Jobless Rate Drops Sharply in L.A. County

Los Angeles County’s jobless rate fell dramatically in May, strong evidence that the county is finally participating fully in the surging economic recovery enjoyed by the rest of California, economists said.

The rate sank to a seasonally adjusted 6.8% in May from 7.4% in April and 8.4% a year earlier, the state Employment Development Department reported Friday. The fall, fueled by job gains in a wide range of industries, was the primary catalyst in pushing the jobless rate for all of California down to a seasonally adjusted 6.3% last month from April’s 6.5%.

“The Los Angeles economy is turning around,” said Steve Cochrane, senior economist at Regional Financial Associates in West Chester, Pa. “That’s really where it’s happening in the state now.”

The latest figures represent part of a comeback for a job market that has long lagged behind the rest of the state, which is enjoying a huge job boom that in turn is generating billions of dollars in fresh tax revenue for the state treasury. The report also clearly shows that the aerospace industry’s drag on the Los Angeles economy is over. The region is now clicking ahead as entrepreneurs in the fashion and toy industries, software developers, multimedia firms and the motion picture industry go on hiring sprees.

An additional 10,000 people found work in the county last month, pushing the total nonfarm employment up 1.5% in the past year.

“Los Angeles is reinventing itself in its own way,” said Bruce Smith, principal economist at the state Department of Finance.

With more than a quarter of the state’s workers living in Los Angeles, it takes a lot of jobs to make such a sizable dent in the unemployment rate, Smith said.

“This is a noticeable shift, and it’s important for everyone in California that Los Angeles County does well,” he said.

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The growth has helped California stay on track to add 400,000 jobs this year--a gain not seen since the mid-1980s and well above the forecast on which the state’s budget was based.

Although the state’s unemployment rate is still higher than the nation’s--which fell to a 24-year low of 4.8% in May--California is rapidly catching up, economists said.

Last month, for the first time since October 1990, the number of Californians out of work fell below 1 million.

“That California is outpacing the nation in job growth is solidly confirmed by these figures,” said Stephen Levy, director of the Center for the Continuing Study of the California Economy in Palo Alto.

Particularly significant, Levy said, is that manufacturing employment is gaining in California--rising 2% to 1.88 million since May 1996--while it’s stagnating in the rest of the nation.

“We’ve certainly dispelled the belief that California is no longer a manufacturing center,” he said.

“We’re showing gains because there are pockets of creativity and entrepreneurship in California, both in the newer industries like chips and biotech and computing, and in the older industries like toys and textiles and apparel,” Levy said.

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Economists were also encouraged by a big statewide increase in construction employment, fueled by surging demand for offices and industrial buildings. Construction employment rose 10% in May from a year earlier, the largest annual gain of any major job category.

That bodes well for job gains overall because it demonstrates pressure being applied from expanding businesses, Smith said. “If you’re going to make jobs and you’re running near capacity, you’ve got to build a box for people to work inside first.”

Even companies in the aircraft and related parts businesses are edging back into a hiring mode as orders pick up from makers of commercial planes and for replacement parts on military jets.

The service sector is still by far the biggest in the state, with 10.7 million workers in May, up 2.6% from a year before. Although many of those jobs are in relatively low-paying fields such as retail and tourism, economists stressed that there are also many relatively high-paying positions being added in trades such as consulting, software development and motion picture production.

What’s more, the tightening employment situation promises to soon begin putting upward pressure on wages, economists said.

Although that’s good news for workers, it raises the risk of inflation and the possibility that the Federal Reserve might raise interest rates later this year.

A few other dark clouds remain. One is that the residential construction market has yet to rouse from its long hibernation.

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Also, Levy said, the improving job picture “doesn’t mean that all economic problems for all people are over. There are persistent issues of training, and how to have all the people participating in this booming economy.”

The job markets in other Southern California counties also showed strength.

Orange County continued to shine with its unemployment rate unchanged at 3.2%, the fourth lowest in the state and by far the best in Southern California.

The Riverside-San Bernardino area’s jobless rate fell to 6.4% from 6.5% in April. The unemployment rate in San Diego County slipped to 4.2% from 4.4%, while Ventura County’s rate was unchanged at 5.5%.

Unlike the figures for the state and Los Angeles County, the other counties’ unemployment rates are not seasonally adjusted.