State Unemployment Rate Increased

The State unemployment rate jumped 0.3% to 6.4%. This is the highest unemployment rate in the US after Michigan and Alaska.

Here are the unemployment rates for the following counties. The previous month’s adjusted unemployment rates is in parentheses:

Los Angeles County – 5.8% (5.3%) – Total nonfarm employment down 13,600 or 0.3% over a year ago

Orange County – 4.6% (4.3%) – Total nonfarm employment down 21,700 or 1.4% over a year ago

Inland Empire – 7.1% (6.7%) – Total nonfarm employment down 21,700 or 1.7% over a year ago

Ventura County – 5.6% (5.5%) – Total nonfarm employment down 5,600 or 1.9% over a year

Interpretation: Unemployment is a lagging indicator. Businesses usually cut back in other expenses before cutting staff; reduced staff hours, slowdown in hiring, cutting back on office supplies etc.

The large increase in unemployment in California is due to a few sectors; construction, finance and real estate. These industries were heavily concentrated here in California, home building in the Inland Empire and mortgage industries in Orange County.

The real estate boom was not without cost and we are paying it now. The market is self correcting, home prices will come down, financing will dry up and construction will slow until buyers and sellers stabilize. This rise is unemployment will be felt hardest where construction was heaviest, where land was cheapest.