Job Creation in California Soars During August

Times Staff Writer

California employers leaped out of their hiring funk in August, adding a net 36,900 payroll jobs in a sign that the state’s economy may be getting a second wind amid a slumping housing market.

The seasonally adjusted gain was the largest in a year and followed a revised increase of only 6,600 jobs in July and 18,600 in June, the Employment Development Department said Friday. Job gains were widespread, with only one sector, construction, posting job losses, reflecting the softening of the once-sizzling real estate sector.

The unemployment rate, however, rose to 4.9% from 4.8% in July as the number of people without a job also increased, by 9,000, the department said.

Even with a strong August, the pace of job creation in California during the current expansion has lagged behind that of previous growth periods, and the latest report doesn’t change that trend, said Ryan Ratcliff, an economist at UCLA Anderson Forecast. Hiring in the next year will continue to slow from this year’s and 2005’s pace as the real estate slowdown takes a toll, he said.


But the recent tumble in energy prices could boost consumer confidence and possibly help lead to a “soft landing” of sustainable growth without recession, some analysts say.

“This report is consistent with a soft landing,” said Howard Roth, chief economist with the state Department of Finance. Because of the severity of the housing slowdown, which has prompted home builders to scale back construction amid tumbling sales and rising cancellations, “we’re going to be losing construction jobs for the rest of this year and most of next year at least,” Roth said. “We can withstand that without having a recession.”

Helping to offset job losses from construction is strong international commerce, which has boosted employment in trade and transportation. And expensive gasoline and higher airline fares are prompting many Californians to vacation closer to home, lifting the state’s tourism sector.

Ten of the 11 sectors tracked by the state posted increases in August, led by government with a boost of 10,300 jobs. Professional and business services added 7,900, information rose 5,900, educational and health services gained 5,900, and leisure and hospitality grew by 4,100. Construction lost 3,800 positions.


“Employers seem more confident, and all markets are showing signs of job growth,” said Lauren Steel, a vice president with job placement firm Spherion Corp. However, the company’s California employee confidence index fell slightly in August as fewer workers reported optimism in job availability and their employers’ futures.

August’s employment gain was the best since a jump of 42,600 jobs in August 2005. For the first time in the state’s history, total nonfarm payroll employment exceeded 15 million, totaling 15,026,300 last month, the Employment Development Department said.

Gov. Arnold Schwarzenegger, who normally doesn’t issue statements on monthly job figures but now is campaigning for reelection, was quick to take credit for the latest increase.

“This is terrific news for all Californians and the country,” he said in a statement, noting that the state has added 600,000 jobs since he took office nearly three years ago. “We have created a positive business climate.”


Schwarzenegger’s Democratic opponent, state Treasurer Phil Angelides, also doesn’t usually issue statements on the monthly numbers but seized on the rise in the jobless rate and the subpar job growth of the current expansion to criticize the incumbent’s economic policies.

“During the second half of the 1990s, California outperformed the nation in job growth,” Angelides said in a statement, adding that if elected, he “will provide tax relief for small businesses and middle-class families in order to create new jobs and return California to the road to prosperity.”

The jobless rate, which is based on a separate survey of households, includes the self-employed and others not officially on company payrolls and thus picks up some of the “underground” economy that is so prominent in California. It showed a decline of 133,000 jobs in August.

The household survey often differs substantially from the payroll survey that is used to calculate the headline job-creation number. Economists generally regard the household survey as less reliable partly because it is based on a smaller sample.


The seasonally adjusted unemployment rate in Los Angeles County rose to 4.8% from 4.6% in July. Orange County continued to enjoy the Southland’s lowest jobless rate, down to 3.6% from 3.8% in July.

Among other Southland counties, San Diego’s jobless rate fell to 4.1% from 4.3%, Ventura’s dropped to 4.6% from 4.7% and San Bernardino-Riverside’s declined to 4.9% from 5.2%. The rates for all counties except Los Angeles are not seasonally adjusted.