April 17, 2009 / 4:52 PM / 8 years ago

California unemployment rises to record 11.2 percent

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SAN FRANCISCO (Reuters) - California's unemployment rate rose to a record 11.2 percent in March and analysts expect job losses across most industries in the most populous U.S. state to increase through much of this year.

"This is the worst recession since the Great Depression and it's not over," economist Steve Levy said on Friday shortly after the state released its March unemployment report.

"We have at least six more months of job losses," added Levy, of the Center for the Continuing Study of the California Economy.

At 11.2 percent, California's jobless rate was well above the March national unemployment rate of 8.5 percent and at its highest level since the U.S. government began collecting state unemployment statistics, Levy noted.

California's unemployment rate last month also rose significantly from a revised 10.6 percent in the prior month and 6.4 percent a year earlier as job losses spread across most of the state's industries, Levy said.

He added that California is facing steep job losses at the same time its ranks of prospective workers swell.

Nonfarm Payrolls Tumble

The state Employment Development Department's unemployment report said California lost 62,100 nonfarm payrolls jobs in March from February and its nonfarm employers shed 637,400 jobs from a year earlier, marking a 4.2 percent drop in the state's nonfarm payrolls.

That compares with a 3.5 percent drop in payrolls from March 2008 for the nation as a whole, Levy noted, adding that California has a greater exposure to the housing downturn and suffers related payroll losses in construction and finance.

California, which would rank as the world's eighth largest economy if it were a nation, was hit hard by the mortgage crisis, which left many of its local housing markets glutted with foreclosed homes and stalled new-home construction. In recent months, consumer spending in the state has slumped amid fears of a lengthy recession and layoffs.

California's increase in unemployment has outpaced the national rise also because the state's labor force has been growing quickly at the same time payrolls have been shrinking.

Over the past 12 months, 335,000 new job seekers joined the state's labor force and "became instantly unemployed," Levy said.

"If our labor force growth had been around the national average our unemployment level would be about 10 percent, which is still above the national average and still very painful," Levy said.

"We're a young state and an immigrant-attracting state and that will keep the unemployment rate higher," Levy said. "We offset that during recoveries by having above-average job growth ... and that's the only way we will close the gap."

Reporting by Jim Christie, Editing by Chizu Nomiyama

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