Surprise: L.A. County employment grows in May thanks to lag in announced layoffs.

Surprise: L.A. County employment grows in May thanks to lag in announced layoffs

Total employment in Los Angeles County actually increased in May, despite anticipated slowing and announced layoffs in the aerospace industry. According to the latest figures released by the state's Employment Development Department, total employment was 4,325,100 in May, up from the 4,305,900 people employed in April. Total employment in the county continued to show steady growth from last year: 4,233,400 people were employed in the county in May 1989.

"It's pretty much in keeping with the trend, both total and non-farm employment is coming in at a 2.2 percent growth rate monthly," said Adrian Sanchez, regional economist at Security Pacific National Bank. "Most of the job creation, however, is coming in service areas. And that is a significant factor."

The service sector showed strong growth in May. There were 3,262,700 employed in the service trades in May, compared with 3,244,800 in April and 3,163,100 in May 1989. Services include categories such as retail trade, business services, government and transportation and public utilities. These jobs tend to be lower paying than jobs in manufacturing and construction.

"By itself the service-producing sector cannot buttress the economy," Sanchez said. "But the increase in services is positive in that it can keep job growth at a moderate pace and keep negative impacts on the economy to a minimum."

Sanchez compared Los Angeles' current employment outlook to Arizona's recent past. In both 1985 and 1986, Arizona boomed, posting job growth of 8 percent to 10 percent in construction and manufacturing. When the economy slowed in those areas, service employment "kept job growth from turning negative and kept the economy from really dragging to a complete halt," Sanchez said. He said that it is possible that Los Angeles County will experience the same trend.

Employment in crucial categories, such as manufacturing, construction and high technology was steady in May in Los Angeles County.

The catch-all "high-tech" category, which includes the aerospace industry, increased to 268,000 employees, up slightly from 267,900 the previous month. While employment is down from the 279,700 measured in May last year, the numbers do not reflect layoffs announced by St. Louis-based McDonnell Douglas Corp., Calabasas-based Lockheed and Century City-based Northrop Corp.

"The layoffs will show up but it will be in gradual fashion," said Sanchez. "The bulk of the layoffs will come later this year and early in 1991."

Construction employment grew in May, increasing to 156,200 from 155,200 in April. There were 152,100 people employed in construction in May 1989. Successful bond issues on the June ballot are expected to further boost construction employment by late 1990, according to Jack Kyser, chief economist of the Los Angeles Area Chamber of Commerce. The growth, however, will likely be in heavy construction and employment in new-home construction and is expected to continue dropping, analysts said.

Manufacturing employment dropped in the month, down to 882,900 in May from 883,900 in April. Manufacturing employment was 895,500 in May 1989, according to the EDD. Manufacturing employers have "circled the wagons" in anticipation of a slowing economy, according to Kyser.

"Lumber, other wood products, glass, stone and other construction related manufacturing employment are all down because of slowing in commercial and residential construction," said Sanchez. "Navigation equipment and space equipment manufacturing, for example, are off because of slowing in the aerospace industry. Manufacturing employment is down because of its dependence on construction and aerospace."

The unemployment rate in May was 5.4 percent, identical to the 5.4 percent recorded in April. In May 1989 the unemployment rate was 4.6 percent. According to the EDD, there were 245,000 jobless in May, up from 239,000 in April and 192,800 in May 1989.

In May, there were 12,871 initial unemployment claims, compared with 11,954 in April and 11,760 in March. Initial unemployment claims are considered an early indicator of economic activity, because they record those people who have not filed for unemployment in the last 18 months.