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California's Jobless Rate Slides to 7% in August

Economy: The good news extends to Los Angeles County, whose unemployment rate fell to 7.7% from 8.3% in July.


California's economic recovery speeded up last month, with the state gaining an ample 34,100 jobs and the unemployment rate sinking to 7% from a revised 7.2% in July.

August is the fifth consecutive month in which the jobless rate hit or maintained lows not seen in more than five years, meaning California is on a faster employment-growth track than the nation as a whole.

State officials also reported Friday that some of the good economic news applies to long-suffering Los Angeles County. Its unemployment rate fell in August to 7.7%--a 13-month low--from a revised 8.3% in July.

In another positive sign, recent evidence suggests that the quality of new jobs in California is improving. Instead of low-paying retailing and erratic temporary-help jobs, much of the new employment appears to be in generally higher-paying fields such as software and other business services, motion pictures and even manufacturing.

"At this stage in the business cycle, firms don't want to hire temps. They're confident enough that the expansion is for real," explained Ted Gibson, economist for the State Department of Finance.

Overall, Gibson said, "we continue to have a broad-based expansion in California. All the major industrial sectors participated" in the August job gains.

One of the few big California businesses remaining soft is home building. The market for California exports is also being tempered by the weakness of the state's trading partners in Europe, Japan and Mexico.

Until improvement comes on those fronts, "California is probably running as fast as it can," said David Hensley, regional economist with Salomon Bros. in New York,

Hensley, however, expects home building to improve next year and to nudge California's expansion along further. "Barring an unforeseen adverse development," such as a big national slowdown or a jump in long-term interest rates, "it's pretty clear sailing for California," he said.

Even the long-beleaguered aerospace industry--whose decline beginning in the late 1980s pulled California into its deep recession of the early 1990s--is making a slight recovery. It gained 300 jobs in August and is up 1,400 from February, when employment in the industry bottomed out at 163,400. That was down nearly 60% from the 1987 peak.

"The decline in aerospace is over. We're getting enough growth on the commercial side to offset the ongoing weakness in defense," Gibson said.

California's gains came in a month when the nation, as reported two weeks ago, saw its jobless rate fall to a seven-year low of 5.1%, from 5.4% in July, amid a gain of 250,000 jobs.

Along with adding proportionately more jobs than the nation as a whole, California's employment gain also outpaced its own average for the past year. Since August 1995, the state has added an average of 25,025 jobs a month.

By way of comparison, California added an average of 23,917 jobs a month last year and 24,175 jobs a month in vibrant 1989, the last year before the severe recession struck the state.

In coming months, analysts said, the state's jobless rate could be pushed up somewhat if too many new job hunters are drawn into the labor force by the improved economic news. Also, they said, part of this month's reported employment growth--an increase of 6,500 government jobs--probably stemmed from a faulty statistical adjustment that will nudge down the figures for September.

Los Angeles County, which has lagged the rest of the state, showed relatively modest improvement in August. Most of the new jobs came in business services, with the motion picture industry showing the next-biggest increase.

"Given what we have experienced, it [Friday's report] is positive. I don't think there's any question about that," said Vincent Canales, a labor market analyst for the California Employment Development Department. Still, Canales added, none of the county's major industries that were hammered in the recession has shown a buoyant recovery.

By way of contrast, economically vibrant Orange County saw its jobless rate fall to 4.2% in August, down from 4.5% in July. The improvement in the county's figures, which are highly volatile because of the small sampling of the population on which they are based, was attributed to a shrinkage in the labor force rather than further employment growth.

Unlike the jobless rates for California and Los Angeles County, the figures for Orange County and other localities in the state are not adjusted for seasonal trends.

Of other Southern California counties, only Ventura County showed a rise in unemployment, with the rate inching up to 8.1% in August from 8% in July.

Elsewhere in the region, San Diego County came in at 5.3%, down from 5.8% in July; San Bernardino, 7.4%, down from 8.1%; and Riverside, 9.2%, down from 9.8%.

The comparable unadjusted numbers for California last month put the jobless rate at 6.9%, down from 7.7% in July, and at 8.1% for Los Angeles County, down from 9.1% in July. The nation's unadjusted jobless rate was 5.1% in August, the same as the adjusted rate, and down from 5.6% in July.


Employment Gains

The state's unemployemnt rate reached yet another low in August, seasonally adjusted:

August: 7.0%

Source: California Employment Development Dept.

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