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California Sees 'Modest' Job Gain in August

Employers add a net 3,100 positions. The unemployment rate drops to three-year low.

September 14, 2004|James F. Peltz | Times Staff Writer

California employers were cautious about hiring in August, adding only a net 3,100 jobs, while the unemployment rate fell to a three-year low of 5.8%, state officials said Monday.

It was "a modest month," said Dennis Meyers, a principal economist at the Department of Finance. Typically, California accounts for about 12% of nationwide payroll growth, and on that basis, more than 17,000 new jobs should have been created in the state.

The actual results were "much weaker than you would expect to see at this point" in the economic recovery, Meyers said, though he added that the picture was "definitely showing an improvement over last year."

The California figures echoed the mixed employment situation in the U.S., where monthly payroll job creation has been uneven, raising concerns that the economy is losing steam. The U.S. jobless rate was 5.4% last month, when employers added a net 144,000 jobs.

As for the state jobless rate -- which is based on a survey of households, not employers -- it was down a full percentage point from 6.8% in August 2003. The rate also was down sharply from a revised 6.2% in July; that originally was reported as 6.1%. And it was the lowest since September 2001, when it stood at 5.7%.

Monday's two seemingly conflicting reports pointed up the confusion caused by the separate payroll and household surveys, which often show job creation and the unemployment rate heading in opposite directions.

The household survey, a random sampling of about 4,500 people reached at home, tallies self-employed workers, independent contractors and newer companies. The survey doesn't count Californians who have stopped looking for work.

Meyers said it was likely that the unemployment rate fell sharply because August was a back-to-school month.

"There probably were a lot of people looking for work in the summer, couldn't find it, and now they're students," he said. "So they no longer show up as unemployed, but they haven't found a job."

The payroll survey by the Economic Development Department queries about 37,000 established employers and is considered by many to be the more reliable gauge of sustained job creation.

Still, many jobs, especially in retailing and construction, are being created by new, small and family-run businesses that show up in the household survey but not the payroll report.

"Those workers, if they ever get called in the survey, say, " Yeah, I have work,' " so the household survey will include that" even though the respondents actually "might not have permanent payroll status anywhere," said Keitaro Matsuda, senior economist at Union Bank of California in San Francisco.

In August, according to the household survey, California added a net 23,000 jobs compared with July, the EDD said.

Vince Sollitto, deputy press secretary for Gov. Arnold Schwarzenegger, called the jobs report "good news ... showing California is on the right track."

But Matsuda noted August's job creation didn't come close to offsetting the 9,300 jobs lost in July.

"That's hardly robust job growth," he said.

Indeed, a report from the UCLA Anderson School of Management showed that Los Angeles County had a seasonally adjusted net loss of 12,600 nonfarm payroll jobs in August, to 4 million, even though the county's unemployment rate fell to 5.8% from 6.3% in July.

Orange County had a net loss of 2,800 jobs, but San Diego County showed a 3,100-job increase and Ventura County added 800 net jobs, the Anderson report said.

Statewide, industries adding positions last month included construction, financial services, restaurants and other hospitality firms and what the EDD calls the information sector, which includes the media and telecommunications.

Several crucial sectors posted declines, including manufacturing, trade, transportation and utilities.

On Monday, the EDD revised a previously announced drop of 17,300 net jobs in July to show a decline of only 9,300 jobs.

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