California unemployment rate rises to 12% in July

California’s unemployment rate increased in July while job creation slowed to a crawl, fueling fears that the state’s fragile recovery is faltering.

Last month’s unemployment rate ticked up to 12% from 11.8% in June, according to figures released Friday by the state Employment Development Department. California now has the second-highest rate of unemployment in the nation, trailing only Nevada at 12.9%. Its jobless rate is well above the U.S. average of 9.1% in July. 

The hiring picture was particularly bleak. California employers added just 4,500 new jobs last month, a steep drop from the revised 30,400 jobs added in June.

Interactive: Unemployment, state by state

Though pockets of the Golden State are doing well, including San Diego’s bio-sciences companies and Bay Area start-ups, weak consumer demand and employer skittishness have curtailed growth in the Central Valley, Inland Empire and Los Angeles. Los Angeles County’s unemployment rate rose sharply to 12.4% in July from 12% in June. 

“The California economy is treading water. It’s growing but not fast enough to create net new jobs,” said Scott Anderson, the senior economist at Wells Fargo Securities. “The recent knock in consumer and business confidence could be enough to tip California back into recession.”