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.
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. email@example.com Times staff writer Richard Verrier contributed to this report.
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.