L.A.'s unemployment rate shot up to 5.6 percent in December the highest level in nearly two years as the impacts of the writers' strike and the housing slump rippled through the local economy.

According to data released Friday from the state Economic Development Department, the unemployment rate for Los Angeles County rose three-tenths of a point in December from November and more than a point from the historic low 4.5 percent rate reached last December. The main culprit was a drop of 15,600 in the number of residents reporting they had jobs; many of those are likely freelancers and independent contractors in the entertainment industry.

Meanwhile, the number of jobs reported on company payrolls rose by 12,700, or 0.3 percent, to 4,185,700 in December from November. While still positive, this represents a sharp slowdown in the rate of payroll job creation.

"These figures show a continued slowdown in economic growth. But that slowdown is not hitting evenly. Anything related to housing and finance is in recession, but some manufacturing sectors and tourism-related industries are still performing quite well," said Jack Kyser, chief economist with the Los Angeles County Economic Development Corp.

Statewide, the unemployment rate jumped to 6.1 percent in December, up from 5.6 percent in November and from 4.8 percent in December 2006. State payrolls grew by a mere 15,500 jobs, or 0.1 percent.

This unexpectedly large increase prompted Gov. Arnold Schwarzenegger to announce Friday that he had instructed officials in his administration to work with the Legislature to find ways to speed the release of $29 billion in unallocated funds from the $40 billion in infrastructure bonds approved by voters in November 2006.

For the 2007 calendar year, L.A. County added 30,500 non-farm payroll jobs, an increase of 0.7 percent. That's less than half of the 1.7 percent job growth rate recorded in 2006 and is another indication that the local economy is slowing.

The discrepancy between the jobs reported by residents and the jobs reported on company payrolls is largely due to the fact that many residents have held jobs that do not show up on company payrolls. They could be independent contractors receiving IRS 1099 forms or they could be working for cash completely off the books.

Since many writers are freelancers or independent contractors, this may reflect the impact of the writers' strike, which started Nov. 5. It may also help explain why, despite the strike, payroll jobs actually increased in the motion picture and sound recording sector, up 800, or 0.6 percent, from November and 1,800 jobs from October.

"We know there are 11,000 workers in the television industry whose shows are dark and are out of work," Kyser said. "And we also know that not only writers, but below-the-line production folks also receive 1099 forms and are not on company payrolls. They move from show to show."

Also, many workers in the construction industry are day laborers or others paid on a cash basis.

On the positive side, retail employment posted a seasonal gain of 8,400 jobs in December, a 1.9 percent increase. For the 2007 year, health services posted the largest increase of 9,800 jobs, followed closely by educational services, up 7,900 jobs.

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