State loses a net 8,600 jobs during July

Thousands of carpenters, drywall installers and other people in the building trades were idled in July as the slumping real estate market put a sledgehammer to construction jobs in California, state figures released Friday showed.

Overall, the state lost a net 8,600 jobs as unemployment crept up to 5.3%

Construction employment shrank by 7,800 jobs as home developers curtailed projects amid weak demand and emerging signs of a credit crunch.

Home construction and the jobs it created had played a key role in the state’s economic expansion.

The retrenchment in construction undercut gains in other employment sectors.

The job losses left a total of 15.3 million people on California payrolls last month, according to the state Employment Development Department’s July survey of employers.

A separate survey of households, designed to pick up informal employment arrangements, showed that the number of Californians with jobs held steady at 17.2 million in July.

The state’s unemployment rate rose from 5.2% in June to 5.3% in July. By comparison, the state jobless rate was 4.8% in July of last year.

The U.S. unemployment rate rose from 4.5% in June to 4.6% in July.

Much of the bad news on the job front was related to the housing market, which many economists believe has yet to bottom out.

They also are watching for signs of weakness in other sectors, paying particularly close attention to consumer confidence because consumer spending fuels more than half of the nation’s economy.

Unless the weakness spreads, analysts said they expected the economy, and jobs along with it, to putter along in low gear for the next several months.

“We’re in a slowing period,” said Stephen Levy, director of the Center for the Continuing Study of the California Economy. “How much we slow, who knows?”

In addition to construction, other sectors reporting net job losses in July were trade, transportation and utilities; information; and educational and health services, which had been gaining for some time.

Overall, the state lost 15,900 payroll jobs in July.

Seven employment categories added a total of 7,300 jobs. The gainers included two sectors: professional and business services, and leisure and hospitality.

The number of unemployed Californians looking for work increased 18,000 to 960,000 in July. That was 98,000 more than a year earlier.

Year over year, all of Southern California was down in construction employment -- with the exceptions of Riverside and San Bernardino counties. That was a bit of a surprise, given that the housing market in those areas has been particularly slow.

“Some people are scratching their heads about that,” said Jack Kyser, chief economist for the Los Angeles County Economic Development Corp.

He said that commercial construction could be responsible for the resilience of construction employment in those counties.

Metropolitan Los Angeles added 11,000 jobs according to the household survey, but lost 37,000 jobs according to the employer survey.

Surging motion picture and television production activity this summer in anticipation of possible strikes later this year and in 2008 probably contributed to the difference in the employment picture captured by the two surveys, Kyser said.

Because they are contractors, many entertainment production workers don’t show up on the employer survey but are captured by the canvas of a sampling of households.

The easing of credit Friday by the Federal Reserve Bank should help staunch the slide in the housing sector, but it could take a while for the effect to show up in the employment figures, said Adrian Fleissig, a Cal State Fullerton economist.

“The cut in the discount rate will stimulate economic activity and probably lower the unemployment rate in California and the U.S. towards the end of this year or early into 2008,” he said.

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