State Jobless Rate Stays at 4.9% in May

California’s employment growth slowed abruptly last month, producing a scant total of 3,200 new jobs and providing strong new evidence that the state’s economic expansion is nearly stalled.

What’s more, the state employment report released Friday showed that the private sector lost 5,200 jobs in May, with the main damage coming in the Bay Area. California managed to post a small overall gain in jobs only because of a pickup in local government hiring, particularly by school districts.

The employment report also found that California’s unemployment rate was 4.9% in May, unchanged from the month before. Skimpy employment gains normally translate into rising unemployment rates, but in May the scarcity of new job hunters helped stabilize the labor market.

In Los Angeles County, the situation was similar, with the jobless rate holding steady at 5.1%. In Orange County, the rate last month was 2.5%, down from 2.6% in April.

Friday’s report and other recent indicators, taken together, suggest that California continues to avoid falling into recession, but that growth has been reduced to a crawl. “Like the rest of the country, we’re skating close to the edge,” said Brad Williams, senior economist for the California legislative analyst’s office.

“The question is, ‘Are we merely slowing, or is California, as well as the rest of the nation, on the verge of an outright downturn?’ On balance, we still think the state economy will avoid recession and continue to expand,” he said.

May’s job gain in California was a major comedown from the first four months of the year, when the monthly employment increases averaged 14,875. It was an even more abrupt decline from last year, when job gains averaged 46,200 a month.

One of the few positive notes was that California managed to keep adding some jobs even as the nation overall, as reported a week ago, lost 19,000 positions. “Despite the slowing here, we look pretty doggone good in comparison,” said Ted Gibson, chief economist for the State Department of Finance.

Nationally, however, the unemployment rate edged down to 4.4% in May from 4.5% in April.

Analysts say California’s economy is being hampered by the national economic slump along with slowing growth in foreign trade, a slowdown in technology spending and the state’s electricity crunch. Hollywood, too, appears to be temporarily cutting back after a surge of production early this year and late last year that was intended to provide a cushion against the possibility of a summer entertainment industry strike.

Other recent economic reports have provided a mixed picture of the California economy. This year’s figures for state revenue from employee withholding taxes and from retail sales generally are weak, and the most recent statistics on nonresidential construction are down. Home building, on the other hand, has risen, but it remains too slow to make much of a dent in the state’s housing problems.

Friday’s employment figures also reflect how the state’s rural areas remain badly depressed, with communities in the Central Valley and Imperial County posting some of the nation’s highest unemployment rates.

Imperial County posted the highest unemployment rate of any county in the state last month, 19.6%, although its level declined from 19.7% in April and 20.9% in May 2000. Still, some farm areas showed even better job gains last month. Fresno County’s unemployment rate, for instance, declined to 12.7% last month, down from 14.3% and 13.7% in May 2000.

California’s loss of economic momentum mainly comes from the Bay Area, which had led the state’s growth in recent years. Southern California, which grew much more modestly after recovering from the early 1990s recession, has emerged as a steadying influence in the state economy.

For the entire nine-county Bay Area, unemployment climbed to 3.1% last month, up from 2.9% in April and 2.4% in May 2000. “It suggests that all those dot-com layoffs are having some impact,” said Michael S. Bernick, director of the California Employment Development Department.

In Southern California, including San Diego County and the five Los Angeles area counties, the jobless level inched down last month to 4.1%, from 4.2% in April and 4.4% in May 2000.

At employment companies such as Manpower Staff Services, which provides temps and other personnel services, the differing fortunes of the northern and southern parts of the state are very apparent. “It has stayed stronger in Southern California,” said Richard Cutshall, Manpower’s western region vice president.

Cutshall said he also has noticed that most of the job losses are coming at big companies and the failing dot-coms. “From the other small companies, we’re still getting orders, and we’re sending people out on assignments. They seem to be weathering things better,” he said.

Yet in Southern California, too, there are signs of softening. Expansion in the Inland Empire counties of Riverside and San Bernardino, which enjoyed some of Southern California’s fastest growth in recent years, is slowing.

Lisa M. Grobar, director of the Cal State Long Beach Economic Forecast Project, pointed out that the job total for the Inland Empire is up 2.9% over the last 12 months, but that it has tapered off sharply from its 5.6% pace in 2000. She blamed a decline in the construction business and said that the region’s manufacturing industries appear to have been hurt due to weak demand for their products from elsewhere around the country.

Likewise, Orange County’s job growth over the last 12 months is 3.1%, compared with 3.4% in 2000. Ventura County, the smallest of the five Los Angeles area counties, has seen its employment gains slow to a 1.7% pace, off from 4% last year.

Still, the May jobless rates in all Southern California counties are either even or down from April’s levels. Compared with the levels of a year earlier, only Orange County’s unemployment is up, by one-tenth of a percentage point, from 2.4%.

The jobless rates for California and Los Angeles County remain fairly close to historical lows. The state unemployment level of 4.5% in February was its best since 1969. Likewise, Los Angeles County’s rate of 4.7% for the same month also was a 32-year low.

For blacks and Latinos, state unemployment rates changed only slightly and remained near record lows. The jobless rate for Latinos held steady at 6.6%, while joblessness among blacks edged up to 7.6%, up from 7.4% the month before.

Among other Southland counties, Riverside County’s rate was 4.3%, down from 4.5% in April and 4.8% in May 2000; San Bernardino’s rate was 4.3%, down from 4.4% in April and 4.7% a year earlier; and Ventura’s was 3.4%, unchanged from April, but down from 3.7% a year earlier.

For San Diego County, last month’s unemployment was 2.7%, unchanged from April, but down from 2.9% in May 2000.

California’s jobless rate for April originally was reported as 4.8%, but it was revised upward to 4.9% in Friday’s report, matching last month’s rate. In May 2000, California’s jobless rate was 5%, and Los Angeles County’s was 5.4%.