California's unemployment rate dipped to 6% last month and job losses slowed significantly, signs that the state's hiring picture, while still weak, may be stabilizing after several months of heavy losses.
The decline in the jobless rate, from a revised 6.1% in November, was due in part to the thousands of state residents who have stopped looking for work and thus are no longer are counted in the unemployment figures. California lost 600 jobs in December, capping the worst year for the state's job market since 1992.
Still, economists said December's modest decline was an encouraging sign after several months of heavy losses. In November alone, the state lost 51,200 nonfarm payroll jobs. And it has shed nearly 88,000 since September.
"The job losses appear to be stabilizing," said Brad Williams, senior economist with the California legislative analyst's office. "But we've got some negative [factors] that have persisted and are still with us."
While the deepest losses may have tapered, Williams and others said they are hard-pressed to identify any sectors of the state's economy likely to post significant employment gains over the next few months. Key sectors such as high technology and manufacturing continue to lag, while government and some services are expanding only slightly.
"The state is still in recession," said Steven G. Cochrane, who tracks the California economy as chief regional economist for West Chester, Pa.-based Economy.com "There's no real job growth. The technology economy still seems to be constricting. The service sector is not expanding, and there'll be less and less help from government spending as the state tries to reel in its budget deficit."
December's losses come amid other signs of a weakened economy. For example, the state reported that revenue from Californians' withholding taxes in December fell 4.3% from the same month a year earlier to $2.32 billion. Over the second half of the year, withholding tax revenue was down 5.8% to $12.92 billion.
As reported a week ago, the national economy lost 124,000 jobs in December. While that boosted the nation's unemployment rate to an almost seven-year high of 5.8%, the losses represented a slowdown from the fierce pace of layoffs in the months immediately after the terrorist attacks.
California's latest numbers mirror that trend, with Southern California continuing to be the bright spot on the state's employment scene. Los Angeles County's jobless rate edged down to 6.1% in December from a revised 6.2% in November. Orange County's unemployment dropped to 3.2% on a non-seasonally adjusted basis, from a revised 3.6% the month before. San Diego County showed a similar drop to 3.3% in December from 3.6% in November.
Unemployment likewise dipped in some hard-hit Bay Area counties, suggesting that the worst of the wrenching technology downturn may be over. But economists said the latest jobs report shows that the Southland, with its vast, diverse economy, continues to weather the storm better than its northern neighbor.
"The southern part of the state is still quite strong," said Mark Schniepp, director of the California Economic Forecast Project in Santa Barbara. "It's one of the best places in the nation to be right now in terms of strength of the economy."
However, experts say Los Angeles County is proving to be the region's weakest link. While the county's jobless rate inched down last month, it is up sharply from the early part of the year, when it fell to a low of 4.7% in February. Lisa Grobar, an economics professor and director of the Cal State Long Beach Economic Forecast Project, said the county's suffering manufacturing and export sectors will continue to be a drag on employment.
"Those are areas of real weakness," Grobar said. "L.A. County is going to struggle in 2002."
Indeed, the manufacturing sector, which tumbled into recession six months before the rest of the economy, is still clawing its way out. California's factory employment fell by another 3,600 jobs in December, bringing total losses for 2001 to 92,700, a 4.7% decline.
December likewise saw job losses in transportation and public utilities, which declined by 4,000 jobs, while wholesale trade shed 2,800 jobs. Certain segments of the service industry also posted losses. Those included hotels, which dropped another 2,500 jobs, and business services, a catch-all category that covers everything from computer professionals to temporary agency help.
Sectors posting job gains included government, whose payrolls increased by 4,200 workers. The construction trades added 2,600 jobs and retailers added 1,800 positions.
But economists don't see these sectors as huge drivers of job growth. Declining tax revenue has put state, local and federal governments in a budget bind. Retailers typically hire temporary workers during the holiday rush.