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State unemployment rate drops to 9.6%; employers add 41,200 jobs

The growth in net new jobs in February, buoyed by consumer spending, was another positive sign for California's economy.

March 29, 2013|By Shan Li, Los Angeles Times
  • A pedestrian walks by a "now hiring" sign posted in the window of a Chase bank branch in San Rafael. According to a Labor Department December jobs report, the U.S. unemployment remained the same from November at 7.8% as employers added 155,000 jobs in December.
A pedestrian walks by a "now hiring" sign posted in the window… (Justin Sullivan, Getty…)

California's economic growth revved up in February as employers added 41,200 jobs, one of the highest monthly gains since the Great Recession ended nearly four years ago.

The payroll gains helped push the unemployment rate down to 9.6% from 9.8% in January, according to data released Friday by the state Employment Development Department.

The growth in net new jobs, buoyed by increased consumer spending, was another positive sign for a state that has steadily gained jobs over the last year, hitting a monthly high of 74,000 in January 2012. Last month, only Texas outpaced California in job creation.

MAP: California unemployment since 2009

"We should continue to get growth this year and next year," said Dan Seiver, chief economist at Reilly Financial Advisors in San Diego. "The recovery is a sustainable one. Nationally, it is slowly gaining steam and that is also true in California."

The improvement in California is part of broader gains in the nation, where jobs have been coming back steadily. Jobless rates fell in 22 states around the country last month. The overall U.S. unemployment rate dropped to a four-year low of 7.7% in February; March results are expected to be released next Friday.

The resurgence of the consumer has been a major factor in keeping the job-creation machine and the overall economy moving along. The Commerce Department said Friday that spending rose 0.3% last month despite higher payroll and sales taxes. Consumer confidence also has edged up as personal income jumped 1.1% in February from the month before.

The state's labor force — those who are employed or looking for jobs — grew by 48,000 in February. That typically points to a strengthening market as job seekers who gave up trying to find work are once again sending out resumes and flocking to job fairs.

"We are seeing people coming back to the labor force, and at the same time enough civilian employment is generated to bring down the unemployment rate," said Esmael Adibi, director of Chapman University's A. Gary Anderson Center for Economic Research.

Workers such as DeAnna Sumrow, 49, are finally getting responses to their applications.

Unemployed since 2008, Sumrow said she has survived on help from family and part-time work at her church, but hopes to find a job soon in bookkeeping or human resources.

"I'm seeing more opportunities, people are contacting me about my resume," the downtown Los Angeles resident said. "I have nothing coming in right now, not even food stamps."

Those searching for work, meantime, often are finding a new employer-employee relationship: Companies now are accustomed to squeezing more from workers and often paying less, said Michael Bernick, former director of California's Employment Development Department.

More firms also are opting to hire part-time workers or contractors from staffing agencies, partly because the firms don't have to pay health benefits.

"We have entered a new normal," Bernick said. "It's just a different job world than in the past."

California still has a long way to go to overcome aftershocks from the housing crisis, which dragged down the economy for years. The state is tied with Nevada and Mississippi as having the highest unemployment rate in the nation.

Friday's employment report showed that the biggest gains last month were notched in leisure and hospitality with 15,700 jobs added, pointing to a surging tourism industry.

The government sector, helped by extra revenue generated from a sales tax hike, showed a gain of 11,200. A revitalized market for homes helped boost construction jobs by 5,700.

"Job growth will be led by a recovery in construction adding to the state's traditional strengths in technology, trade and tourism," said Stephen Levy, a senior economist with the Center for Continuing Study of the California Economy.

Manufacturing continues to be a weak spot, shedding 3,300 positions, as the ongoing Eurozone crisis pushed down demand for U.S. exports, economists said. The combined trade, transportation and utilities sectors lost 7,000 positions in payrolls.

Economists predict that a stronger job market this year will offset any impact from the federal spending cuts known as sequestration that went into effect March 1.

"The California economy is so big that the effect will be small given the overall size of the economy," Seiver said. "We are hoping the blip is small enough that it won't be noticed too strongly."

Coastal counties continued to lead the way for job creation in the state in February.

Los Angeles County added 39,000 nonfarm jobs, and unemployment dropped slightly to 10.3% from 10.4% in January. The information industry, including motion picture and sound recording, led the gain. Professional and business services, educational and health services, and leisure and hospitality also added positions.

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