State’s Job Market Stuck in Neutral

California’s labor market continued to tread water in June, with the unemployment rate continuing at 6.4% and companies reluctant to do much hiring, according to data released Friday by the state Employment Development Department.

Through the first six months of the year, California payrolls have increased by a mere 3,600 jobs, reflecting employers’ skepticism about the strength of the economic recovery.

A separate report released Friday showed that consumers are having doubts of their own. The University of Michigan index of consumer confidence fell to 86.5 in July, down from 92.4 in June and 96.9 in May.

With few sectors beyond housing showing any real verve, economists say the state’s job market, like that of the nation’s, probably will remain sluggish for months to come.

“The economy is just plain looking flat,” said Ted Gibson, former chief economist for the California Department of Finance. “We’re really not doing any better or worse than the rest of the nation. We’re just kind of sitting here.”

California’s 6.4% June unemployment rate equaled that of May’s, which was revised upward from the 6.3% previously reported by state officials. California has 29,000 fewer payroll jobs than it did a year ago, and has seen its unemployment rate increase from 5.2% in June 2001. Last month, the national unemployment rate was 5.9% compared with 5.8% in May. A year ago, the U.S. jobless rate stood at 4.6%.

Although Southern California’s labor market remained among the healthiest in the state, all the major counties reported increases in joblessness in June. Orange County’s June unemployment rate was 4%, up from 3.7% in May. San Diego’s June rate rose to 4.1% from 3.8% the month before. Riverside and San Bernardino counties posted 5.7% in June, up from 5.2% in May. June unemployment in Ventura County was 4.8% compared with 4.3% the prior month.

Los Angeles County remained the Southland’s laggard. The county’s unemployment rate hit a five-year high of 7.1% in June, up from a revised 7% in May, while its payrolls dropped by a net 800 job positions in June, led by continued declines in manufacturing employment.

Still, the Bay Area continues to bear the brunt of last year’s economic slowdown. In Santa Clara County, the heart of Silicon Valley, the June unemployment rate bounced back to 7.6% after easing to 7.3% in May. In January 2001, that county’s jobless rate stood at 1.7%.

A collapse in technology spending helped send the national economy into recession last year, and businesses still aren’t buying computers, software and other equipment at anywhere near the torrid pace of a few years ago. Although the Bay Area is no longer experiencing the steep job losses of last year, weak business spending continues to be reflected in the region’s unemployment figures, said Michael Bernick, director of the state Employment Development Department.

“Those big tech investments aren’t materializing,” Bernick said. “It’s still having an impact.”

In June, California gained a net 4,400 nonfarm payroll jobs. Revised May figures showed a loss of 12,300 jobs, 3,300 more than had been previously reported.

In June, losses in manufacturing, services and transportation and public utilities were more than offset by gains in other sectors, led by construction, retail trade and government.

Government has been a particularly strong employer in California, adding more than 62,000 payroll jobs over the last year, many of them teachers and other municipal workers needed to serve a growing population.

But Gibson doubts the government sector can continue to be an engine for growth, given California’s budget woes.

The latest figures show that personal income taxes for the month of June were $219 million less than officials had been expecting. Most of that gap was due to a decline in payroll withholding taxes, which have been persistently weak all year.

“That suggests to me that the labor market may be in a little worse shape than the official data would indicate,” Gibson said.

The unemployment rate for Latinos in California was unchanged in June at 7.4%, while the rate for blacks increased to 10.5% from 10.3% in May. The jobless rate for whites was 5.8% in June, up from 5.6% in May.

San Luis Obispo County posted the lowest jobless rate of any California county at 3.1%, while Imperial County recorded the highest at 17.4%