U.S. Economy, State Jobs Set a Sizzling Pace

Big job gains across a broad spectrum of California industries helped drive down the state unemployment rate sharply in January to 4.7%, a 30-year low, officials reported Friday.

Orange County unemployment remained well below the state average, despite rising slightly to 2.5% in January, up from a revised rate of 2.2% in December.

Economists attributed the local uptick to seasonal factors, rather than a change in the county’s tight job market. Nearly two-thirds of the county jobs lost occurred in retail trade, according to state figures.

“After Christmas, people get laid off,” said Anil Puri, chairman of Cal State Fullerton’s College of Business and Economics.

Friday’s report also included newly revised job growth figures for all of 1999. They showed Orange County employers added a net 46,000 nonfarm jobs last year, a robust 3.5% increase from 1998.

That momentum carried over into January, propelled by new jobs created in such varied industries as business services, private education and trucking.

The state’s decline in joblessness, from a revised rate of 5% in December, was the steepest one-month drop in unemployment in nearly five years. It dovetailed with a job gain of 42,300 in January, reflecting a third consecutive month of sizable increases in nonfarm employment. Unlike the Orange County figures, state numbers are seasonally adjusted.

“Employment growth is accelerating in the state quite dramatically,” said Ross DeVol, director of regional studies for the Milken Institute in Santa Monica.

Over the last 12 months, DeVol noted, California’s employment total grew by 3.1%, versus a 1.7% rise nationally.

The new employment report, he said, “shows the underlying structural change in the California economy. We’re not dominated by Fortune 500 companies, but predominantly high-growth companies and start-ups.”

Michael S. Bernick, director of the California Employment Development Department, agreed. “What’s striking,” he said, “is how broad-based the growth is, and that it’s not limited to one geographic sector of the state or one industry sector.”

With the exception of Los Angeles and Sacramento counties, Bernick pointed out, major urban areas throughout the state are posting unemployment rates of less than 3%.

Tom Lieser, executive director of the UCLA Anderson Business Forecast, said the momentum of the state’s recovery could reduce unemployment further in Los Angeles and in still-ailing areas in Central California.

But as joblessness falls ever lower, it is becoming harder for employers to find workers. That ultimately could slow economic growth, both in California and nationally.

L.A. County, which was ground zero for California’s economic collapse in the early 1990s, also showed improvement. Its jobless rate fell to 5.5% in January, from 5.7% in December, to its lowest level since July 1990.

The latest figures show that unemployment in California, which began its economic expansion after most of the rest of the nation, is drawing closer to the extremely low U.S. level. As previously reported, the U.S. jobless rate for January was 4%, or seven-tenths of a point below California’s. A year ago, the gap was 1.3%, with the U.S. jobless rate at 4.3% and the state at 5.6%.

That narrowing “is consistent with the fact that the state’s been adding jobs at a faster pace than the nation, and that’s pretty incredible because the nation’s economy is exceedingly strong,” said Lisa A. Grobar, director of the Cal State Long Beach Economic Forecast Project, which tracks the economy of the five-county Southern California region.

Statewide, the largest employment gains came in the service sector. Within that category, business services--including jobs in the computer and software industries, along with professions such as law and accounting--led the way. Other big gainers were engineering and management services and motion pictures.

Among other major employment categories, construction and government--mainly jobs in public school systems--also posted substantial gains.

One of the few signs of weakness came in manufacturing, which suffered a loss of 2,900 jobs in January. Analysts said, however, that California is faring better than the rest of the nation in retaining manufacturing jobs.

Bernick said that, for state policymakers, low unemployment is “a real window of opportunity to address long-standing unemployment issues, particularly providing greater employment opportunities for California workers with disabilities, moving welfare recipients into jobs and providing skills upgrading for California’s working poor.”

Along with its latest monthly estimates, the California Employment Development Department released its annual revision of state job totals. It showed that California added slightly fewer jobs last year than previously estimated.

Under the revised figures, the state gained 370,400 jobs in 1999, versus a previously estimated 401,800. Economists considered the overall revision minor, and said it did not alter their upbeat assessment of the statewide economic expansion.

The revisions showed most of Southern California growing slightly faster than previously reported, while the northern part of the state was expanding at a slightly slower pace than estimated earlier. L.A. County was the only Southern California county whose rate of job growth was revised down, to 1.6%.

Orange County, by contrast, posted job growth of 3.5% last year, and the combined Riverside-San Bernardino counties area was up 5.8%.

“It’s the outlying areas that are really generating the growth for Southern California,” Grobar said. “All of the outlying counties are growing faster than L.A., and it’s been that way for a number of years.”

The figures for California and L.A. County are adjusted to take seasonal trends into account.

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

O.C. Unemployment

The county’s jobless rate rose to 2.5% in January, considered a seasonal shift, not a fundamental change in the job market.

June 1999: 3/1%

January 2000: 2.5%

Source: Employment Development Department