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A blog about the economy and the Sacramento-area real estate market.

December 18, 2009
Unemployment falls, but job cuts resume

California's unemployment rate fell two-tenths of a percentage point last month, to 12.3 percent. But the state lost 10,200 payroll jobs, resuming a discouraging trend after a one-month holiday, according to figures released today by the Employment Development Department.

Analysts said the numbers suggest the economy is bottoming out - but is doing so slowly.

In October the state actually gained 31,100 jobs, the first monthly increase since April 2008. But economists cautioned that the job losses weren't over and there might have been some glitches in the November data - even though they generally put more faith in the payroll statistics than in the unemployment rate. The unemployment rate is calculated from a much smaller survey.

The November numbers, showing a resumption of job cuts, seemed to validate those warnings.

Sacramento unemployment was reported at 12.4 percent. That was unchanged from the October rate, which was revised. During the month, some 1,500 jobs disappeared in the Sacramento region.

Construction fell by 2,100 jobs - nearly twice as much as usual for November. And retailers added a mere 2,100 jobs, a much lower than usual for the month, said EDD labor market consultant Justin Wehner.

"You can see rays of hope in the California reoprt, but it's not really here in Sacramento," said economist Jeff Michael, director of business forecasting at the University of the Pacific.

Michael Bernick, former EDD director, said the drop in California's unemployment rate had more to do with Californians dropping out of the labor force, either because they're discouraged or they're seeking new job training. Once they drop out of the labor force, they're no longer counted among the unemployed.

Although there are encouraging signs on the job front, "we're not out of the woods yet," Bernick said.

At 12.3 percent, California was tied with Nevada and South Carolina for the third highest unemployment rate. Michigan had the worst unemployment at 14.7 percent and Rhode Island was second at 12.7 percent

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