Employment Worries Still Not Worked Out

Economists still see some ominous signs in the job sector, despite the state’s report last week that employment growth in Orange County spiked up last month after trending down all year.

The county started the year with a bang, as annual job growth hit about 5%. But growth slowly retreated to the mid-3% range during the summer. Then in August, the county recorded a surprising 4% jump in the number of people working, and the unemployment rate remained at a minuscule 3.1%.

The biggest factor contributing to the strong showing in August was the construction sector, which is on a roll thanks to continued low interest rates and pent-up demand for housing. Construction employment in the county in August was up nearly 11% from a year earlier, to 66,000. Also helped by favorable interest rates was the finance, insurance and real estate sector, which had been hammered previously because of the banking industry consolidation.

Low interest rates are “helping us stay above the water,” said Esmael Adibi, director of Chapman University’s Anderson Center for Economic Research.

Wholesale trade showed strong job growth last month due to an influx of imports. Transportation also registered a big gain from a year ago, when the United Parcel Service strike kept employment levels low.

But the sickly economies in Asia, Latin America and even Russia are still threatening job formation here, Adibi said. Manufacturers are most vulnerable to a sluggish export market, but the service industry is also at risk, he said.

“What would continue to help us offset some of that weakness is the lower interest rates and--this is a big question mark--the domestic economy and consumer spending,” he said. If consumer spending declines because of eroding confidence in the economy and personal finances, “we’ll be seeing much smaller job growth through the rest of 1998 and 1999.”