State’s Jobless Rate Holds Steady at 6.7%

A series of employment reports issued by the state Friday portrayed a California economy that was described by many analysts as moving sideways -- ebbing and flowing but not sustaining real improvement.

Yet hidden behind the numbers are some positive indicators of what might be the initial stages of a straight-ahead economic recovery. One state Employment Development Department survey showed that the jobless rate held steady at 6.7% in June, after factoring in a revision for the prior month.

The agency also said California gained 5,100 payroll positions in June, ending a four-month streak of losses that saw 46,200 nonfarm jobs eliminated.

That ran counter to the trend nationwide, where the unemployment rate shot to a nine-year high of 6.4% and payroll jobs shrank by 30,000 last month.

The state’s financial services and government sectors picked up many of the new jobs created. And though Tom Lieser, economist with the UCLA Anderson Forecast, called that “a ray of hope” for California’s economy, he voiced concern that these industries are likely to soon change directions.

“We know that with the budget deficit the government jobs are not going to last and the boom in refinancing home mortgages is going to end at some point,” Lieser said.

Meanwhile, California continues to shed manufacturing jobs, at a rate of 4% during the last 12 months, EDD said. In June, about 4,900 such jobs were cut.

The most recent drop brings the total of manufacturing slots lost in the last two years to more than 290,000.

“We have lost 15% of our industrial job base,” said Gino DiCaro, spokesman for the California Manufacturers and Technology Assn. “That’s at least as bad as it was in the early ‘90s.”

The information sector, which includes Internet companies, software makers and the motion picture and TV industries, added 600 jobs last month -- only the second increase this year. Still, the category is down 6.6% from a year ago.

Despite June’s small uptick in payroll jobs, high levels of unemployment remain a problem, economists said. A separate survey of households issued with the jobs report Friday found that the number of unemployed is 14,000 higher than a year ago. More than 524,000 Californians collected unemployment benefits last month, an increase of 36,000 from a year ago.

The surge in the number of unemployment checks being cashed has put the state’s program in danger of running out of funds by early next year, state officials warn. That has raised the possibility that employers will have to pay more insurance taxes to keep the system solvent.

Lieser noted that unemployment rates in parts of Southern California are low compared with the northern end of the state.

Orange County’s jobless rate, which is not adjusted for seasonal changes in the workforce, rose to 3.9% in June from 3.7% in May. San Diego’s unadjusted rate jumped to 4.5% from 4.2%. The unemployment rate in Los Angeles County, which is seasonally adjusted, edged up to 6.8% last month from 6.7% in May.

By contrast, the unemployment rate in Santa Clara County -- home of Silicon Valley -- stood at a seasonally unadjusted 8.5% in June. San Francisco County’s unemployment rate was 7.3%.

Brad Williams, senior economist with the nonpartisan California Legislative Analyst’s office, said that amid the mostly downbeat statistics he has detected the seeds of a potentially solid economic turnaround.

Perhaps the most encouraging sign, Williams said, is that personal income tax-withholding collections jumped 6.5% in the second quarter to $6 billion compared with the same period a year earlier.

“Withholding increases reflect an improvement in the number of jobs, the hours people are working and the wages they are earning,” Williams said.

A similar trend has taken hold at the corporate level, where tax prepayments jumped 23% to $2.1 billion in the second quarter, a sign that businesses’ profits are rising. And a 5.5% bounce in sales tax collections -- to $6 billion in the second quarter compared with last year -- indicates consumers are spending more on taxable goods.

Still, Williams acknowledged, it’s up to businesses to start spending more or “there’s just not going to be a strong recovery.”

Added Lieser: “There are some real crosscurrents in California’s economy right now. Maybe we are finding the bottom.”

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Times staff writer Ronald D. White contributed to this report.