State job growth slows to a crawl in June

Times Staff Writer

Dragged down by the real estate slump, California’s employment engine ground to a near standstill in June with a net gain of 400 positions, state figures released Friday showed.

By comparison, the state added 16,200 jobs in May and 4,800 in April.

As expected, financial activities and construction were the biggest losers among six sectors that posted employment declines in June, according to the state Employment Development Department report.


Reflecting layoffs by troubled sub-prime mortgage lenders and the big chill in home building, the financial activities sector lost 5,700 jobs, while construction shrank by 5,300. By comparison, the four other declining sectors lost a total of 5,900 jobs.

“Slowing state job growth has been primarily caused by the slowdown in residential building and resale activity,” said Stephen Levy, senior economist for the Center for the Continuing Study of the California Economy. “A continuation of the slowing will cause problems for this year’s and next year’s state budget.”

Unemployment ticked up by 0.2% in the Inland Empire and by 0.4% in San Diego, where home construction has slowed, said Steve Cochrane, an economist with West Chester, Pa.-based Moody’s, a consulting and forecasting firm.

The Central Valley may be the next major area to be hit by problems tied to sub-prime mortgage delinquencies, Cochrane added.

Overall, California’s unemployment rate held steady at 5.2%. By comparison, the state jobless rate was 4.9% in June 2006, and the U.S. rate was 4.5% last month, unchanged from May.

A steady unemployment rate means the number of jobs is growing at about the same pace as the number of people seeking them.

The state has matched the national job growth rate for the last year, Levy said, although unemployment has risen here but not in the nation because the state labor force has grown by nearly 300,000.

Since June 2006, the state’s employers have added 204,700 jobs, an increase of 1.4%, for a total last month of 15.3 million.

Sectors gaining jobs last month were led again by the educational and health services category at 8,600. Government employers added 4,600 jobs, while the leisure and hospitality sector hired 3,300 workers. Other services added 600 jobs, and professional and business services added 200.

Some of the slack in the housing market is being taken up by continued construction activity in the commercial real estate market and by motion picture and film production, said Jack Kyser, chief economist for the Los Angeles Economic Development Corp.

Movie studios “are rushing to get productions done” ahead of possible labor-related disruptions related to contract negotiations with screen writers, actors and directors late this year and early next, he said.


Staff writer Marc Lifsher in Sacramento contributed to this report.