Unemployment hits 4-year high

Slowing job growth pushed Sonoma County's unemployment rate to 5.6 percent in June -- the highest in more than four years, the state reported Friday.

Unemployment has been rising steadily over the past year in Sonoma County, where the weak economy left 15,100 job-seekers out of work in June, a 31 percent increase over a year ago. It is the largest number of people without jobs since January 1995, the state Employment Development Department reported.

While the county has added 800 jobs over the past year, job growth has slowed dramatically since the spring, according to the EDD. In the first three months of the year, the local economy was on track to create 2,600 jobs this year. But in the second quarter, job growth tapered off and the economy was on pace to produce just 700 jobs this year.

Much of the slowdown is tied to the housing downturn and cutbacks in consumer spending, which are deepening as the economy slumps and prices for gas and other goods rise.

"We've kind of had the perfect storm the last few months. The slowdown is taking hold more broadly," said Ben Stone, executive director of the county Economic Development Board.

The biggest losses over the past year were 1,000 jobs in construction, 300 among finance and insurance companies, 300 restaurant and bar jobs and 500 in other services.

But those losses were offset by gains in other sectors. Manufacturing companies have added 600 jobs over the past year, retailers hired 800 workers, professional and business services gained 600, and health care added 300.

Overall, unemployment in Sonoma County stood at 5.6 percent in June, up from 5.1 percent in May and 4.4 percent a year ago.

On balance, Sonoma County is faring better than much of the state. Only six counties have lower unemployment rates.

Job losses are mounting statewide, with California losing 63,200 jobs in June compared with a year ago.

California's unemployment rate hit 6.9 percent in June, matching its highest level in nearly five years. That is a small increase from 6.8 percent in May, but a significant jump from 5.3 percent a year ago.

The numbers indicate that weak consumer spending is emerging as the major drag on employment, said Stephen Levy, senior economist for the Center for Continuing Study of the California Economy. Rising energy prices and sharp losses in home and stock values -- along with the deteriorating jobs picture -- indicates California has entered a mild recession, he said.

Ray Sweeney is a victim of the economic slowdown in Sonoma County. The Santa Rosa resident is collecting unemployment after the painting company he worked for made cuts in response to fewer contracts.

"Quite a bit of it is related to housing. I know quite a few painters who are looking for work," Sweeney said.

Finding a job in a sputtering economy has been difficult for the 47-year-old, who has been a painter for more than 25 years. He has applied to more than a dozen companies, including hardware and warehouse stores, as well as painting contractors, and has turned to temporary agencies for help.

"It's very, very discouraging. I've just got to keep plugging away," Sweeney said.

The job outlook is not expected to improve for at least the next several months. Some of this is seasonal. Unemployment tends to rise every summer, peaking in July, said Devla Singh, a state labor market analyst.

But several sectors tied to housing continue to shed jobs.

"Construction has been losing jobs for the past 14 months. Financial activities has been losing jobs for the last 23 months," Singh said.

Tourism-related businesses aren't hiring as in past years, indicating a drop-off in consumer spending, Singh said.

"That's slowing. It's not the normal job gain," Singh said.

With little or no economic growth forecast, unemployment is expected to remain in the 5 percent range through the end of the year, according to the latest forecast for the region from Moody's Economy.com.

Economists describe the current economy as one that grows, but so slowly that unemployment rises. Such sluggish growth is expected to extend into next year.

"A lot of this is just a predictable pattern that we're going through as part of a recession," said Robert Eyler, director of the Center for Regional Economic Analysis at Sonoma State University.

More important is how long the economy takes to rebound, he said.

"Long term, the issue is persistence. We have to see some trends," Eyler said. "The next four to six months will be the real test to see if we wiggle out of this thing in 2009."

In Mendocino County, unemployment rose to 6.4 percent in June, up from 6.3 percent in May and 5.1 percent a year ago.

In Lake County, the jobless rate climbed to 9.5 percent in June, up from 9.2 percent in May and 7.8 percent a year ago.

You can reach Staff Writer Michael Coit at 521-5470 or mike.coit@pressdemocrat.com.