42,000 Jobs Added in May in California

Unfazed by Asia’s financial crisis and the unusually wet weather, California’s economic growth accelerated in May, with employers adding nearly 42,000 jobs over the month. That nudged the sliding jobless rate down further from 5.9% in April to 5.8% this month, the lowest in eight years, state officials said Friday.

The job gains exceeded analysts’ expectations and once again outstripped the national growth rate. Employee increases were recorded in all industries, led by services and retail, and were spread across the state, with the strongest growth in the San Jose area, Orange County and the Inland Empire.

Orange County’s economy continued to sizzle. Its jobless rate stayed at 2.7% in May, third lowest in the state and matched only by the San Francisco area. Orange County’s job gains were broad but strongest in the services and retail trade sectors. The county’s total nonfarm payrolls in May were up 3.8% from May 1997--the third-fastest growth rate among major areas in the state, after the San Jose area and the Inland Empire.

Los Angeles County was not far behind. Motion picture employment rebounded from lackluster growth in recent months and hundreds of retail jobs were added.

Statewide, Asia’s economic problems dampened hiring at many high-tech manufacturers. But the state’s overall manufacturing industry still gained 3,500 jobs last month, thanks largely to housing-related sectors such as lumber products and industrial machinery, the latter getting a lift from increased sales to Mexico and Europe. By comparison, the nation as a whole lost 26,000 manufacturing jobs in May.

“We’re doing remarkably well,” said Howard Roth, an economist at Bank of America in Los Angeles. In the first four months of this year, Roth said, California’s job-generating machine slowed to an average of 28,000 a month, compared with an average of 41,000 new jobs in the second half of last year. “This is reassuring,” he said.

The state would have added even more jobs last month were it not for the wettest May on record in Northern California, which kept the fast-rising construction industry in check. Statewide, construction employers took on just 1,800 additional workers in May, although the total building payroll count last month was still up an impressive 8.2% from May 1997, the Employment Development Department said.

Economists are expecting a burst of construction hiring this summer, because there has been relatively little home building, even though demand is booming.

“We know construction is going to blossom forth pretty strongly,” said Ted Gibson, head economist at the state’s Department of Finance. “Home builders up and down the state are low on inventory, and we expect to see a real boost in the second half of the year.”

The state’s nonfarm employment reached a record 13.55 million jobs in May, up 3.3% from a year ago. That compares with a year-over-year growth rate of 2.6% for the nation. But California’s unemployment rate of 5.8% remains well above that of the U.S., which held steady at a 28-year low of 4.3% last month.

Statewide, the services sector expanded by 18,200 jobs last month, most of that split between two industries--motion pictures and business services. The latter includes software firms and other businesses engaged in Internet services, which are generally high-paying jobs. Motion pictures, which on average pay well at more than $30 an hour, added 7,300 jobs over the month, nearly all of that in Los Angeles County.

Retail employers, notably restaurants, added about 10,000 jobs statewide last month. And the finance, insurance and real estate industries--which have been among the holdouts in the state’s recovery--reported brisk hiring last month.

In Southern California, Orange County’s economy continued to sizzle. Its jobless rate stayed at 2.7% in May, the lowest among major metropolitan areas in the state. Orange County’s job gains were broad but strongest in the services and retail trade sectors. The county’s total nonfarm payroll in May was up 3.8% from May 1997--the third-fastest growth rate among major areas in the state, after the San Jose area and the Inland Empire.

Los Angeles County, which has lagged the state in job growth, continued to make up ground impressively. Last month, its unemployment rate edged down to 6.3% from a revised 6.4% in April, and nonfarm jobs advanced at an annual rate of 2.7%. The county is doing better than the state as a whole in manufacturing, largely from the strength of the apparel and food products industries.

However, Los Angeles County’s total payroll jobs in May--3.97 million--were still 188,500 below the peak in May 1990.

Officials counted 948,000 unemployed California workers in May. In May 1997, there were more than 1 million unemployed in the state.

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May Unemployment

Orange County’s 2.7% May unemployment rate is down slightly from 3.2% a year ago, but mirrors the rate for April.

May 1998: 2.7%

Source: California Employment Development Dept.

Where the Jobs Are

Almost all areas of employment in California have shown growth since May 1997, with construction and services leading the way. Number of jobs, in thousands:

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Industrial May 1998 May 12-month classification Prelim. 1997 change Nonagricultural wage 13,554.2 13,118.1 3.3% and salary workers Mineral extraction 28.6 29.3 --2.4 Construction 593.4 548.2 8.2 Manufacturing 1,947.8 1,907.8 2.1 Durable goods 1,208.8 1,180.6 2.4 Nondurable goods 739.0 727.2 1.6 Transportation and utilities 680.6 662.5 2.7 Wholesale trade 801.3 771.5 3.9 Retail trade 2,327.5 2,279.4 2.1 Finance, insurance 779.6 754.5 3.3 and real estate Services 4,216.8 4,022.8 4.8 Government* 2,178.5 2,142.1 1.7 Agriculture** 388.7 435.0 --10.6

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*Includes all civilian employees of federal, state and local governments.

**Includes forestry and fishing.

Source: California Employment Development Department