SAN FRANCISCO – California’s jobless rate rose from 5.4 percent to 5.7 percent last month, tracking a jump in the national unemployment rate as companies cut production and fired workers in response to the lagging economy.
Nearly 1 million Californians are looking for work and haven’t found a job, according to figures released Friday by the state Employment Development Department. The data were the first to report state employment levels since the Sept. 11 attacks.
The 5.7 unemployment rate was the highest since December 1998 and continued a trend that began in February, when unemployment bottomed out at 4.5 percent.
But economists said the numbers were better than expected.
Last week, the U.S. Labor Department reported that the nation’s unemployment rate soared from 4.9 percent in September to 5.4 percent in October, and that 415,000 non-farm payroll jobs were eliminated nationwide. Friday’s state report put non-farm payroll job losses at 4,300.
“The downturn in California is just remarkably mild compared to what the U.S. statistics showed,” said Stephen Levy, director of the Center for Continuing Study of the California Economy, a Palo Alto research firm. “It’s better than expected, given everything that’s happening in the nation.”
It also appears to be the reverse of what happened during the recession of the early 1990s, when California moped in the economic doldrums while the nation snapped back.
Not all is well across the state, though.
Unemployment in the San Francisco Bay area, staggered by the summer’s layoff binge at high-tech firms, was up notably.
For the first time since 1988, San Francisco’s 6 percent unemployment rate was higher than that of Los Angeles County, which currently stands at 5.9 percent, according to Ted Gibson, chief economist for the state Department of Finance.
In Santa Clara County, the heart of Silicon Valley, unemployment rose to 6.4 percent — nearly five times its historic low of 1.3 percent, recorded in December.
Technology layoffs drove the jobless rate over the summer.
While cuts at major high-tech firms appear to have stabilized, these latest unemployment data suggest technology-related manufacturing and service sectors are still losing jobs, according to Mary Daly, a senior economist at the Federal Reserve Bank of San Francisco.
Other sectors suffered as the economic ripples from the terrorist attacks worked through the service and transportation sectors.
Tourism sectors were significantly hit. Even taking into account the slowdown after the summer travel season, the state lost 4,400 jobs in the hotel and amusement and recreation industries. Likewise, air transportation employment fell by 4,300 jobs — a loss more rapid than the overall economy.
In a twist, the restaurant industry added 4,600 jobs over the month, Gibson noted, saying that could be a statistical blip due to the difficulty in tracking employment at thousands of small eateries.
Other hard-hit sectors included electronic equipment and apparel.
“We were experiencing a downturn before Sept. 11,” said Ilse Metchek, executive director of the California Fashion Association. “Now ... the retailers of America have taken it upon themselves to cancel (current) orders and downsize spring orders.”
Short-term predictions indicate garment manufacturing will continue to suffer, forcing more layoffs and causing 10 percent to 15 percent of contractors in Los Angeles County — the hub of the statewide industry — to go out of business.
The outlook for manufacturing mirrors that of apparel.
Firms that make metal products for new airplanes are struggling as the demand for planes drops after the Sept. 11 attacks, said Jack Kyser, chief economist for the Los Angeles County Economic Development Corp.
“Until you come up with real good airport security and airplane security ... people aren’t going to want to jump on a plane,” he said.
The start of the school year saved the numbers from being worse.
State and local education systems added 65,100 jobs, the department reported. Sectors including finance, real estate, insurance and the government also added jobs.
In all, 996,000 Californians were unemployed as of mid-October. That was up 48,000 over mid-September and 161,000 from last October, when the state’s jobless rate was 4.9 percent.
Economists have predicted the state’s jobless rate will continue to climb and company payrolls will continue to be trimmed.