County Job Growth Projections Revised Downward

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County Job Growth Projections Revised Downward

By AMANDA BRONSTAD

Staff Reporter

Job growth in Southern California will be far slower this year than originally projected, as uncertainty over the state budget crisis, workers’ compensation costs and the national economy keep employers from hiring, according to a new forecast.

The report, being released this week by the L.A. County Economic Development Corp., projects that the county would add 17,200 non-farm jobs this year, an increase of only four-tenths of a percent over 2002. The LAEDC had earlier expected that the county would recoup the 40,000 jobs lost in 2002.

Jack Kyser, chief economist at the LAEDC, said the revision was due to several factors, including the sluggish national economy and growing concerns about the state’s fiscal crisis, which could bring about potential tax increases and a jump in vehicle license fees, which affect companies with large fleet operations. All these factors, Kyser said, will likely place additional cost pressures on business.

Yet the slower job growth comes as the LAEDC expects L.A. County’s unemployment rate to fall to 6.4 percent in 2003, from 6.8 percent in 2002.

The LAEDC report notes that declining unemployment and job growth may indicate an increasing number of Angelenos are self-employed. “We know that’s supported in Los Angeles because of the movie industry and professional business services,” he said.

Even with weaker-than-expected job growth, L.A. continues to fare better than the Bay Area, which expects more job losses this year, said Fred Furlong, an economist with the Federal Reserve Bank of San Francisco.

“We’ve had cautious hiring with regard to employment in a lot of regions throughout California,” Furlong said. “The pressures to control costs have forced businesses to find ways to meet the demands for goods and services more efficiently, to able to do it with fewer people. That’s why we have modest but positive growth (statewide).”

Year-end growth

Kyser anticipated job growth later this year, primarily in aerospace, architectural and engineering services. Growth could also come from financing and brokerage firms, which could add jobs in L.A. County with the surge in home refinancing activity and a slight up-tick in IPOs and corporate mergers. Jobs in health care are expected to increase as well.

While health care employment was expected to increase, the report was less than optimistic about the industry as a whole.

“This industry is going through a lot of turmoil, and yet the irony is jobs are being added because the population is growing,” said Kyser, pointing to cost pressures at hospitals, the nursing shortage and the tenuous relationship between private hospitals and the L.A. County’s Department of Health Services.

Another poor-performing industry is entertainment, which will see only modest job increases even with advertising spending expected to increase by 4.3 percent in anticipation of the Olympics and the 2004 U.S. presidential election.

Technology and tourism are likely to hold steady, with hotel occupancy in L.A. County increasing to 68.5 percent this year, up almost 2 percent from last year, the report says. The average hotel room rate should decline by 2.6 percent, however.

The only area expected to vastly improve this year is textiles and apparel, thanks to a projected year-end increase in retail sales.

“When business is tough, retailers go where there’s something new, cheap and quick,” said Ilse Metchek, executive director of the California Fashion Association. “It’s what we call fast fashion. L.A. is not noted for basic T-shirts. We make fast fashion.”

L.A.’s first “Fashion Week” event, held in April, brought in large numbers of buyers and much media attention to L.A., Metchek said.

And although retail spending nationwide is down, many retailers are gambling that consumers would empty their pockets for something new and different, Metchek said.

Also countering the darker employment view was the projected ongoing strength of international trade, which has seen strong gains statewide. The LAEDC expects the value of two-way trade from the Port of Los Angeles and Long Beach to reach a record $230.7 billion this year, up 7.6 percent from 2002.

Further positive signals are seen in L.A.’s booming housing market, where permits for 26,700 units are expected this year, the highest level since 1989, the report said.




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