Weak state job re­port adds to con­sumer woes

April un­em­ploy­ment climbs to 5.1% from 4.8%. Spend­ing may ebb amid anx­i­ety about gas prices and real es­tate.

Los Angeles Times - - Business - By Lisa Girion

The rise in the state un­em­ploy­ment rate last month stoked con­cerns that job wor­ries, along with ris­ing gaso­line prices and a stum­bling real es­tate mar­ket, could make con­sumers skit­tish about spend­ing.

The rate climbed to 5.1% af­ter hold­ing steady at 4.8% for four months, the Em­ploy­ment De­vel­op­ment De­part­ment said Fri­day.

The de­te­ri­o­ra­tion was due in large part to the slump in home con­struc­tion. The sec­tor shed 3,000 jobs in April, con­tribut­ing to an in­crease of 58,000 in the num­ber of out-of-work Cal­i­for­ni­ans. It was the great­est onemonth jump in un­em­ploy­ment since Fe­bru­ary 1992, when that pop­u­la­tion ex­panded by 69,000.

An­other fac­tor was ane­mic growth. Em­ploy­ers around the state added just 7,400 jobs in April — well off the first quar­ter’s monthly av­er­age of 10,069.

Some economists said bad news on the job front could spook con­sumers who are al­ready ill at ease with pay­ing an av­er­age of $3.46 a gal­lon for gaso­line and see­ing “for sale” signs linger in their neigh­bor­hoods. Home sales in South­ern Cal­i­for­nia fell to a 12-year low last month, and prices have be­gun to slip.

“Em­ploy­ment is the most com­pre­hen­sive mea­sure of what’s go­ing to hap­pen to the econ­omy down the road,” said Es­mael Adibi, di­rec­tor of the An­der­son Cen­ter for Eco­nomic Re­search at Chap­man Univer­sity in Orange. “Con­sumer spend­ing is de­pen­dent on it. That’s a very big con­cern.”

Be­cause the econ­omy re­lies so heav­ily on con­sumer spend­ing, con­sumer con­fi­dence is cru­cial. “The big deal for whether this car­ries over to the broader econ­omy is whether the con­sumer looks at his wife and says, ‘Honey, the house is not worth as much and gas prices are high, so we’re not go­ing to go to Eng­land or buy that RV,’ ” said Stephen Levy, chief econ­o­mist at the Cen­ter for the Con­tin­u­ing Study of the Cal­i­for­nia Econ­omy in Palo Alto. State of­fi­cials said they didn’t


[ put much stock in a sin­gle month’s data and cau­tioned against draw­ing con­clu­sions.

“The thing that would be wor­ri­some is if you start to see con­sis­tent month-to-month in­creases in the un­em­ploy­ment rate,” said Howard Roth, chief econ­o­mist at the state De­part­ment of Fi­nance. “But this one month, in and of it­self, is not too trou­bling.”

The num­ber of un­em­ployed Cal­i­for­ni­ans, which is used to cal­cu­late the job­less rate, is drawn from a sur­vey of fewer than 6,000 house­holds, such a small sam­pling that “the house­hold num­bers may be over­rep­re­sent­ing the num­ber of un­em­ployed,” Roth said.

He noted that the un­em­ploy­ment rate av­er­aged 4.9% for the first four months of the year — bet­ter than the 5% the state has fore­cast for the whole year.

But worker con­fi­dence in the job mar­ket slipped for the third month in a row in April, ac­cord­ing to a sur­vey by Har­ris Interactive for Sphe­rion Corp. Last month, 60% ex­pressed con­fi­dence about their abil­ity to find a new job, a de­cline of 3 per­cent­age points from March. And 43% of work­ers said they be­lieved that the econ­omy was get­ting weaker, an in­crease of 3 per­cent­age points.

April’s em­ploy­ment data in­cluded lay­offs among sub-prime mort­gage lenders, con­tribut­ing to the loss of 700 jobs in the fi­nan­cial ser­vices sec­tor.

The most painful job news may still lie ahead in that sec­tor be­cause mort­gage lenders have yet to bring pay­rolls in line with the steep drop-off in busi­ness, said Adibi, a mem­ber of state Con­troller John Chi­ang’s eco­nomic ad­vi­sory coun­cil.

In the worst case, Adibi said, the hous­ing slump could feed on it­self.

As sub-prime lenders fal­ter and va­cate of­fices, he said, com­mer­cial de­vel­op­ers could lose their ap­petite for launch­ing new projects. Also, he said, if more peo­ple lose their jobs, more home­own­ers will have trou­ble mak­ing mort­gage pay­ments, es­pe­cially those with in­ter­est rates ad­just­ing up­ward.

“I think there will be quite a bit of weak­ness down the road,” Adibi said, adding that he ex­pected to re­vise his 2007 job growth fore­cast of 1.8% down­ward to 1% in June.

Chuck Wil­liams, dean of the Univer­sity of the Pa­cific’s Eber­hardt School of Busi­ness, pre­dicted con­tin­ued, al­beit slow, growth.

“The cur­rent eco­nomic ex- pan­sion may be on wob­bly knees but not yet down for the count,” Wil­liams said.

The eco­nomic en­gine was fu­eled by the cre­ation of 18,800 jobs in April in six of 11 sec­tors. Al­most one-third of those jobs came in the gov­ern­ment sec­tor, which has been ro­bust for some time. Hir­ing also re­mained strong in trade, trans­porta­tion and util­i­ties, pro­fes­sional and busi­ness ser­vices, ed­u­ca­tion, health and leisure and hos­pi­tal­ity.

Five job cat­e­gories re­ported shrink­ing pay­rolls in April. The in­for­ma­tion sec­tor shed 6,800 jobs; some state of­fi­cials said they were in movie pro­duc­tion, a volatile in­dus­try. But there were skep­tics.

“I’m not aware of any­thing that would make such a big dif­fer­ence from one month to the next,” said Steve MacDon­ald, pres­i­dent of FilmL.A. Inc., a non­profit group that han­dles film per­mits for much of Los An­ge­les County. MacDon­ald noted that pro­duc­tion was heavy dur­ing this year’s television pilot sea­son, which runs from Fe­bru­ary through early May. lisa.girion@la­times.com Times staff writer Richard Verrier con­trib­uted to this re­port.

Damian Dovarganes As­so­ci­ated Press

WORK­ING THE PHONES: Anza Dixon hunts for a job at a ca­reer cen­ter in Comp­ton in April. It might be a lit­tle harder this month be­cause the most re­cent state data show un­em­ploy­ment ris­ing.

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