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Employment outlook brightens in U.S., state

California payrolls grow by 32,500 in January, but the jobless rate rises as more seek work. February losses fall far short of forecasts nationally.

March 05, 2010|By Alana Semuels and Don Lee
  • Employment seekers fill out applications at a job fair in Detroit. The U.S. economy lost 36,000 jobs in February, far fewer than economists had expected.
Employment seekers fill out applications at a job fair in Detroit. The U.S.… (Paul Sancya / Associated…)

Reporting from Washington and Los Angeles — Encouraging reports on both national and state employment released Friday indicate that the long-awaited economic recovery may be gaining a bit of traction.

The U.S. unemployment rate in February held steady at 9.7%, the Labor Department said, as the economy lost 36,000 jobs. That's far fewer than economists had expected, and it was a welcome sign of improvement amid recent fears about a double-dip recession.

Markets rallied on the news. The Dow Jones industrial average rose 122 points, or nearly 1.2%, to close at 10,566.20.

California, which released its January data Friday, began the year by adding 32,500 jobs, following losses in November and December. The gains were broad-based as sectors including construction, manufacturing, education and health services all added employees.

More help-wanted signs prompted some discouraged workers to start job hunting again. Because the increase in the number of people looking for work more than offset the increase in the number of jobs, the state's January unemployment rate rose to 12.5% from a revised 12.3% in December.

"These are encouraging numbers showing the first signs of an employment recovery," said Jerry Nickelsburg, senior economist at the UCLA Anderson Forecast. "But it's too early to tell if they have any staying power over the next couple of months."

Melody Boyd is keeping her fingers crossed. The Los Angeles resident has been out of work since August 2008. Her unemployment benefits expire soon. But next week, Boyd said, she has an interview for a job in the accounting section of a healthcare firm. It's her first interview in months.

"I have a spark of hope," she said.

The latest snapshot of the labor market, which for most people is the single most important economic indicator, came against a backdrop of mixed reports recently on key engines of the economy.

The housing market has tailed off after a burst of sales in the second half of last year, driven largely by tax credits. Construction remains sluggish as high vacancies continue to depress commercial construction. Business investment for equipment and software has been rising, and manufacturing is growing again. But consumer confidence has been slow to come back, raising concerns about the durability of an economy that relies heavily on personal spending.

U.S. economic output expanded at an annualized rate of 5.9% in the fourth quarter, but most of that was due to short-term boosts related to business inventory restocking and federal stimulus efforts. Forecasters are expecting economic growth to drop to about 3% this year -- a relatively slow pace that won't add much fuel to hiring.

Ana Gamba-Dolowy, 32, of Woodland Hills lost her job at an architecture firm in January. She and her husband have decided to put off having children until the economy stabilizes.

"I need a job," Gamba-Dolowy said. "Everyone is telling me I am overqualified for their positions."

Employers have been reluctant to add workers because of weak sales, tight credit and uncertainties about government policies on healthcare, energy and taxes. That's prompted fears that the broader economy could backslide.

"In terms of self-sustaining growth in the economy, it's hard to see how you can do that without creating jobs," said Dean Baker, director of the Center for Economic and Policy Research in Washington.

Despite the better-than-expected employment report for February, he noted, the economy needs to add, on net, some 125,000 jobs or so monthly just to keep pace with growth in the workforce. The labor market has lost 8.4 million jobs since December 2007.

Nearly 15 million Americans remain unemployed, about 2.3 million of them in California. About 4 in 10 of those workers have been jobless for six months or longer, an alarmingly high rate by any standard.

San Diego resident Jim Penar has been looking for full-time work ever since he was laid off from his job as a systems engineer at Northrop Grumman in November 2006. Nearing the end of his unemployment benefits, he says his age -- 67 -- makes companies reluctant to call him in for an interview.

"It's just so frustrating," he said. "I have 30 years of experience."

Revised California employment figures released Friday in an annual process called benchmarking showed that the Golden State lost 836,000 jobs last year, significantly more than the 579,000 that had been previously reported.

California has shed more than 1.4 million jobs since the recession began in December 2007, driven largely by the collapse in housing.

"We did worse than the nation," said Stephen Levy, director of the Center for Continuing Study of the California Economy. "We got hammered by the drop in home building."

Still, Friday's reports did reveal some positive trends.

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