Vol. 1, No. 2
Issued July 6, 1998
Covering the period through April 1998

Next publication date: August 3, 1998

In This Issue

• Unemployment Hits New Low
• Construction Growth Continues
• Foreign Trade Slowdown Tied to Asia

Unemployment Hits New Low
California's seasonally-adjusted unemployment rate fell slightly in April to 5.9 percent, matching its lowest point (recoreded in February of this year) since the start of the 1990s recession (Figure 1). Despite this continued drop, the unemployment rate in the state remains about a point above levels in the late-1980s. (See RAND California Employment and Unemployment Statistics for up-to-date employment statistics on California and its regions.) The number of civilian unemployed currently registers 950,000, one-third less than the high point of 1.5 million unemployed in October 1992.

Figure 1
California Unemployment Rate

The largest one-year decrease in the unemployment rate occurred in Imperial County. However, the rate there remains the state's highest at more than 20 percent (Figure 2). Large drops also occurred in Amador, Lake, and Tuolumne counties, and in the Modesto MSA. (See RAND California MSA and Region Definitions for geographic areas.) The largest increases in the unemployment rate occurred in Colusa, Tulare, and Glenn counties, and in the Sutter-Yuba and Fresno MSAs. Among California's major metropolitan regions, the unemployment rate fell the most in the Ventura MSA (1.0 percent) and San Diego MSA (0.9 percent). The largest increases in metropolitan areas occurred inthe Fresno MSA (1.2 percent) and Bakersfield (0.3 percent) MSAs. The unemployment rate for the state as a whole fell 0.5 percent.

Figure 2
Largest One-Year Increases and Decreases in Unemployment Rates

During the last year, California added about 430,000 nonfarms jobs, with well over one-half of these in Los Angeles, Orange, Riverside, and San Bernardino counties (Figure 3). Nearly one-fourth of the jobs gained were in Los Angeles County alone. This rate of employment growth for the Los Angeles Region suggests that its growth has almost caught up with that in the San Francisco Bay Region on a population share basis. In the past year, 45.8 percent of the increase in nonfarm jobs occurred in the Los Angeles Region, where 48.5 percent of the state's residents live. Just under 21 percent of the increase in nonfarm jobs occurred in the San Francisco Bay Region, where 20.1 percent of the state's residents live.

Figure 3
Share of Increase in Nonfarm Employment

Nearly 80 percent of the increase in employment over the last year occurred in service-producing industries. About one-half of the increase in the services sector was in business services, which expanded 8.5 percent in the last year.

Construction Growth Continues
A significant part of California's economic recovery is the construction industry. Although construction employment was flat from March-April, it rose nearly 50,000 for the year ending in April, including about 16,000 jobs in the Los Angeles Region and 12,000 in the San Fransisco Bay Region. Both residential and non-residential construction are benefitting from the recovery, as evidenced by the value of all new construction. According to the Construction Industry Research Board, the value of all new construction in April rose to $3.06 billion, a 14.2 percent increase over April 1997. New residential construction increased to $1.85 billion, 13.1 percent higher than April 1997. New non-residential construction increased to $1.20 billion, 16.0 percent higher than April 1997 (Figure 4). (See RAND California County-Level New Construction Statistics for residential and non-residential valuation and building units for California and its regions.)

Figure 4
Non-residential Construction Valuation

The number of new housing unit authorized grew 1,000 to 10,800 in April (Figure 5). However, as indicated, the number of housing units statewide still has not recovered to levels of the very early 1990s.

Figure 5
California New Housing Units Authorized

Foreign Trade Slowdown Tied to Asia
California foreign trade has slowed considerably since the onset of financial and other economic problems in several Asian countries. According to the U.S. Department of Commerce, April exports from all California customs districts fell 10.4 percent from April 1997 (Figure 6). The largest drop was in exports from Los Angeles, which registered a 13.4 percent decline. (See RAND California Merchandise Trade Statistics for more details.) Merchandise exports from the U.S. overall fell just under 3 percent.

Figure 6
Merchandise Exports from California Customs Districts, U.S.

Sharp drops in exports to many of California's trading partners account for much of the decline. Year-to-date (through April) U.S. merchandise exports have increased 2.6 percent over 1997 levels. However, exports to Asia and the Pacific have fallen more than 11 percent (Figure 7). U.S. year-to-date exports to Asia and the Pacific for 1997 and 1998 are illustrated in Table 1. The sharpest decrease is to Korea, where U.S. exports are off by nearly 50 percent.

Figure 7
U.S. Merchandise Exports by Destination

Table 1
Year-to-date U.S. Merchandise Exports to Asia and the Pacific
($ billions)

 Source: U.S. Department of Commerce

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