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State Jobless Rate Hits 4-Year Low of 7.3%

March 11, 1995|STUART SILVERSTEIN | TIMES STAFF WRITER

Providing a potent sign of a reviving economy, California employers added a record 82,500 workers to their payrolls in February and the state's jobless rate tumbled to a four-year low of 7.3%, down from 8.2% the month before, the government reported Friday.

The gains in California dovetailed with a strong showing nationally and marked a rebound from a weak job report in January, when bad weather sapped job growth. With new hiring boosting employment by 318,000, the U.S. unemployment rate declined to 5.4% last month, down from 5.7% in January and back to the 4 1/2-year low where it stood in December.

Los Angeles County, which initially was slow to join the state's economic recovery, also showed improvement. The county's volatile jobless rate--which, unlike the state and U.S. figures, is not adjusted for seasonal trends--dropped to 7.9%, from 8.9% in January.

In Orange County, the unemployment rate for January, the latest month for which figures are available, was 5.4%, up from December's 4.2%. The county's report for February is due out late this month.

Wall Street investors, frightened early this week by a flagging U.S. dollar, were buoyed by the indications of continuing solid growth with little inflation that emerged in the employment report. The Dow Jones industrial average climbed 52.22 points to close at a record 4,035.61.

And Friday's sanguine jobs report helped boost the value of the U.S. dollar, which has been driven to historic lows against the Japanese yen and German mark.

Economists were divided over whether the latest figures would prod the Federal Reserve Board, which already has increased short-term interest rates seven times since February, 1994, to boost them once again.

Some experts said Friday's report demonstrated that the Fed has been successful in subduing inflation without stifling economic growth and that it should leave interest rates alone. But others warned that the jobless numbers may reflect an economy that is still growing too fast to keep inflation under control--a signal that the Fed still might hike rates further.

At the White House, President Clinton said the latest figures underscore the success of his Administration's economic policies. "We have the lowest combined rates of unemployment and inflation in 25 years," he told reporters. "The fundamentals of this economy overall are healthier than they have been in a generation."

Some analysts continued to express concern about the quality of the new jobs produced by the U.S. economy.

"If you look at the categories that grew most rapidly, most of them tend to be the ones with lots of low-paying jobs," said Dean Baker, an economist with the Economic Policy Institute, a labor-supported think tank

Baker noted that two of the biggest job gainers were the retailing and temporary help categories. He added that the flat earnings in February, while comforting for inflation-wary investors, is discouraging news for workers hoping to receive pay increases.

At the same time, Baker was heartened by job gains in two relatively high-paying categories--durable goods manufacturing and government. He also noted that a relatively high 10.8% of the workers who were unemployed in February had left their jobs voluntarily. In Baker's view, that signals that larger numbers of workers who are unhappy in their jobs are now willing to quit and look for something they consider better.

"It's an indication that people are feeling more comfortable about the job market," he said.

California's job gains in February, analysts said, showed that the loss of 47,300 jobs reported for January was an aberration. By itself, the February gain of 82,500 jobs was the highest since the state started tracking employment statistics in their current form in 1989.

And even coupled with the job losses in January, the 35,200 gain in employment during the first two months of 1995 reflects faster growth than last year. Over the past 12 months, the state's job growth has averaged just over 12,000.

"The overall picture we're getting is that we're in a recovery, but the recovery is very modest," said Gary Schlossberg, an economist with Wells Fargo Bank in San Francisco.

But Ted Gibson, economist for the California Department of Finance, said the figures suggest that the state's recovery is spreading from one industry to another. "What I'm happiest about is that even manufacturing, despite ongoing cuts in aerospace, is improving" in comparison to a year ago, he said.

Meanwhile, California's jobless rate--based on a separate employment survey--was the lowest it has been since February, 1991, when it rested at 7.2%.

California's unemployment rate, all the same, remained the highest among the 11 big states whose figures were released Friday. California was followed by New Jersey and New York, which both posted jobless rates of 6.1%.

The drop in Los Angeles County's jobless rate broke a three-month string of increases, and returned the unemployment level close to where it stood in October, at 7.8%. Still, Vincent M. Canales, labor market analyst for the California Employment Development Department, discounted the notion that Los Angeles' recovery is beginning to outpace--or even match--that of the rest of the state.

* BROAD RALLY: Jobs report sparks rise in stocks, bonds, dollar. D1

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