Helped by a strong holiday shopping season, California unemployment fell below 10 percent for the first time in nearly four years last month.
The statewide unemployment rate dropped three-tenths of a percentage point, to 9.8 percent, the Employment Development Department reported Friday. It was the lowest rate since January 2009, during the worst of the recession, when unemployment stood at 9.7 percent, and signified that California continues to make a long, slow climb out of the recession.
November's news wasn't all good, however. A separate survey by EDD showed payrolls actually shrank by 3,800 jobs.
The payroll survey is usually considered more reliable, but top economists said they believe this is the exception California's job market really is continuing to expand, albeit slowly.
Experts said it's possible the drop in the unemployment rate really wasn't as steep as Friday's report claimed. Still, having unemployment drop below 10 percent is a worthy milestone, said Dennis Meyers, principal economist at the state Department of Finance.
"We're not out of the woods, but it feels better now single digits," he said.
Unemployment in the Sacramento region remained unchanged at 9.8 percent even though 2,900 jobs disappeared during November.
Although some of the Sacramento job losses were due to seasonal factors, like the wind-down of the construction season, the November numbers were something of a letdown. They followed several strong months that suggested the recovery was kicking into a higher gear.
"It sort of tempers some of the stronger numbers we've seen over the year," said economist Jeff Michael of the University of the Pacific. "One month's weak report doesn't change the outlook. It's just a reminder it's a pretty weak recovery out there."
The numbers don't reflect recent setbacks, such as the closure in late November of the Hostess Inc. factory in Sacramento. The company's failure will cost the region 300 jobs.
Retailing is one of the bright spots, statewide and in Sacramento.
EDD consultant Justin Wehner said retailers in Sacramento added 4,800 jobs last month; the average for November is 3,200. Retail employment is 5 percent higher than the same time a year ago, suggesting the holiday shopping season has been a good one.
"Overall, we're seeing growth," said Tod Strain, manager of Arden Fair mall. "Our merchants are hiring."
At 9.8 percent, California unemployment is third highest in the nation, behind Nevada (10.8 percent) and Rhode Island (10.4 percent). The state has recaptured just 40 percent of the 1.4 million jobs lost to the recession.
Nonetheless, it has added jobs at a 1.9 percent rate in the past year, one of the best records in the country. Economist Chris Thornberg said the state avoided much of the slowdown that hit the rest of the country earlier this year.
"California has shown a certain amount of resilience," said Thornberg, head of Beacon Economics consulting in Los Angeles.
Interpreting November's numbers was more challenging than usual. It isn't unheard of for the unemployment rate to fall even if payrolls decline. Usually, the explanation is that the labor force has shrunk, as fewer people were looking for jobs and therefore weren't counted among the unemployed.
This time, however, the labor force actually grew.
Bottom line, economists said they were doubtful that employers were cutting back in November. Thornberg and Meyers noted that the reported 3,800 statewide job loss in November was likely a statistical fluke. It included significant losses in some of the state's strongest economic sectors, including private education and health care.
"I find it implausible that these sectors are all of a sudden giving up jobs," Thornberg said.
On the other hand, he said he's troubled by a loss of nearly 9,000 factory jobs during November. The manufacturing sector in California continues to falter even as it's gained strength nationally.
A possible factor is the state's new cap-and-trade market, which restricts carbon emissions by heavy industries. Businesses complain the program will cost them at least $1 billion a year. At the very least, Thornberg said, it contributes to "regulatory uncertainty" and could dissuade factories from expanding in California.