Jobless Rate in O.C. Hits 2.5%, an 8-Year Low

Orange County’s economy concluded a spectacular year in appropriate fashion, with December’s unemployment rate falling to an eight-year low of 2.5%, as 5,600 new jobs were created.

Fueled by growth in services and manufacturing, the county’s surging labor market surprised even the most bullish forecasters this year.

“If you had told me that Orange County’s unemployment rate would be 2.5% by year-end I wouldn’t have bought it,� said Mark Zandi, chief economist at Regional Financial Associates in West Chester, Pa.

The county’s jobless rate last month was down from 2.8% in November, and from 3.1% in December 1996.

Though the rate is not adjusted for seasonal fluctuations and therefore benefited last month from the annual spurt in retail hiring for the holidays, it was impressive nonetheless, analysts said.

The county’s red-hot job growth will cool somewhat this year, Zandi predicted, but mainly because “businesses can’t find the bodies to fill the positions.�

Indeed, the number of new jobs surpassed a sizable increase in the labor force itself, a good indication of just how forcefully Orange County’s job market expanded last year, said Esmael Adibi, director of Chapman University’s Anderson Center for Economic Research.

He noted that Orange County’s unemployment rate will undoubtedly rise in January due to the post-holiday downturn in retailing.

Also, the financial crisis in Asia is expected to put the brakes on export growth this year, as demand slows for Orange County products there.

Nevertheless, he said, the economy continues “on the right path,� and the jobless rate will probably remain in the 3% range this year.

The California economy, also capping a stellar year of employment growth, added 40,600 new jobs in December, pushing state payrolls to record levels for the 26th consecutive month.

The state has now added about 1.3 million jobs since the low point of the recession in 1993, and is nearly 800,000 jobs ahead of the previous peak employment in 1990, the Employment Development Department reported Friday.

The state’s unemployment rate edged up to 6.0%, seasonally adjusted, from a revised 5.9% in November, but economists attributed the increase to statistical quirks in the way the numbers are counted rather than an indication of any slowing.

“It’s boom times in California,� said economist Zandi. “The growth is stupendous, and it’s very broad-based. You’re hard-pressed to find a business that’s not adding to payrolls.�

Last month’s rate was well below the 6.8% jobless rate in December 1996. The average rate for the year, 6.4%, was substantially improved from 1996’s average of 7.2%.

“The economy, if anything, seemed to be picking up steam at the end of the year,� said Ted Gibson, chief economist at the state Department of Finance. “Aside from Asia, it’s hard to find any clouds on the horizon.�

In Los Angeles County, the unemployment rate also moved up a notch to 6.5% from a revised 6.4% in November, but was well below the 7.8% rate a year earlier.

The motion picture and high-tech fields are “really smoking,� helping push total county job growth for the year to 21,600, said Jack Kyser, chief economist at the Economic Development Corp. of Los Angeles County.

The good news in the jobs report was tempered somewhat by Raytheon’s announcement of plans to eliminate 5,200 jobs in Los Angeles and Orange counties. “We knew there were going to be some job losses,� due to industry consolidation, said Kyser, but the depth of the cuts is “very disappointing.�

California’s unemployment rate is still higher than the 4.7% rate registered for the nation as a whole in December. But the state’s 2.8% increase in payroll employment well eclipsed the national growth rate of 2.5% last year.

Economists say that California’s economy has entered a positive self-reinforcing cycle, in which the plentiful jobs are attracting more people to the state. That means more business for the construction industry, thus creating more demand for workers.

Though the building trade is expected to be a major driving force of the economy this year, it isn’t the only sector keeping the momentum going, economists say. Virtually all industry sectors--from aerospace to tourism, software to government--are adding jobs.

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December Unemployment

Orange County unemployment rate dropped to 2.5% in December from 2.8% in November, reflecting additional hiring by retailers for te holiday season. Unemployment by county:

Region

Los Angeles

1996: 7.8%

1997: 6.5%

*

Ventura

1996: 6.4%

1997: 5.7%

*

Riverside/San Bernardino

1996: 6.3%

1997: 5.3%

*

San Diego

1996: 4.1%

1997: 3.1%

*

Orange

1996: 3.1%

1997: 2.5%

*

California*

1996: 6.8%

1997: 6.0%

*

U.S.*

1996: 5.3%

1997: 4.7%

* Adjusted for seasonal factors

Source: Employment Development Dept.