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California's Jobless Rate Dips to 6.9%, Lowest in 6 Years

Economy: Los Angeles County's figure is 7.6% in October. Employment expansion in the county appears to be smaller than thought.


Reflecting the steady momentum of the state's economic recovery, California's unemployment rate edged down to 6.9% last month, the first time joblessness has been below 7% in nearly six years.

The decline in the unemployment rate, from a revised 7.1% in October, came in a month when the state showed a solid, if unspectacular, job increase totaling 25,700.

All told, the figures show California is enjoying faster employment growth than the rest of the nation, even as its jobless rate remains far higher than the U.S. level. Two weeks ago, the government reported that the U.S. jobless rate held steady at 5.2% in October, while employers added 210,000 jobs nationally to their payrolls.

"We're in the process of closing the gap with the U.S., and we could see some continued improvement in California even if the national economy slows," said Tom Lieser, associate director of the UCLA Business Forecasting Project.

Lieser and other analysts said strength in international trade, manufacturing, entertainment and software is propelling the state's economy.

But in Los Angeles County, the news was far less encouraging. The county's jobless rate was 7.6%, the same as the revised figure for September, although down from 8% in October 1995.

What's more, the employment expansion in the county since January 1995 now appears to be far smaller than previously estimated, said Vincent Canales, labor market analyst for the California Employment Development Department.

The discovery of what might turn out to be a significant over-counting of jobs in Los Angeles County came amid the reanalysis of employment data undertaken by state officials every year.

To fine-tune the job estimates they produce every month, state officials once a year take a comprehensive look at payroll tax records. The evaluation takes several months and normally is completed in February.

Canales said the preliminary indication, however, is that Los Angeles County's employment growth during 1995 and '96 has been well under 1%, versus previous estimates of more than 2%. As a result, more than half of the nearly 93,000 jobs that were believed to have been added in the last 12 months may be illusory.

In Los Angeles County, Canales said, "I don't want to sound like it's all doom and gloom, but it seems to be flat. There isn't much strength."

However, he added that the job market "hasn't been getting worse, and that's significant."

Other economists offered conflicting assessments of the health of the county's job market.

Jack Kyser, chief economist of the Economic Development Corp. of Los Angeles County, took a relatively optimistic view. He said the statistics for the county may be missing substantial job growth in the entertainment industry and at small firms.

Kyser also was encouraged by recently reported job gains in the aerospace industry, whose dramatic decline plunged the county and the rest of the state into a deep recession in the early 1990s.

But Ted Gibson, principal economist for the state Department of Finance, countered that Los Angeles County "is still recovering, but it's not doing as well as we had thought and hoped."

"The story we had been telling was that the recovery had been evening out across the state," Gibson said. The most recent information, he said, "does cast it in a different light."

For the state as a whole, the latest employment estimates and tax figures all show that employment growth is continuing at a solid 2.5%, Gibson said. He speculated that although the state was overestimating job growth in Los Angeles County, it probably was underestimating the gains in Orange, Riverside and Ventura counties, along with the Bay Area.

Statewide, last month nearly half of the 25,700 reported new jobs came in the government category. Analysts believed the rise reflected the widespread hiring of new teachers as part of the statewide drive to reduce class sizes for children in kindergarten through third grade.

Six of the other eight employment categories posted slight increases, while small declines came in the wholesale trade and mining industries.

The state's unemployment rate was the lowest since December 1990, when the level also was 6.9%.

In Orange County, one of the stars of the state's economic recovery, the jobless rate fell to 3.8% in October, down from 4.2% in September. That was the county's lowest jobless rate since August 1990, when unemployment also was 3.8%. Orange County's figures, unlike those for Los Angeles County and the state, are not adjusted for seasonal trends.

The unadjusted jobless rates fell in all of the other Southern California counties too, as follows: San Diego, 4.8%, down from 5.4% in September; Riverside, 8.3%, down from 9.1%; San Bernardino, 6.6%, down from 7.2%; Ventura, 6.9%, down from 8.2%.


California Unemployment

The jobless rate fell to 6.9% in October, the first time it has been below 7% in nearly six years. Percentage of unemployed workers:

Oct 1996: 6.9%

* Source: Labor Department.

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