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Local unemployment drops but job growth remains sluggish

At first glance, San Diego's unemployment report appeared promising, but a deeper look showed a troubling situation.

The region's unemployment rate dropped to 4.2 percent in April, down from 4.4 percent in March and to the lowest level this year. However, just 400 jobs were created here last month, a considerable decline from the 9,200 jobs added to the economy in April 2002.

So for the first time since 1993, San Diego's year-over-year new job growth was negative, according to the state's Employment Development Department, which also computes the unemployment rate. The region has now lost more than 1,300 jobs since April 2002.

"Of course one month doesn't make a trend," said Cheryl Mason, a local labor analyst with the EDD, "but if this continues in the next couple of months it could be a sign that San Diego is really headed for some trouble."

The California unemployment rate was 6.6 percent for April, down from a revised 6.9 percent in March. The national rate was 5.8 in April, down from 6.2.

The drop in the unemployment rate for April was the result of fewer people looking for work, a statistic that is difficult to track, Mason said.

San Diego's economy watchers were more concerned with the precipitous drop in the growth of new jobs, since that is one of the primary indicators of a recession.

"Having it go negative like that is a concern, because maybe it is saying or indicating that a recession is going to hit San Diego, that we're actually going to see a downturn in our economy," said Kelly Cunningham, the economic adviser to the San Diego Regional Chamber of Commerce. "One month certainly doesn't make it (a recession) -- the national definition is you have to have two consecutive quarters of negative growth. This doesn't necessarily say that we're having a recession, but it does say something very significant."

The local job market for the last 10 years benefited from a healthy, expanding business sector and a plump government, collecting steadily increasing corporate and personal tax dollars. But when the economy, and the technology industry in particular, stumbled in early 2000, few immediately understood the depths to which the economy would fall, and thus were unwilling to part with employees.

The recently concluded war in Iraq also hindered the economy. An estimated 10,000 locally based Marines and sailors shipped half-way around the world severely impacted discretionary spending in parts of San Diego County with high concentrations of pre-deployed military personnel.

Alan Gin, an economics professor at the University of San Diego, said the local job market drought was likely the result of tough economic times for nationwide customers of San Diego businesses.

"The war certainly had an impact, it took a lot of spending power out of the economy ... but I also think this reflects a problem that we're having in the economy both nationally and locally," he said. "We have weak economic activity now and if you look at the national economy, the national economy lost 500,000 jobs in the last three months. Because we're more tied to the national economy, that's hurting us here."

Business sectors that increased jobs in April were construction, up 1,300 jobs; trade transportation and utilities, up 300 jobs; travel and hospitality, up 200 jobs; and financial activities, and professional and business sectors, both up 100 jobs.

Decreased job numbers were recorded in manufacturing, down 800 jobs; education and health, down 400 jobs; government, down 300 jobs; and other, nondescript services, down 100.

No changes were recorded in information or natural resources and mining.

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