State Adds Jobs for 3rd Month in a Row

California employers added jobs in May for a third straight month, a milestone that hadn’t been achieved in more than three years and a sign that the state’s fragile recovery is sustainable.

“We’ve had some false starts before, but this looks like the real thing,” said Howard Roth, chief economist for the state Department of Finance.

The net gain of 23,600 jobs, although modest, was broad-based, lifting employment in every field except natural resources and government, the state Employment Development Department said Monday in its monthly jobs report. The leisure and hospitality category showed the largest monthly gain, thanks to a pickup in tourism and business travel, and the construction sector had the strongest consistent growth through the year, testament in part to the state’s robust housing market.

Manufacturing added a small number of jobs for the second month in a row, a sign that the sector has finally bottomed out, economists said.

Another bit of good news in the report: California’s rate of job growth nearly matched that of the nation, after lagging behind for several months. Gains in California accounted for 9.5% of the 248,000 jobs added across the country last month -- close to the state’s 11% share of the national payroll.

“We are now catching up with the rest of the country in job growth,” said Keitaro Matsuda, senior economist at Union Bank of California. “I see that as a very positive development.”

That helps relieve concerns that the state’s economy is uniquely troubled, as it was in the early 1990s, when slumps in housing, aerospace and financial services hit California particularly hard. In the current recovery, economists had been worried about sluggish employment growth caused by high business costs, a lingering slump in technology hiring and cutbacks at government agencies.

The state’s unemployment rate remained unchanged at 6.2%, however, as the newly employed were replaced by job seekers entering or returning to the market. A year ago, unemployment stood at 6.8%.

Growth was especially strong in tourism-related jobs, such as at amusement parks and hotels. Whether higher gas prices will boost that trend through the summer by keeping Californians close to home or reverse it as potential visitors from out of state stay home remains to be seen.

After suffering through steep losses in the travel slump that followed the Sept. 11, 2001, terrorist attacks, some hotels are seeing enough demand to raise room rates, Matsuda said. “We haven’t seen that kind of pricing power in the rest of the economy.”

May’s job gain followed a revised increase of 15,700 jobs in April. Compared with May 2003, nonfarm employment in the state grew by 110,200 jobs, a rise of 0.8%.

There were some cautionary notes in the overall positive news. For one, staffing agencies continued to account for many of the new jobs -- more than 6,000 in May -- indicating that many companies still prefer to add temporary workers rather than commit to permanent, full-time hires.

By now, economist Roth said, that trend should have begun to shift. “It’s a mixed bag,” he said of the high number of temporary jobs. “We’ve been saying for quite some time that [temporary jobs] bode well for future employment, but it is taking a long time to get there.”

Staffing agencies themselves had conflicting interpretations of the trend. Mara Klug, regional vice president in Los Angeles for Adecco, said she was seeing increasing project work for accountants and people in other white-collar professions, partly in response to new federal accounting rules. Those jobs pay well but will never become permanent.

“There’s not a whole lot of temp-to-hire,” she said. “We’re definitely seeing some growth right now, but I can’t say it’s necessarily long-term growth.”

However, Sue Foigelman, an executive in Los Angeles for Manpower Inc., said her agencies were placing many blue-collar workers, including packagers and assemblers, in manufacturing jobs that were likely to become permanent.

“Light-industrial seems to be really strong,” she said. “We’re starting to have more difficulty in recruiting. The last couple of years, we’ve had an easy time getting hold of good people. Now I feel a bit of tightening.”

Also, positive as the numbers are, the job growth is not strong enough to pull the state government out of its financial crisis, said Brad Williams, chief economist at the state legislative analyst’s office. Williams noted that May’s job growth would be 2% if annualized. That indicates moderate economic expansion at best, he said.

“The state still faces challenges,” Williams said. “These numbers are not strong enough to change that underlying picture.”

Budget-induced cutbacks in government employment led to the loss of nearly 10,000 jobs in May.

The number of unemployed in California totaled 1,087,000 in May, down 11,000 from April and lower by 100,000 compared with the year before.