Business

Friday, Sep 20 2013 09:21 AM

California's unemployment rate rises again as Kern's rate drops to 10.9 percent

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    By AP Photo/Rich Pedroncelli

    Visitors use the Unemployment Insurance phone bank at the California Employment Development Department office in Sacramento, Calif., Friday, Sept. 20, 2013. California's unemployment rate increased to 8.9 percent in August, the second consecutive monthly increase.

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    By AP Photo/Rich Pedroncelli

    Aleah Metzler fills out some forms at the California Employment Development Department office in Sacramento, Calif., Friday, Sept. 20, 2013. California's unemployment rate increased to 8.9 percent in August, the second consecutive monthly increase.

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By STAFF AND WIRE REPORT

California's unemployment rate rose for the second consecutive month in August, to 8.9 percent, even as the state added more than 29,000 jobs, the state Employment Development Department said Friday.

The seasonally adjusted jobless rate is up nearly a half-percent since June, when it was 8.5 percent and is two-tenths of a percentage point higher than in July. When California's unemployment rate rose in July, it was the first increase since spring 2011.

"It's definitely not with the prevailing trend, which has been declining unemployment," department spokesman Kevin Callori said. "We've had two years of rate decreases."

In Kern County, a surge in agricultural hiring drove the jobless rate down to a seasonally unadjusted 10.9 percent in August from a revised 11.6 percent the month before.

Much of Kern's improvement can be attributed to a 5,000-job month-over-month increase in farm employment. Countywide, 5,100 net new jobs were created in August.

The state has seen 26 consecutive months of job growth since the recession ended, the longest streak of any state, including the 29,100 jobs added in August.

It was not immediately clear why California was experiencing the apparently contradictory trend of a rising unemployment rate coupled with greater job creation.

One answer could be statistical: As the economy improves, people who have been unemployed for so long they are not counted in the government statistics start looking for work again, thus showing up in the unemployment figure. Or it could be that more jobs were lost than created over the summer.

Stephen Levy, senior economist for the Center for Continuing Study of the California Economy, said the unemployment rate is based on a smaller and more volatile survey, and likely was affected by seasonal employment.

"The more accurate number is the job creation," he said. "It's another month of this slow path to a full recovery, painfully slow."

The statistics show that California added jobs at a slightly faster pace than the nation; that coastal areas and higher-paying jobs are recovering more quickly; and that two sectors that had been a drag on the economy, construction and government, are slowly beginning to recover.

Christopher Thornberg, founding partner of Beacon Economics, said a two-month rate increase is too soon to worry. He said the previous two months showed unemployment dropping "at almost an unbelievable rate," and he thinks the longer-term statistics will show steady improvement for California's economy.

"There's noise in the data. You can't look at one or even two months of this data and say it means that much," he said.

Still, he said there is a downturn in some areas, including trade with China and Mexico, because of the slowing in the world economy. But he believes California's overall outlook is positive.

"We really have sort of turned the corner," he said.

California's jobless rate had been in double digits and was among the highest in the country during the recession. It fell to 8.6 percent in May, which was the first time it had been below 9 percent in five years.

It has been edging back up since then and remains above the national average of 7.3 percent. The Employment Development Department says more than 1.6 million Californians remain out of work, up 23,000 over July.

Nevada, at 9.5 percent, has the highest unemployment rate of any state, followed by Illinois, Rhode Island and Michigan.

California added 29,100 jobs in August despite the uptick in the unemployment rate. That continues a positive trend that has seen 826,500 jobs created in California since February 2010. Since August 2012, the state has seen an increase of 223,900 jobs.

Nine of the 11 main job categories gained a combined 34,100 jobs between July and August. They included mining and logging, construction, manufacturing, financial activities, professional and business services, educational and health services, leisure and hospitality, and government.

Construction posted the largest increase since July, adding 7,700 jobs. The Associated General Contractors of America said California added the most construction jobs of any state on a year-over-year basis.

"It will take a lot more growth, however, before construction employment levels return to their pre-recession levels in most places," Stephen E. Sandherr, the association's chief executive officer, said in a statement.

Two categories dropped a combined 5,000 jobs last month: information and the trade, transportation and utilities industry.

Michael Bernick, a former director of the Employment Development Department who is now a fellow at the Milken Institute economic think tank, said in an email that the increase in payroll jobs is a more important economic indicator than the increase in the unemployment rate.

He said the 29,100 jobs created in California substantially exceeds the 18,000 jobs the state would have expected to see as its share of the 169,000 payroll jobs created nationwide last month.

-- Staff writer John Cox and The Associated Press contributed to this report

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