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State's Unemployment Now Lowest in 7 Years

Economy: The California rebound gathers more steam as the jobless rate falls to 6.5% in April. Broad-based growth could add 400,000 jobs this year alone.


California's job market continued on a roll in April, as the unemployment rate fell to 6.5%, its lowest level in more than seven years.

The state has now added more than 1 million jobs since the end of the recession four years ago and is on a pace to add more than 400,000 new jobs this year alone, according to Friday's report by the state Employment Development Department.

"That's a big deal," said Stephen Levy, director of the Center for Continuing Study of the California Economy in Palo Alto.

The last time 400,000 jobs were created in California in a single year was in 1988--near the height of the boom years and just before the economy began to sour. With the economic rebound now gaining speed, the number of new jobs created in February through April of this year alone was about equal to the total number of new jobs created in all of 1994.

"California's economy is in the midst of a strong expansion," Gov. Pete Wilson said in a statement accompanying Friday's report. "Manufacturing, services, finance, insurance and real estate, and retail trade all gained jobs last month."

The 6.5% unemployment rate was down from a revised 6.6% in March and from 7.4% in April 1996. Last month's rate was the lowest for the state since October 1990.

While Los Angeles County's jobless rate remained a relatively high 7.3% last month, continued growth in entertainment-related jobs helped push the rate down from March's revised 7.4% and from 8.4% in April 1996.

One of the stars in the state's comeback is Orange County, where 39,000 jobs have been added since April 1996. At a tiny 3.1%, the county's unemployment rate was higher only than the jobless rates of Marin and San Mateo counties and equal to that of booming Silicon Valley.

While California's unemployment rate overall is still well above the 4.9% rate for the nation, the gap is closing. At the current pace of job growth, the statewide unemployment rate could sink to 6% by the end of the year, Levy said.

Every additional job over 300,000 outpaces the growth of the labor force, cutting directly into the unemployment rate, he said. The benefits to state and local governments could be significant as chronically unemployed people return to the labor market, Levy said. If the job growth continues, it could help welfare recipients move back into the work force, he said.

"We've come a long way" since the recession, said Tom Leiser, associate director of UCLA's Business Forecasting Project. "If the nation continues to do well, California should continue to outgrow it."

Economists were most encouraged by April's 10.5% jump in the level of construction industry employment from a year earlier. The growth was centered largely on nonresidential construction--which means that businesses are building new facilities, said Bruce Smith, an economist at the state Department of Finance.

"That bodes very well for future job growth," he said.

More construction would also provide a boost to the economy because of the increased demand for materials and related services, said Steve Cochrane, senior economist at Regional Financial Associates in West Chester, Pa.

The number of jobs in the manufacturing sector also continued to rise last month, increasing 2.5% from a year ago to 1.89 million, despite fears that a slowdown in the semiconductor industry might dampen growth. Friday's report showed that demand for computers, electronic equipment and other export-oriented goods remains a solid contributor to the state's growing job base.

"If you look at the fact that we added over 5,000 manufacturing jobs in April alone, while the same month the nation loses over 14,000 manufacturing jobs, that doesn't hurt our feelings at all," said Smith.

The service sector also chugged along, reaching 4.05 million jobs, a 4.5% year-to-year increase. The growth was spread among high-paid fields in technology businesses and lower-wage jobs in tourism.

Even the finance sector posted a slight gain in employment, 0.5%, to 735,000 jobs, despite the ongoing consolidation of banks and other financial institutions. Economists said that could be due to more jobs being created at stock brokerages and in the real estate industry.

"The whole picture of the California economy is that it is fairly well in balance," said Cochrane. "You've got every single major category expanding."

Esmael Adibi, director of Chapman University's Anderson Center for Economic Research, said that for the last few years Northern California's strong growth has been carrying the state--and offsetting the spotty economic performance of the south. But that might be turning around, he said.

"I believe that Southern California is regaining momentum," he said, although he added that "it's a catch-up game."

The biggest drag on the state economy has been Los Angeles County, which has suffered deep wounds from aerospace, retail and financial services cutbacks.

While Los Angeles County recorded slight year-to-year gains in manufacturing and service industries, the county's biggest boost last month came from a 7% jump in motion picture industry employment.

Other regions of Southern California saw their unemployment rates decline last month. In the Riverside-San Bernardino area, the rate fell to 6.4% from 6.5% in March. Ventura County's rate was 5.5%, down from 5.6%, and in San Diego it fell to 6.4% from 6.5%. Those figures are not seasonally adjusted.


Fewer Jobless

Both California and Los Angeles County's unemployment rates fell last month, although Los Angeles' rate remains relatively high, especially compared with neighbor Orange County's tiny 3.1% rate.



* Source: Labor Department.

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