Forecasts Looking Up as State Jobless Rate Drops

California’s economic prospects continue to brighten, with joblessness on the decline in April and sharp improvements projected as the year unfolds, a pair of reports showed Friday.

Job growth accelerated in April, driving the state unemployment rate back down to a near-nine-year low of 5.6%, as the state added 26,200 nonfarm jobs--double the average of the previous two months, the Employment Development Department said.

And a report by California Finance Department economists projected that California would add about 450,000 jobs this year--far more than previously expected. They predicted that personal incomes, housing starts and retail sales all would either match or exceed last year’s stellar increases.

That report said the revisions were based partly on the state’s very strong personal income tax withholdings in the last few months, which suggest that California’s job growth is even stronger than indicated in the monthly EDD labor reports.

The April job growth was broad-based, geographically and by industries. Hiring was brisk in construction and engineering as well as in health services. And manufacturing posted a small payroll increase last month, reversing five straight months of declines.

The state’s jobless rate compared with 5.8% in March. Unemployment among African Americans in California edged down further, to 9%, from 10% at the start of the year. The rate for Latinos held steady at about 8.5%.

In Los Angeles County, the jobless rate declined from a revised 6.5% in March to 6.2%, the lowest since September 1990.

However, the Los Angeles-centered motion picture industry showed continued weakness, declining by a seasonally adjusted 2,500 jobs statewide. Hiring in apparel manufacturing, which also has been eroding lately, was flat.

Still, with robust job growth in Orange and Ventura counties and especially the Riverside-San Bernardino area, the region’s economy remains solid, said Joseph Magaddino, chair of the economics department at Cal State Long Beach.

By EDD’s count, California’s job growth in April was running at an annual rate of 2.9%--compared with last year’s growth of 3.6%. But the state’s monthly reports are based on surveys of generally large firms and do not include businesses formed within the last two years.

Still, the latest monthly report did capture the addition of 4,100 jobs in engineering services, which includes biotechnology firms such as Amgen. Employment in health services rose by 4,900 over the month. Business services, including software, had an off month, adding just 1,700 jobs.

Construction produced 4,800 new jobs last month, and the industry is spurring growth in lumber and furniture, helping offset continued cutbacks in electronics and aerospace manufacturing. Overall, factory payrolls rose by 800 last month, but remains almost 10,000 jobs shy of April 1998.

Unemployment last month dropped throughout Southern California. It dropped to 2.6% for Orange County, from 2.7% in March; to 5% for the combined Riverside-San Bernardino counties, from 5.2%; and to 4.1% for Ventura County, from 4.5%. Those figures are not adjusted for seasonal variations.

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California’s Brighter Outlook for 1999

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Governor’s budget forecast May (Nov. 1998) revision Nonfarm job growth 285,000 443,000 Pctg. chg. in job 2.1% 3.3% growth from ’98 Personal income growth 5.1% 6.6% Housing permits 154,000 162,000

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Source: California Finance Department