss of thousands of aerospace and defense jobs during the region’s severe recession in the early 1990s.

The biggest employment increases came in services. Within the service category, the growth mainly was in motion pictures and business services, a broad category that includes software, law firms and many other types of employment.

In other Southern California counties, the jobless rates were:

* Ventura: 4.4% in June, up from 3.6% in May.

* San Diego: 3.3%, up from 2.8%.

* Riverside: 5.8%, up from 4.7%.

* San Bernardino: 5.5%, up from 4.5%.

Unlike the statistics for California and Los Angeles County, the figures for other communities in the state are not adjusted for seasonal trends.

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L.A. Bucks Trend

The unemployment rate has risen over the last two months for California overall and in most counties, but Los Angeles County has managed to buck the trend.

L.A. County: 5.4%

California: 5.2%

Orange County: 2.8%

Note: California and Los Angeles County rates are seasonally adjusted; Orange County rates are not.

Source: California Employment Development Dept.