Oct. 17--Layoffs returned to California in a big way last month, suggesting a setback on the road to economic recovery.

The state's unemployment rate actually fell to 12.2 percent from a revised 12.3 percent in August, the Employment Development Department reported Friday. But analysts were more focused on the loss of 39,300 payroll jobs in September. That was significantly worse than August, when only 7,200 jobs vanished and the outlook seemed brighter.

While still a far cry from the 60,000-plus monthly job losses recorded earlier this year, the September numbers show the layoffs "are not moderating as much as I thought last month," said Howard Roth, chief economist at the state Department of Finance. The payroll jobs figure is considered more reliable than the unemployment rate, which is calculated using a smaller survey sample.

Sacramento's September was somewhat brighter. Unemployment fell to 11.8 percent, down two-tenths of a percentage point from August. And the region gained 200 jobs, the first monthly increase since May.

Yet the improvement was largely a seasonal phenomenon. The start of the school year put teachers back on the payrolls, said Justin Wehner, labor market consultant at EDD.

Many other sectors of the economy continue to struggle. Some 1,600 construction workers lost their jobs in Sacramento last month, far more than the typical fall cutback, Wehner said.

Statewide, 14,100 construction jobs disappeared, the worst of any major industry.

"We remain mired in recession," said Stephen Levy, director of the Center for Continuing Study of the California Economy.

Some top economists have said the national recession is probably over, including Federal Reserve Chairman Ben Bernanke. But California will likely lag the U.S. recovery, and the job market usually recovers more slowly than the economy.

It felt like a recession Friday at the EDD's job center on Broadway in Sacramento. Unemployed bookkeeper Marlena Turner was flabbergasted when told the region's unemployment rate had fallen.

"It seems like every time you turn around, people are getting laid off," said Turner, 62, who lost her job in February.

As for her own job search, she said: "You send out resume after resume -- not even a nibble."

Sacramentan Joe Rodriguez, 54, was laid off a year ago from a gravel plant. He checks in periodically with his union, Operating Engineers Local 3, but "they don't have anything for me yet."

Although the start of the school year produced thousands of jobs, the effect of budget cuts was obvious. School employment was about the same as last year in the Sacramento region but down by about 15,200 jobs statewide.

"This is certainly the month that government job losses came home in the numbers," Levy said.

California's city and county governments employed 18,100 fewer workers than a year ago.

And Sacramento, more than any other area in California, continues to suffer the effect of state furloughs three Fridays a month. The furloughs don't count toward the jobless numbers but are robbing the region of hundreds of millions of dollars in wages.

More layoffs are coming. Calpine Corp., an independent energy producer, will close its Folsom payroll and accounting office in November, eliminating 88 jobs. The work is being transferred to Calpine offices in Dublin and Houston.

And it doesn't look like much relief is coming from the retail sector for the holidays. Former EDD director Michael Bernick, a senior fellow at the Milken Institute, said the fall hiring looks weaker than usual.

The hiring spree by discount retailer Kohl's is a welcome boost for the economy. But for the most part, "retailers are already saying they don't expect to add a lot of seasonal employees," Bernick said.

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Call The Bee's Dale Kasler, (916) 321-1066. Read his blog on the economy, Home Front, at www.sacbee.com/blogs.

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