California adds jobs, but unemployment rate rises to 8.9%

California’s employers created 29,100 net jobs in August, but the unemployment rate edged up for the second month in a row, climbing to 8.9% from 8.7% the month before, the state’s Employment Development Department reported Friday.

The jobless rate has climbed nearly half a percentage point since June even as employers have added nearly 57,000 jobs to their payrolls during that time.

Friday’s data painted a tepid picture of the Golden State’s economy, which has hit a soft patch during the summer months, economists said. The labor force has declined by 65,000 people since June.


“The labor market appears to be going sideways,” said Robert Kleinhenz, chief economist at Los Angeles County Economic Development Corp. “We see a month of improvement and maybe a month of retrenchment, and that’s a discouraging story to report.”

Earlier this year, California was outpacing the nation’s rate of job creation, with payroll growth hovering around 2%. But since August 2012, the state has added 223,900 jobs for a growth rate of 1.5%.

“Here we are in the middle of the year ... and the economy has shifted down to second gear,” Kleinhenz said.

Still, the payroll numbers show California has continued adding jobs. Those numbers are derived from a separate survey than the unemployment rate and are considered more reliable because the payroll survey takes in a larger sample of businesses and fluctuates less from month to month.

California’s net increase of 29,100 jobs in August was spread across nine of 11 sectors.

The most jobs were added in the construction industry, which expanded by 7,700 positions last month. The sector is still thousands of jobs below its pre-recession peak, when contractors were throwing up new homes at a breakneck pace.

The housing recovery has lent a huge assist as demand for multi-unit housing continues propelling economic growth. That has led to construction posting the fastest growth rate — 5% — of all sectors. It has added 29,100 jobs since August 2012.

The professional and business services sector, which includes occupations such as lawyers, accountants and engineers, added 6,300 jobs last month. Educational and health services added 4,300 jobs; leisure and hospitality grew by 3,000 jobs.

Reflecting muted expectations by retailers for the holiday shopping season, retail and wholesale trade declined by a combined 5,000 jobs in August.

In its latest monthly review, the National Retail Federation said consumer spending has grown only modestly through the recovery.

“It is impossible to generate stronger economic growth in a consumer-based economy if personal income gains remain weak,” according to the federation’s September report written by its chief economist, Jack Kleinhenz.

The sluggishness of the labor market has frustrated 42-year-old Melvina White, a former medical assistant who has been out of work since 2009.

In recent months, she has broadened her job search outside the medical field to include jobs in retail and fast food. But with such a large gap in her work history, employers haven’t given her applications more than a cursory glance, she said.

“At this point, I’m looking for anything,” White said.

These days, she’s living with an aunt in Los Angeles and relies on public transit to get around the city. Going back to school to beef up her skills is tough without a job to cover costs, she said.

“From my perspective, it’s getting worse,” White said. “At this point, I’m getting ready to leave California.”

Friday’s jobs report comes on the heels of the surprise decision this week by the Federal Reserve to keep its monetary policy in place. Despite an improvement in the U.S. unemployment rate, Fed policymakers said Wednesday that the economy is still not strong enough to handle a reduction in a key stimulus program.

The Fed also downgraded its forecast for economic growth. Policymakers now expect 2013 growth to be between 2% and 2.3% — down from the June forecast of 2.3% to 2.6%.

The U.S. economy faces the threat of a federal government shutdown as well: House Republicans approved a spending bill Friday that would defund President Obama’s healthcare law, setting up a showdown with the Democratic-controlled Senate. If the impasse isn’t resolved in the next few weeks, it risks causing the first government shutdown in two decades. That could throw a wrench into job growth later this year, economists said.

Barring a government shutdown and any unexpected calamity, California’s job growth is expected to pick up later this year as government tax revenue recovers and Europe’s economy improves. Those factors should offset the decline in government jobs and boost manufacturing and trade, said Esmael Adibi, director of Chapman University’s A. Gary Anderson Center for Economic Research.

Southern California counties all notched job gains last month, helping push down local unemployment rates in most counties.

Los Angeles County payrolls added 6,500 jobs, but the county’s seasonally adjusted unemployment rate rose to 10.1% from 9.9% the month before, partly because its labor force grew by 12,000.

Orange County added 2,400 jobs last month, pushing down its unemployment rate to 6.2% from 6.5% the month before. San Diego County added nearly 3,000 jobs, and its unemployment rate declined to 7.4% last month from 7.8% in July.

The Inland Empire, which includes Riverside and San Bernardino counties, added 14,100 jobs. Its unemployment rate dropped to 10.4% last month from 11% in July.

Twitter: @rljourno