The state’s latest unemployment report doesn’t take into account business shutdowns imposed in late July.

The state’s latest unemployment report doesn’t take into account business shutdowns imposed in late July. Photo by California Employment Development Department

The snapshot of L.A.’s economy in July was a good news, bad news story.

First, the good news from the state Employment Development Department: Los Angeles County’s unemployment rate fell nearly 2 percentage points last month to 17.5% from 19.4% in June.

That’s the most significant drop in unemployment since the Covid-19 pandemic hit the county in March.

Data from the EDD’s monthly household survey, which calculates the unemployment rate, showed the number of L.A. County residents who reported that they were working rose by 74,000 in July, topping 4 million for the first time in three months.

And the number of residents who said they were unemployed in July fell by 95,000 to 863,000. That figure had been near 1 million in May.

On the cautionary side, the EDD data sampling took place during the second week of July, just as Gov. Gavin Newsom and Los Angeles Mayor Eric Garcetti started to reimpose shutdowns on bars, indoor dining areas and indoor personal grooming services amid a surge in coronavirus cases. That means those shutdowns were not yet reflected in the July sample.

“Since the survey was taken during the week of July 12, the situation in L.A. County has deteriorated,” said Sung Won Sohn, professor of finance and economics at Loyola Marymount University in Westchester. “A rollback in economic openings has been ordered. More layoffs have occurred, especially at small- and medium-sized enterprises. … The August numbers are likely to be worse than July.”

Payroll job growth in L.A. County continues to be anemic. EDD data for July showed a drop of roughly 3,600 payroll jobs from June to 4,093,500, mostly due to seasonal layoffs in the education sector. That reversed two months of payroll job gains.

Growth slowed dramatically from the 147,000 jobs added in June as the economy reopened. For economists, it’s a sign that the snapback from the spring shutdown may be over, with the payroll job count in L.A. County still down 425,000 from a year ago.

“The momentum gained in June has been tempered,” said Taner Osman, research economist with Beacon Economics in Westchester. “Since the end of June, the economy has essentially been moving sideways,” he added.

Adding to the bad news was the end of two major federal government aid programs in recent weeks: the additional $600 unemployment insurance payouts and the Paycheck Protection Program for employers.

Osman said the Aug. 8 conclusion of the Paycheck Protection Program could force some businesses could be forced to close entirely. “Both of these programs were designed to be stopgap measures to get us through three or four months, with the bet that by the expiration dates, the economy will have recovered enough on its own to make extending these programs unnecessary,” Osman said. “But that hasn’t happened.”

L.A. County’s economy continues to be harder hit than much of the rest of the nation. The 17.5% unemployment rate for July was well above the 13.3% statewide level and 10.2% national figure.

Part of this is due to the fact that the county is still a coronavirus hot spot. But it’s also due to the mix of industries that, until this year, had been one of the county’s great economic strengths.

“Roughly 46% of the jobs in the county are in high-risk industries,” Shannon Sedgwick, director of the Institute for Applied Economics at the Los Angeles County Economic Development Corp., said in a Zoom briefing last week.


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