Job data stir fears of state recession

SACRAMENTO —  California’s employers added only a net 900 new jobs to total nonfarm payrolls last month, increasing some economists’ concerns that the weak housing market and mortgage crisis could push the state into a recession.

Monthly figures released Friday by the California Employment Development Department showed that the state’s unemployment rate held steady for the third straight month at 5.6% but was up markedly over the 4.7% reported in November 2006.

“I’m very confident that, unfortunately, we are moving toward recession and aggregate job loss,” said Esmael Adibi, an economist who directs the Anderson Center at Chapman University in Orange. Adibi, who defines a recession at the state level as two consecutive quarters with negative job growth, said he expected the downturn to happen next year.

Most other economists around the state are still reluctant to predict recession. But they agree that sharp declines in the rate of job creation portend trouble in 2008.

Total seasonally adjusted nonfarm employment grew by just 0.6% in November from a year earlier, according to the Economic Development Department. Employment in construction fell 3.8%, and the financial sector saw a 1.9% drop.

In November, the state lost a net 13,000 jobs in the construction, financial activities, manufacturing, trade, transportation, utilities and government sectors. It gained 13,900 jobs in natural resources and mining, information, professional and business services, educational and health services, and leisure and hospitality.

“We are on recession watch right now,” said Jack Kyser, chief economist for the Los Angeles County Economic Development Corp.

Kyser said he was particularly concerned about Orange County, which he said was the only major economic area of California suffering from a year-over-year decline in jobs -- 8.2% -- mainly because of the soft housing market and the meltdown in real-estate-related financial businesses.

Los Angeles County is faring a little better, with job growth still slightly in positive territory at 0.7% in November compared with November 2006, Kyser said. Surprisingly, he noted that movie and television production employment in November rose by 1,100 jobs from October as studios rushed to finish production before the effects of the current writers strike could be fully felt.

The labor dispute will probably affect the December figures, Kyser said.

The continuing economic slowdown, combined with a report that taxable sales declined in the third quarter and steady accounts of falling home prices and property tax revenues, “will increase pressure on state and local [government] budgets this year and next,” warned Stephen Levy, director and chief economist at the Center for the Continuing Study of the California Economy in Palo Alto.

The warning came just minutes before Gov. Arnold Schwarzenegger said Friday that he would call the Legislature into special session Jan. 10 to deal with a “fiscal emergency.” The state faces at least a $3.3-billion shortfall in the current year’s spending plan and must fill a $14-billion hole in the budget that takes effect July 1.

Schwarzenegger has called for a 10% across-the-board cut in government spending for the next fiscal year, which could bring a halt to this year’s modest growth in government employment.

Such a downturn could increase pessimism among workers about the job market. On Friday, Spherion Corp., a Los Angeles recruiting firm, released its monthly survey of employee confidence.

The California employee confidence index found that 54% of workers asked believed the economy was weakening, a jump of 11 percentage points from October.

Sixty-seven percent said they were unlikely to look for a new job, a 20-percentage-point increase from the previous month.

Such a cautious outlook is in line with a report released by the UCLA Anderson Forecast this month.

“We see substantial weakness in real estate and employment growth below 1% through 2009,” said Ryan Ratcliff, the forecast’s head economist. “It will be pretty slow in 2008 and better in 2009.”

marc.lifsher@latimes.com