Growth Keeps Lid on State Jobless Rate

California’s unemployment rate edged up to 6% in March from 5.9% in February, but the increase largely reflected a surge in new job-seekers lured to the labor force by the growing economy, state officials said Friday.

Employment in the state set a record for the 23rd consecutive month, as employers added 34,500 new jobs to their payrolls during March. The increase brings the total number of jobs to 13.5 million, nearly 500,000 more than in March 1997, when the unemployment rate was 6.4%, the Employment Development Department reported.

Of the nearly 1 million unemployed in the state last month, nearly half were either new job-seekers or long-term unemployed who were resuming the search for work, the agency said.

“The improving economy is attracting people into the California labor force, both people who were living here who had not been working and others who moved here who are being attracted by job opportunities,” said Ted Gibson, chief economist at the state Department of Finance.

The state’s seasonally adjusted unemployment rate still remains higher than the nation’s, which stood at 4.7% in March.

But the momentum is clearly in California’s favor, as nationwide payrolls actually shrank by 36,000 last month, leading many forecasters to predict that growth is slowing and the gap between the U.S. and California unemployment rates will nearly close by the end of the year.

Los Angeles County’s unemployment rate rose to a seasonally adjusted 6.2% from 5.9% in February, but remained well below the 7% rate of a year earlier. Despite the higher rate, payrolls continued to expand as business services, manufacturing, wholesale and retail trade, transportation, and the government sector added jobs.

Concerns continued to swirl around the motion picture industry, which has lost 6,500 jobs, or 4.4%, from a year ago. But economists said the industry has probably been affected by short-term factors, such as the threat of an actors’ strike, which was averted earlier this month, rather than any long-term malaise.

“You may say the days of very rapid growth in the motion picture industry are behind us,” said Jack Kyser, chief economist at the Los Angeles Economic Development Corp. “But we’ll still see growth.”

In Orange County, which has enjoyed a booming job market for more than a year, the unemployment rate, which is not adjusted for seasonal factors, sank to 2.8% from 3.0% in February and 3.2% a year earlier, as 8,800 new jobs were added over the month. That was the third-lowest rate in the state, and equal to that of economic powerhouse Silicon Valley.

Esmael Adibi, director of Chapman University’s Anderson Center for Economic Research, noted that the growth in employment in Orange County has cooled slightly from the torrid pace of a few months ago. For the next year, he expects payrolls to continue expanding at a more moderate rate, tempered largely by the effects of Asia’s troubles on county exporters.

Indeed, preliminary results of an upcoming Chapman survey show that purchasing managers at Orange County businesses plan to curtail hiring somewhat during the remainder of the year, Adibi noted.

“Job formation is slowing down,” he said. “That doesn’t mean we’re not going to continue doing well and creating jobs, it’s just not going to be at the same rate.”

Statewide, employment growth was spread across a wide range of industries, including manufacturing (up 3%, or 56,000 jobs from a year earlier), services (up 4.8%, or 192,000), and wholesale and retail trade (up 3%, or 90,800). Construction showed the biggest year-to-year gain with an increase of 47,700 jobs, or 8.8%.

“The construction industry is really kicking in now,” said Mark Zandi, chief economist at Regional Financial Associates, a research and consulting firm in West Chester, Pa. “I expect that will continue for a year or two. More homes need to be built.”

The surging economy is now reminiscent of the late 1980s, Zandi said, but with one important exception. “In the late ‘80s the economy was really booming because of what was going on in the defense industry. It’s much harder to point to one sector or industry that’s fueling the growth now. It’s much more diversified.”

A few warning signs surfaced in the March figures, including a softening in the semiconductor business, which could reflect weak product demand from struggling Asian countries.

But the damage from the Asian financial crisis so far has been minimal, economists said. “You need a lot more than a microscope to see the effects of Asia,” said Zandi.

Gibson also noted that even industries that are undergoing upheaval, such as telecommunications, are showing a net gain in jobs. Old-line companies such as GTE Corp. and Pacific Telesis Group have been downsizing operations, he said, but the wireless telecommunications concerns are growing so fast they are absorbing the displaced workers from other firms. “It’s an industry that’s changing but not losing ground,” Gibson said.

Unemployment rates also fell last month in San Bernardino County, to 5.5% from 5.8% in February; Riverside County, to 6.0% from 6.8%; and Ventura County, to 4.8% from 5.6%. Those figures are not seasonally adjusted.

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A Growing Labor Pool

California’s improving economy added 34,500 jobs in March but didn’t absorb all the growth in the labor force, much of which was from out of state.

Seasonally adjusted, March: 6.0%

Unemployment rates for Southland counties

Los Angeles*: 6.2%

Orange: 2.8

San Bernardino: 5.5

Riverside: 6.0

Ventura: 4.8

San Diego: 3.4

* Los Angeles rate adjusted for seasonal factors

Researched by JANICE JONES DODDS / Los Angeles Times

* * ROOM FOR EVERYONE: Job boom is luring people long absent from the labor force. A1