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February Job Statistics Show Gains for California and U.S. as a Whole : Economy: The state had 9,500 more people working last month, and its unemployment rate fell to 9% from 10.1%.

March 05, 1994|ROBERT A. ROSENBLATT and STUART SILVERSTEIN | TIMES STAFF WRITERS

WASHINGTON — In a sign that California may be pulling out of its long and punishing recession, the federal government reported Friday that the state gained 9,500 jobs last month and its unemployment rate fell to 9%, down from 10.1% in January.

The state's improvement accompanied a strong performance nationally that cut the U.S. unemployment rate to 6.5%, from 6.7% the month before, and added 217,000 jobs to employer payrolls.

While economists downplayed the significance of the declines in the unemployment rates--particularly the often-volatile state and local figures--they were heartened by the signs of job growth.

"We were seeing the job total go down month after month, and now it seems to be leveling off," in the state, said Ted Gibson, principal economist for the California Department of Finance in Sacramento. "There are grounds for encouragement here, especially since February should have had the most negative effects from the earthquake."

"The preliminary sense is . . . we (in California) may be out of recession and that it is happening six months sooner than we had expected back in December," said Larry Kimbell, director of the UCLA Business Forecasting Project.

Kimbell said he now expects California to enjoy modest gains in employment this year, reversing a severe decline since mid-1990 that, by some estimates, cost the state more than 800,000 jobs.

The jobless report for Los Angeles County was also encouraging, with unemployment dipping to 9.7%, down from 11% a month earlier.

December's unemployment rate for Orange County--the most recent figure available--was 5.3%, down from 5.6% in November. The monthly rates for the state's counties normally are issued at the end of following month, but January's figures have been delayed until next week because of revisions in the method for computing the number of unemployed people and the number of jobs on local payrolls.

Analysts cautioned that state and local jobless rates swing widely because they are drawn from relatively small numbers of household interviews. In addition, federal officials said some of the recent fluctuations may stem from new information-gathering techniques they adopted this year. Consequently, economists focused on the government's separate survey of employer payrolls, which showed the gain of 9,500 jobs in California and 217,000 nationally.

Last month's employment increase nationally marked a sharp improvement from frigid January, when weather-related problems led to a 2,000-job decline.

But the increase in jobs in February, which outstripped the pace of employment growth for 1993, came even though "the impact of this winter's severe weather was still apparent in several industries," Katherine G. Abraham, U.S. commissioner of labor statistics, told a hearing of Congress' Joint Economic Committee.

Construction, retailing and restaurants all were hampered as bad weather kept workers and consumers at home, she said.

The general business outlook for the United States appears strong, with the Commerce Department reporting Friday that the government's main forecasting gauge rose 0.3% in January, the sixth straight monthly increase.

The gauge, known as the index of leading indicators, includes measures such as industrial orders and points to the overall economy's likely performance in the next four to six months.

Economists said the rebounding national economy may be starting to pull California along with it. At the same time, they said, the job losses from earthquake-related business closings in February were less than anticipated.

In addition, analysts said they expect Southern California to enjoy a major pickup in construction in coming months as rebuilding efforts get into full swing.

"It's already in the bank that this will be a good year for construction," Kimbell said.

Nationwide, job creation has averaged 146,000 a month during the first 13 months of the Clinton Administration, keeping on schedule with the White House's goal of generating 8 million jobs during the President's term.

Still, the production of new jobs remains modest compared with the growth in the output of goods and services: The economy expanded at an annual rate of 7.5% during the final quarter of last year. This was not accompanied by a vast expansion of jobs because many companies are benefiting from productivity improvements or are choosing to increase overtime hours rather than hire additional workers.

"The easiest thing to do is to pay overtime to your current labor force," said Rep. Christopher Cox (R-Newport Beach), a member of the Joint Economic Committee. "Hiring a new worker means a large fixed overhead with significant fringe benefit costs."

While the average workweek in manufacturing, which had been running at near-record levels, dropped last month, the decline was attributed to bad weather by Laura D'Andrea Tyson, the head of the President's Council of Economic Advisers.

Tyson also offered reassuring words for investors worried about erratic bond prices and uncertain financial markets. Inflation won't be a menace, she insisted.

"When we look at the fundamentals, we remain absolutely comfortable with the forecast we have out there in terms of (economic) growth in the range of 3% this year and inflation in the range of 3% this year," she said. "That is our forecast, and we remain totally comfortable with it."

February was the second month in which the government has used its new survey for measuring unemployment, including a more accurate count of women in the work force.

Under the old system, the jobless rate would have been calculated at 6.4% in December, 6.3% in January and 6.4% last month. Under the new system, the figures were 7% in December, 6.7% rate in January and 6.5% last month.

Rosenblatt reported from Washington and Silverstein from Los Angeles. Times staff writer John O'Dell contributed to this report.

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