State Posts Net Loss of Jobs in December

In a sharp and unexpected divergence from national and local employment trends, the state reported Friday that the number of people holding jobs in California fell by 25,000 last month.

But economists downplayed the significance of the plunge, the biggest in nearly two years.

Some said it was at such variance with the state’s generally healthy economy that the figure eventually would be revised. Others described it as a blip that didn’t portend a true slump.

“The headline number is obviously disappointing, but it’s not an indication of a broad-based weakness,” said Dennis Meyers, a principal economist at the state Department of Finance.

California’s unemployment rate was unchanged from November’s revised 5.8%, the state Employment Development Department said in its report.

That’s down significantly from 6.5% a year earlier but above the national rate of 5.4%.

In October, California employment soared by a net 42,400 jobs, the best showing in four years. Though no one expected that supercharged level of growth to continue, no one expected it to slump so much so quickly either -- particularly in a month when the nation’s net job gain was a respectable 157,000.

The California numbers “make no sense to me,” said Steve Levy, director and senior economist at the Center for Continuing Study of the California Economy in Palo Alto. “They don’t fit with the last several months, which showed a modest but growing recovery. You don’t have four or five good months and then out of the blue a terrible December.”

Levy’s expectation: “There will be revisions.”

An initially weak November job-gains number, which clocked in unexpectedly small at 8,700 when first reported, was itself revised upward Friday by nearly 10,000 jobs, to 18,300. Economists who contended a month ago that the employment picture was brighter than it looked were proved right.

Sectors that added jobs in December included construction, natural resources, financial activities and professional services. Three that lost jobs were government, trade and transportation, and leisure and hospitality.

Economist Meyers traced much of the month’s decline to two subcategories: motion pictures and retail. The first lost more than 10,000 jobs in December, reversing healthy increases of 7,000 in November and 11,000 in October.

Motion picture employment tends to move irregularly with the ebb and flow of new productions. Even with December’s decline, the month’s total was 2,000 above that of December 2003.

As for the retail sector, employers apparently reacted to weak post-Thanksgiving sales by putting off hiring, Meyers said. Eventually the sales improved, but the job situation never did.

The December decline was the third in 2004 and the biggest since March 2003, when the drop was 27,500.

The county with the lowest unemployment rate in December was Marin, at 2.4%. Colusa had the highest rate, 26%.

Ever since the Silicon Valley tech bust that began in 2001, California has struggled to keep pace with the nation’s economic growth.

That pattern continued last year. The U.S. added 2.2 million nonfarm jobs in 2004, while California added only 152,000. Based on its 11% share of the U.S. workforce, the state’s total should have been at least 70,000 more.

Christopher Thornberg, an economist at the UCLA Anderson School of Management, said the state’s survey was probably missing some job growth. The early years of an expansion often see the creation of many small firms, but these are typically missed in the state’s regular survey of 40,000 workplaces.

But Thornberg also worries that the Southland, which has been driving job growth in the state, is slowing down.

“In the Inland Empire, jobs have been flat for about three months,” he said. “In San Diego County, they’ve actually been declining.”

The picture will come into much sharper focus at the end of next month, when the Employment Development Department publishes not only the January jobs numbers but also revised numbers for the last year.

“I think we should be waiting for the January report with bated breath,” Thornberg said.