March 20, 2009 / 4:49 PM / 11 years ago

California unemployment rate hits 10.5 percent

SAN FRANCISCO (Reuters) - California’s unemployment rate rose to 10.5 percent in February, its highest in nearly 26 years, as most industries in the most populous U.S. state slashed payrolls.

The increase underscores how the U.S. financial crisis and slump in consumer spending it prompted is battering California’s economy, the world’s eighth largest, and compounding troubles brought on by its prolonged housing downturn.

At 10.5 percent, California’s unemployment rate is at its highest level since April 1983 and has increased for 11 consecutive months, economist Steve Levy of the Center for the Continuing Study of the California Economy said on Friday after officials reported on the state’s labor market.

California’s economic downturn is affecting nearly all its industries — although its entertainment, natural resources, education and health industries are showing some resilience — in contrast to previous recessions when a few industries suffered most.

California’s high-technology companies, for instance, felt the brunt of job losses earlier this decade after the implosion of dot.com companies.

This time, “It’s a huge vicious cycle,” Levy said. “We’re in it with other states. Oregon, for example, says it has 10.8 percent unemployment ... It’s every place.”

MOST INDUSTRIES SHED JOBS

California is suffering more than many other states and its unemployment rate is running ahead of the national average because the state had one of the nation’s most overheated housing markets earlier this decade and because its labor force is growing at a time when companies are cutting payrolls, Levy said.

Slowing international trade through California’s ports, which are major gateways for exports to and imports from Asian markets, also is hurting the state’s jobs market, Levy said.

California’s February jobless rate edged up from 10.1 percent in January and far exceeded both the state’s 6.2 percent rate a year earlier and the national unemployment average for February of 8.1 percent, according to a report released on Friday morning by the state’s Employment Development Department.

California lost 116,000 non-farm payroll jobs in February from January and 605,900 non-farm jobs from a year earlier, marking a 4.0 percent decrease in nonfarm payrolls, the Employment Development Department’s report said.

The report noted that only one industry category tracked by state labor market analysts expanded payrolls in February from January — 7,900 new information industry jobs amid an employment upswing at film studios, Levy said.

Ten industry categories posted job losses between the months, led by construction, which shed 30,900 jobs.

Compared with a year earlier, only two industry categories, natural resources and mining and educational and health services, expanded payrolls, adding a combined 31,000 jobs.

Educational and health services posted the strongest job increases in both numbers and by percentage, or 30,900 jobs for a 1.8 percent increase.

Nine industry categories pared payrolls from a year earlier. Trade, transportation and utilities shed the most positions on a numerical basis, or 159,900 jobs. Construction lost the most jobs on a percentage basis, with its payrolls down 18.5 percent, representing the loss of 155,100 jobs.

Job losses have grown so severe in California the report on last month’s unemployment situation said the state would open its call-center on Saturdays to respond to increased demand for assistance for unemployment insurance benefits.

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