Jobless Rate Dips to 6.8% in U.S. but Rises in California

The nation’s unemployment rate edged down in July to 6.8%--its lowest level in nearly two years--while joblessness in recession-weary California climbed for the third straight month, hitting 9.8%, the federal government reported Friday.

But private economists and analysts cautioned against reading too much--either good or bad--into the latest figures for the nation and the state.

The national drop in unemployment, from 7.0% in June, came as employers added 162,000 non-farm jobs to their payrolls. But economists said the report actually may suggest little improvement in the economy.

In Orange County the unemployment rate hit 6.6% in June, the most recent month for which figures are available. That was up from 6.1% in May, largely because of seasonal factors including the flood of teachers and students entering the summer job market. Because the monthly jobless statistics for the individual counties are computed after the state and national rates, the July figures for Orange County won’t be released until the end of this month.

Economists pointed out that the national gains came largely from summer youth job programs and other temporary positions, which typically provide low pay and no job security, and from an apparent increase in discouraged job hunters who quit looking for work.

Ken Goldstein, an economist for the Conference Board, a business research group in New York, said “it certainly looks good that unemployment is down to 6.8%, but on closer inspection, we’re getting more news that we’re in a very slow, very sluggish economy.�

As for the California picture, some economists actually were more upbeat, despite the influx of new job seekers that drove up the unemployment rate from 9.1% in June. The economists were heartened by a separate survey showing that the number of jobs statewide actually rose by 23,300 in July--the biggest increase in 16 months.

This development prompted Bank of America economist Frederick Cannon to go so far as to pronounce that the state’s recession “may be hitting bottom.�

Nationally, the gains in temporary jobs also masked continued, though smaller, losses in manufacturing employment, a trend that troubles economists because of its ripple effect on other businesses.

Audrey Freedman, a New York economist and management consultant, said the decline in blue-collar jobs is somewhat overstated by federal statistics. She explained that manufacturers themselves are making greater use of temporary workers, and these employees do not show up in the federal data as part of the manufacturing labor force.

Still, Freedman said, temporary jobs add less muscle to the economy than permanent positions. “More and more people aren’t sure what they are going to be doing next week, and that’s not the kind of recovery that makes people confident about buying a house or a car,� she said.

Economists said that the recent flooding in the Midwest did not appear to play a major role in holding down July’s job growth but could start having a broader impact on the economy later this year.

In a briefing with reporters in Washington, Laura D’Andrea Tyson, chairwoman of the White House Council of Economic Advisers, declared that the employment figures show that “the pace of the recovery has really picked up.�

Tyson suggested that some of the jobs were created by the economy in anticipation of the Clinton economic plan being passed. The measure cleared Congress Friday night.

Still, she said, the Administration will reduce its growth forecast for 1993’s gross domestic product to 2.1%, from the previously projected 3.1%, when the official midyear forecast is released this month. The 1994 forecast is expected to be lowered to 2.9%, from 3.3%.

California’s jobless rate in July was close to the recessionary high of 10.1% in November. The rise in unemployment resulted from a 116,000 rise in the number of job hunters in the state. Larry Kimbell, director of the UCLA Business Forecasting Project, said that increase may have been a statistical quirk.

Still, Kimbell was cheered by the 23,300 gain in non-farm jobs in California that was found in the government’s closely watched survey of employer payrolls. It showed gains in each of the eight major employment categories except mining.

“It’s awfully hard to see a broad-based recovery in California yet,� Kimbell said. “But it’s been a long time since we’ve seen a gain like this.�

With July’s gain, the number of non-farm jobs in the state totals nearly 12 million while the number of unemployed stands at 1.5 million.

Still, among the 11 big states whose jobless figures were released Friday, California posted the highest unemployment, followed by New York, at 7.5%.

North Carolina posted the best rate, 4.5%.

Los Angeles County’s unemployment rate fell to 9.5% in July, from 9.6% a month earlier, raising the possibility that the area’s slump is bottoming out. Still, the county’s monthly jobless figures are considered unreliable because of the small sampling of households they are based on, so economists were reluctant to read much into the new local statistics.

The county’s jobless rate reflected an estimated gain of 45,000 jobs in the county during July. That brought employment up to nearly 4.12 million, while the number of unemployed held steady at 431,000.

Vincent Canales, an analyst with the California Employment Development Department, said the figures were encouraging considering that the county jobless rate normally climbs substantially in June and July as students pour into the labor market. Unlike the federal and state numbers, the county statistics are not adjusted for seasonal trends.

Jobless Rates

Here are U.S. and California unemployment rates, in percentages, over the last year:

U.S. Calif. July ’93 6.8 9.8 June 7.0 9.1 May 6.9 8.7 April 7.0 8.6 March 7.0 9.4 Feb. 7.0 9.8 Jan. 7.1 9.5 Dec. ’92 7.2 9.8 Nov. 7.2 10.1 Oct. 7.3 9.8 Sept. 7.4 9.4 Aug. 7.5 9.8 July 7.6 8.9 June 7.7 9.5