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State's Job Losses Worsen

Payroll drop last month diverges from upbeat U.S. data but may be a statistical quirk. The jobless rate falls as many quit looking for work.

October 11, 2003|Marla Dickerson | Times Staff Writer

California's job market swooned in September, posting its biggest monthly loss this year and sending payrolls to their lowest level since employment began its long slide 2 1/2 years ago, a government report said Friday.

Employers axed a net 16,600 positions last month, according to the state Employment Development Department. In addition, the agency sharply revised August's job losses to 7,800 -- a drop four times greater than previously reported. Since employment began declining in March 2001, California has shed a net 306,200 nonfarm jobs.

The statewide unemployment rate declined to 6.4% in September from a revised 6.7% the month before. But that was only because thousands of discouraged job seekers had dropped out of the labor force and were no longer counted in the official unemployment tally.

The latest California numbers stand in stark contrast to upbeat national employment data released last week showing that the U.S. economy added 57,000 jobs in September.

"It's obviously disappointing, particularly when the nation is gaining," said Howard Roth, chief economist for the state Department of Finance.

Still, he and others warned against reading too much into last month's data, which they believe may be affected by seasonal factors or other statistical quirks. More than half of September's job losses were in the educational and health services category, a grouping that includes private schools, independent colleges and for-profit trade schools, as well as the state's health-care providers.

Although government analysts tweak the jobs data each month to factor out seasonal dips and spikes, September is a tricky month to adjust. Statisticians must take into account the unusually large number of people returning to work for the school year, making the data more susceptible to imprecision.

"I don't think this indicates any trend," said Michael Bernick, director of the Employment Development Department. "Educational and health services has been one of our strongest job generators over the last few years, and all indications are that it will continue to be."

Indeed, many economists have found California's deteriorating jobs picture downright puzzling in the face of abundant signals that the state and national economies are stirring to life. The nation's gross domestic product -- the value of all goods and services -- grew at a 3.3% annual clip in the second quarter, faster than expected. Manufacturing activity has picked up in recent weeks, and U.S. retailers in September had their best showing since March 2002.

In California, the latest Finance Department data showed the state's general fund tax revenue through August was running $105 million ahead of expectations. New business incorporations have hit record levels. Exports are recovering and home building remains strong.

"My impression is that the underlying economy is better than what we're seeing in these numbers," UCLA senior economist Tom Lieser said of California's September jobs data. "There is always a lot of confusion and contradictions in the data when you are getting close to a turn" in the economy.

In fact, the two major surveys that government analysts use to gauge employment trends have diverged markedly in recent months. The separate September survey of households released Friday found that the number of Californians who said they were holding jobs increased by 39,000 from August and 203,000 from September 2002.

In contrast, the so-called payroll survey that examines tax filings of employers shows that California companies have shed a net 57,600 jobs during the last 12 months. Experts tend to put more stock in the payroll survey because it draws from a larger sample and is based on hard financial data rather than individuals' responses to pollsters. Still, analysts said the payroll sample leaves out the self-employed, as well as very small companies and start-ups, which are generally the first to start hiring when the economy improves.

There were bright spots in September's employment figures. Of the 11 "super sectors" tracked, more added jobs than lost them. The trade, transportation and utilities sector was the biggest winner, boosting payrolls by 4,400. Other gainers included construction, business and professional services, and financial activities. But the biggest surprise was California's manufacturing sector, which added a net 3,500 jobs -- the state's first increase in factory payrolls since April 2002.

"We're seeing a lot of little rays of hope out there. The economy is in a transition.... The overall direction is positive," said Esmael Adibi, director of the Anderson Center for Economic Research at Chapman University in Orange.

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