Unemployment inched up to 6.9 percent in California last month, the highest rate since January 1997, state officials said Friday. The new rate was a tenth of a percentage point higher than the month before.
The numbers released by the Employment Development Department showed the effects of the economic slowdown deepening throughout the state. They also appeared to reflect the impact the slowdown is having on the state treasury: Government jobs declined during the month, particularly in Sacramento.
The Sacramento-area unemployment rate rose four-tenths of a percent to 6.8 percent. That's the highest since March 1996 and was caused in large part by a 1,900-job decline in the region's state workforce. In the past year or so, state hiring had been one of the most reliable job generators in Sacramento as the private sector faltered.
Although it wasn't immediately clear what caused the state government job loss, "it could well be the budget," said Lynelle Jolley, spokeswoman for the state Department of Personnel Administration. With the state struggling with a $15.2 billion deficit, and the budget two weeks overdue, "departments are doing everything possible to eliminate vacancies," she said.
As for the overall economy, "the numbers say we're in a mild recession," said Stephen Levy of Palo Alto's Center for Continuing Study of the California Economy. "We've had job losses in five of the last six months."
Statewide unemployment is as high as when the state was struggling to recover from the recession of the early 1990s. California's unemployment is tied with Mississippi's for the third highest in the nation, behind Michigan's 8.5 percent and Rhode Island's 7.5 percent.
Across the state, employers reduced payrolls by 12,800 jobs during June and have cut 39,900 jobs in the past year, a reduction of 0.3 percent.
Levy said "it's a mild recession as measured by job losses" but probably feels worse to many Californians who are coping with falling home values and stock portfolios, and rising gas and food prices.
"It looks like a decelerating economy, more of what we've been seeing," said Howard Roth, chief economist at the state Department of Finance. "It looks like it's not just housing now, it's other sectors."
Retailers, for instance, cut 2,300 jobs across the state.
In greater Sacramento, jobs fell by 100 during the month and have dropped by 7,100, or 0.8 percent, since last year.
Sacramento-area construction contractors added 1,000 jobs during the month. But that's relatively weak for June; over the past five years, the region added 1,640 jobs in construction. Still, the fact that the industry added jobs at all should be "taken as a positive," said Diane Patterson, labor market consultant at EDD.
Sacramento's construction employment is still 6,700 jobs smaller than a year ago.
Call The Bee's Dale Kasler, (916) 321-1066.
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