California's economy showed signs of weakening in January as employment fell by 10,500 jobs, on top of a revised loss of nearly 30,000 jobs the month before, state officials reported Friday.
The payroll losses came largely from huge cutbacks in manufacturing and were a sharp contrast to January's performance for the U.S. economy overall, which added 143,000 nonfarm jobs.
Economists warned against reading too much into the state's January payroll employment report, citing volatility in the jobs data, seasonal hiring patterns and a major change in the way the newly released figures were calculated. In fact, a separate survey of households showed that California's jobless rate edged down to 6.5% from a revised figure of 6.9% in December. Friday's report incorporated for the first time new job groupings and an annual revision of data drawn from payroll tax filings.
Still, analysts said there was little to cheer in Friday's report.
"I think we're past the bottom," said Nancy Sidhu, senior economist for the Los Angeles County Economic Development Corp. "But what's happening is that the state's economy is not growing fast enough to generate job growth," she said.
Friday's figures showed the continuing drag of the high-tech collapse on the California economy, with Silicon Valley still lagging behind the rest of the state in job growth, according to Esmael Adibi, director of the Anderson Center for Economic Research at Chapman University.
He said that while most of the state's metropolitan areas, including Los Angeles and San Diego counties, showed slight increases in year-over-year employment, the job base in the San Jose and San Francisco areas continued to contract.
"The headline for 2003 seems to be that while the economy appears to be bottoming out overall, we still face pockets of really weak economies up north and more moderate growth in the south," Adibi said.
He also pointed out that the weakness in the California job picture is unlikely to change, and could worsen, depending on what happens with the conflict in the Middle East.
The number of unemployed people in California in January was 1.14 million, a decrease of 63,000 from the previous month but up by 28,000 for the same month the previous year, according to the state Employment Development Department.
There were some bright spots in the services side, with employers involved in trade, transportation and utilities adding 16,800 jobs in January and 27,300 jobs for the year. Leisure and hospitality payrolls were up by 14,100 jobs in January, after declines the two previous months.
Another area of strength was government payrolls, which gained 8,000 jobs in January after recording job increases in 21 of the last 22 months. That sector could be hit in the coming year with the state facing a budget shortfall as high as $34.8 billion.
But offsetting that was the worrisome news that California's struggling manufacturing sector had lost a whopping 28,100 more jobs in January, after much smaller losses of 1,700 jobs in December and 6,900 jobs in November.
For the year, the state's hard-hit manufacturing sector shrank by 84,800 jobs, the largest loss in any part of the economy.
Jack Stewart, president of the California Manufacturers & Technology Assn., said some of those job losses might be attributable to the changes in the way the state was reporting its employment data. But he said the figures confirmed his fears that the exodus of manufacturing from California was continuing.