State Loses Jobs in July
California’s employers went into a hiring funk in July, cutting a net 17,300 jobs and raising concerns that the state’s economic recovery has lost steam along with the nation’s.
The state’s first decline since February in seasonally adjusted nonfarm payrolls followed revised gains of 19,100 in June and 33,200 in May, the state Economic Development Department reported Friday. The tumble came as the nation added only 32,000 net jobs in July, far below expectations.
“We have our own soft patch, except ours in July looks a little softer than the nation’s,” said Howard Roth, chief economist at the state Department of Finance, citing a phrase used by Federal Reserve Chairman Alan Greenspan to describe the nation’s recent economic doldrums.
On the bright side, California’s unemployment rate fell to 6.1% in July, down from a revised 6.3% in June and the lowest mark since October 2001. The state’s jobless rate stood at 6.9% a year ago.
The nation’s jobless rate was 5.5% in July, down from 5.6% the previous month.
The Golden State’s economy has been jolted by some of the same factors weakening the nation’s, analysts said. Higher gasoline prices have stifled consumer spending. President Bush’s tax cuts have lost some of their stimulative effect. And employers, facing stiff healthcare and benefit costs along with higher prices for steel and other basic commodities, have been cautious about hiring.
However, Greenspan and many other economists continue to express confidence that the midsummer slump is temporary. Other recent data, including resurgent manufacturing activity and a comeback in auto sales, suggest that growth may be picking up again.
Sung Won Sohn, chief economist for Wells Fargo & Co., noted that business spending on capital equipment has been robust, with California’s aerospace, auto, housing and technology industries as prime beneficiaries. California’s exports also have been healthy, along with surging international trade traffic through the state’s ports.
What’s more, personal income tax withholding in California continues to be strong, a positive trend for the state’s treasury. “Somebody out there is making some money,” economist Roth said.
At the same time, claims for unemployment benefits haven’t risen in a way that suggests the job market is weak, said Joseph Hurd, senior economist at the UCLA Anderson Forecast. The UCLA forecasting organization on Friday released its job figures for July suggesting that the state actually added jobs last month.
“The state’s economy is moving ahead,” albeit more slowly than the nation’s, Hurd said.
The state’s July jobs report paralleled the nation’s in another way: Both revealed a sharp discrepancy between the payroll survey and a smaller but separate survey of households.
In the state’s case, the household survey showed a solid increase of 44,000 positions. Nationally, the Labor Department’s household survey showed a net job surge of 629,000 in July in contrast with the measly gain in the payroll survey.
The payroll survey, administered to established employers, is generally seen as the more reliable indicator. The household survey, based on a random sampling of people at home, picks up self-employed workers, independent contractors and newer businesses that are missed in the payroll data.
People who have left bigger firms “either can’t find jobs or are fed up with the bureaucracy of large companies” and are seeking “the freedom to do what they want,” Sohn said of the apparent boom among the self-employed and entrepreneurs.
The household survey also is used to calculate the unemployment rates for the state and nation -- another reason the jobless rate painted a more positive picture in July, said Economic Development Department spokesman Kevin Callori.
Only four of the state’s 11 job categories showed gains in July. They included manufacturing, which also showed an increase nationwide, and government, which appears to be stabilizing amid the state’s improving fiscal condition.
The categories losing jobs tended to be in services. The information category notched the largest decline, at 10,300 jobs. This was accounted for almost entirely by a decline in the volatile motion-picture production business, Callori said.
Job seekers had the best success in Santa Barbara and Marin counties, which posted unemployment rates of 3.6%. Orange and San Diego counties posted jobless rates of 3.7% and 4.2%, respectively. Los Angeles County had 6.9% out of work, unchanged from June.
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Jobs lost
Net gain or loss of nonfarm jobs in California (in thousands)
January: -2.1 July: -17.3
Source: California Employment Development Department
