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California jobless rate increases to 8.7 percent
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SACRAMENTO (AP) — California's unemployment rate increased slightly to 8.7 percent in July, the first such bump since the spring of 2011, state officials announced Friday.

The rate increased two-tenths of a percentage point, up from 8.5 percent in June, according to the state Employment Development Department.

However, the state remains on an overall positive trend and the slight increase could be a statistical aberration, said department spokesman Kevin Callori. July tends to be more volatile because of summer seasonal employment and because recent graduates are seeking jobs.

"It's definitely a departure from the prevailing trend because we had 23 straight months of decreases," he said. "We always caution people not to look at a particular month and focus on the trend. We've dropped quite a lot since last year."

The rate was 10.6 percent in July 2012.

California's rate continues to exceed the nation as a whole. The U.S. unemployment rate dropped slightly to 7.4 percent for July.

Some 1.6 million Californians remained unemployed in July. That is up 29,000 over June, but down by 328,000 compared with July of last year.

The state added more than 38,000 nonfarm payroll jobs in July despite the increase in the rate.

Michael Bernick, a former director of the department who is now a fellow at the Milken Institute economic think tank, called the job gains "impressive" and noted in an email that they among the highest monthly increases since the economic recovery began in February 2010. He also downplayed the significance of the uptick in the monthly jobless rate.

Callori said it is the largest payroll job increase since October 2012 and marks the 25th consecutive months of payroll job growth.

Job gains were led by the professional and business services sector, which added 15,000 jobs last month.

"That's a good sign as well, because those are the higher paying jobs," Callori said.

Other industries adding jobs were manufacturing; trade, transportation and utilities; information; educational and health services; leisure and hospitality; and other services.

Together, the seven sectors added nearly 50,000 jobs.

The increases were offset by a loss of more than 7,000 construction jobs. Mining and logging and government employment also dropped in July, for a total of more than 11,000 jobs lost.

The jobless rate dropped below 9 percent this spring for the first time in five years, when it fell to 8.6 percent in May.

Assemblywoman Diane Harkey, a Republican from Dana Point who expects to run for the state Board of Equalization next year, added a note of caution.

Not only did the unemployment rate increase, but state tax revenues fell $266 million below the state Department of Finance's forecast for July, the first month of the fiscal year. Democrats who control the state Legislature have been lobbying to increase spending on social programs, but Harkey supported the conservative approach adopted by Democratic Gov. Jerry Brown.

She said consumers and business owners may be reacting to temporary income and sales tax increases sought by Brown and approved by voters last year, and to uncertainty over the looming potential costs of the federal Affordable Care Act.

"Whenever you make huge changes, that can affect the bottom line," said Harkey, vice chairwoman of the Assembly Appropriations Committee. "You're going to cut back on employing people and do with what you have. I think all of these things are starting to hit home."