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Chapman: State's job market sees improvement

Though employment levels are still below last year, numbers are growing on a monthly basis.

By Kristen SchottPublished: May 05, 2010 10:38 AM

A job market study by Chapman University's A. Gary Anderson Center for Economic Research suggests the state’s employment picture is improving, albeit slowly. Still, that’s welcome news coming on the heels of a report by Chief Executive magazine, which called California the worst state to do business, in part because of its 12.6 percent unemployment rate.

According to the Chapman report, the California Index of Leading Employment Indicator jumped to 94.8 during the second quarter of this year, up from 81.9 in the first quarter. Although it’s an increase, the number still falls below 100, indicating continued job losses in a year-over-year comparison. A level over 100 points to yearly job growth.

The state gained 32,400 jobs in the first quarter of the year, but total payroll employment is down 4 percent compared to the first quarter of 2009. However, the Chapman study does show that the state's employment picture is strengthening on a month-to-month basis.

"The good news is we're adding a little more (jobs) every month," says Chapman economist Esmael Adibi, "and eventually we'll exceed what we were at."

Job creation should continue in the second quarter and year-over-year losses will also improve, he says.

Adibi adds that Orange County will most likely mirror the state.

The indicator is based on a number of factors that impact California's payroll employment growth, including movements in the values of real Gross Domestic Product, real exports, the S&P 500 and the state’s total construction spending, which was the only component that showed continued weakness.

Construction spending decreased by 35 percent in the first quarter of the year, which is up slightly from 33.5 percent in the previous quarter.

Looking ahead, Adibi says the overall improvement in the indicator series suggests that the local, state and national recovery is growing, and he predicts a drop in the unemployment rate in mid-2010.

"If the trend continues into the third quarter," he finishes, "we will surpass what we were at in the third quarter of last year."

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