Jobless Rate Shoots Up to 9.8% in California : Economy: Defense, aerospace workers are hardest hit. O.C. job picture not expected to improve until mid-1993.

WASHINGTON —  The nation’s jobless rate improved slightly in October, but unemployment surged to 9.8% of the work force in recession-battered California, the Labor Department reported Friday.

The national unemployment rate dipped to 7.4% last month, down from 7.5%, primarily because large numbers of teen-agers left the work force to return to high school and college, the department said. The figures were further evidence that, unlike past recoveries, the current anemic economic expansion brings with it relatively negligible job growth.

Orange County’s unemployment figures for October will not be released until the end of this month. Local analysts expect little improvement from September’s jobless rate of 6.5%.

Economists say they do not expect employment increases in the county until mid-1993. In some sectors, particularly the beleaguered defense industry, layoffs continue. McDonnell Douglas Corp. confirmed Friday, for example, that it will cut 254 jobs in Huntington Beach and Santa Ana as part of a regional restructuring.

A sluggish economy poses “an enormous challenge” to the incoming Clinton Administration, said Sen. Paul S. Sarbanes (D-Md.), chairman of Congress’ Joint Economic Committee, which heard a litany of discouraging news Friday from Labor Department officials.

In Little Rock, Ark., President-elect Bill Clinton responded with a familiar campaign theme: “Creating new jobs and getting our economy moving again will be my top priority as President,” he said in a statement.

“While the slight drop in the unemployment number today is a step in the right direction, the numbers also sent a sign that our economy is still not creating enough jobs,” Clinton said.

California’s jobless rate, which remains persistently high while the national situation seemingly improves, matched the August figure of 9.8%--the highest since 1983. The rate fell to 9.4% in September. Among the 11 biggest states, only California and Ohio had rising unemployment last month.

The state, especially Southern California, has suffered from cutbacks in defense and aerospace spending and a moribund real estate and construction sector.

“It’s the same old dreary news,” said Ted Gibson, an economist with the California Department of Finance.

Gibson said California’s best hope for improvement is a nationwide recovery that produces more business for companies in the state. But any pickup in California “is going to be a long, slow process, that’s very clear,” Gibson said, noting that the crucial home-building industry remains weak.

Most of the state’s October job losses came in defense and aerospace business and in other durable manufacturing industries. In all, seven of the eight major employment categories either were flat or showed declines.

The only major job category showing an increase was services, which gained 16,000 jobs. Within manufacturing, food processing showed a modest advance.

Those areas of slight improvement are mildly encouraging, according to Joseph A. Wahed, chief economist of Wells Fargo Bank in San Francisco. “The beginning of the end of the recession is on the horizon,” he said. However, he quickly added: “We’re not there yet, though. We’ve got another year to 18 months to go.”

California had 13.7 million people working, a decline of 169,000 from September, according to the government’s household survey. Unemployment climbed to 1.5 million, a rise of 55,000.

A separate payroll survey conducted among businesses, considered more accurate than the household tally, showed a smaller employment decline: a loss of 14,100 jobs in California last month.

Although the figures were discouraging, they were better than those for previous months. The state lost 41,000 jobs in September and 62,000 in August, according to the payroll survey.

The highly volatile jobless rate for Los Angeles County fell in October for the third consecutive month--dropping to 9.5% from 10.4% in September--largely because students and other job hunters pulled out of the labor market. The statistics showed employment growing by 18,000 to 4,118,000 while the number of people without jobs shrank even more, by 43,000, to 433,000.

Jay D. Horowitz, labor market analyst for the California Employment Development Department, said the county’s job market remains mired in recession. “It’s been fairly stagnant since the beginning of the year. . . . Nothing much has really changed,” he said.

In portions of Northern California, particularly Sacramento and nearby areas, the economy appears significantly stronger, analysts said.

AFL-CIO President Lane Kirkland said the national October tally “is no real improvement--it merely reflects a further shrinking of the labor force, the same trend that has been in effect since last June.”

Kirkland called for aggressive new spending programs to rebuild crumbling bridges and highways, and to provide financial aid to hard-pressed state and local governments. “These initiatives should be at the top of the list for President Clinton and the new Congress,” Kirkland said.

In a typical business cycle, unemployment actually increases when a recovery begins because workers sense that opportunities are improving and move back into the market to seek jobs. That happened between November, 1991, and June of this year, but the new jobs didn’t materialize.

“Since June, the labor force has dropped by about 600,000, with most of the decline occurring among older women,” William G. Barron Jr., acting commissioner of labor statistics, told the Joint Economic Committee. “These developments help explain the recent drop in the unemployment rate despite the lack of job growth,” he said.

There were 117.6 million Americans working last month, a decline of 76,000. Unemployment totaled 9.3 million, a drop of 238,000.

“I expect we will have a couple of reasonably robust quarters of economic growth, but then we are likely to slip back to the meager economic crawl we have experienced over the past year,” Richard Rahn, president of the Novecon Companies, which arrange ventures for U.S. businesses in the former Communist nations of Eastern Europe, told the congressional committee.

Times staff writers John O’Dell and Dean Takahashi contributed to this report.

NEW MCDONNELL LAYOFFS: Aerospace giant to lay off 254 in Orange County. D1

Jobless Rates

Here are U.S. and California unemployment rates, in percentages, over the last 12 months:

U.S. Calif. Oct. ’92 7.4 9.8 Sept. 7.5 9.4 Aug. 7.6 9.8 July 7.7 8.9 June 7.8 9.5 May 7.5 8.7 April 7.1 8.0 March 7.2 8.5 Feb. 7.2 8.7 Jan. 7.0 8.1 Dec., ’91 7.0 7.7 Nov. 6.8 7.4