California’s Unemployment Rate Maintains Record Low in May

June 19, 2018
Source: Pacific Union Bay Area Real Estate Blog

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  • The Golden State added 5,500 jobs in May and downwardly revised April’s monthly growth to 25,600, according to the latest numbers from the California Employment Development Department. This year’s job numbers have been unusually volatile, mostly due to larger-than-usual changes in industries that are sensitive to seasonal trends. Total state numbers also differ slightly from changes seen at metropolitan area levels, suggesting that statewide numbers may be revised upward.
  • California’s unemployment rate remained at a record-low 4.2 percent in May. Many metropolitan areas showed further declines in unemployment rates, largely driven by the state’s shrinking labor force, which dropped for the third consecutive month and now totals 49,000 persons. It was also the fifth labor-force decrease in the last seven months.
  • Four industries added a total of 12,900 jobs in May, with the largest gains in the leisure and hospitality sector, followed by professional and business services, information, and other services. Six industries reported losses, with the most coming from the construction industry, followed by trade, transportation, and utilities and educational and health services. Nevertheless, since last May, 10 of 11 industries added a total of 307,600 jobs, with the largest gains in the educational and health services sector, leisure and hospitality, and construction. Other sectors that added jobs over the year were professional and business services; trade, transportation and utilities; government; information; manufacturing; financial activities; and mining and logging. Only other services posted a year-over-year loss. Other services include jobs in repair and maintenance; personal and laundry services; and religious, civic, and similar organizations.
  • The large monthly swings may overshadow the strength of California’s employment numbers. Taken together, the state added 306,000 jobs from last May, a 1.8 percent increase. Despite the monthly decline in construction jobs, the industry is still creating positions at the fastest rate in the state, up by 6.2 percent year over year in May. Further, information-sector jobs, which are declining in other states, grew at a solid pace, up by 3.3 percent since last May, with gains in data hosting, digital media, and software compensating for declines in print media and landline communications.
  • All California metro areas saw employment rise over the past three months.
  • San Francisco and San Mateo counties added 2,100 jobs from April, and the unemployment rate dropped to 2 percent. The leisure and hospitality sector saw the strongest gain, boosted by accommodation and food services, particularly restaurants. Professional and business services saw a similar increase, mainly due to jumps in administrative and support services. On an annual basis, the two-county area added 21,000 jobs, with half of those in professional and business services — particularly computer systems design and related services. The information sector experienced the second largest net increase. With these changes, it appears that about three-quarters of new jobs added were in high-income sectors.
  • Santa Clara and San Benito counties added 4,000 jobs in May, and the unemployment rate ticked down to 2.3 percent. Monthly job gains were mostly in the leisure and hospitality sector, followed by professional and business services. On an annual basis, the area added 34,300 jobs, with the information sector leading the increase. Again, while most other regions of the state and country lost information jobs that focused on old media, Silicon Valley’s new-media information sector has taken off. The manufacturing, private educational and health services, professional and business services, leisure and hospitality, construction, and government sectors also posted solid annual job gains.
  • Alameda and Contra Costa added 5,400 jobs in May, with the unemployment rate holding steady at 2.7 percent. The largest gains were in the leisure and hospitality sector, particularly food services and drinking places, followed by construction; government; and trade, transportation, and utilities. On an annual basis, two industries that added about an equal number of jobs were professional and business services and construction, both with more than 5,000 new positions. Other services posted the largest annual decline.
  • Marin County’s unemployment rate dropped to 2 percent In May. And while the area added 1,100 jobs in May, the majority were in the leisure and hospitality sector. On an annual basis, Marin County lost 1,200 professional and business services jobs.
  • Sonoma County’s unemployment rate declined to 2.4 percent, and there was a robust increase of 2,300 jobs from April, with the largest gains in educational and health services and leisure and hospitality sectors. On an annual basis, Sonoma County added 3,700 jobs, with the educational and health services sector leading the gains but also a solid uptick in manufacturing, which in Sonoma County mostly pertains to wine production.
  • Napa County’s unemployment rate fell to 2.5 percent in May, with 900 jobs created during the month. The region has experienced some employment losses over the last year, thus the total change from last May includes only 300 new jobs. The annual decline came from the manufacturing; educational and health services; and trade, transportation, and utilities sectors.
  • Los Angeles County added 15,700 jobs in May, and the unemployment rate remained at 4.4 percent. The leisure and hospitality sector accounted for two-thirds of May’s new jobs, adding 5,700 positions in the accommodations and food service sector and 4,900 in arts, entertainment, and recreation. The professional and business services and local government sector followed. Over the year, the leisure and hospitality sector continued to lead all industries, with 24,600 jobs. The accommodations and food services industries created 13,700 positions, and arts, entertainment, and recreation accounted for 10,900 jobs. The professional and business services sector added 17,300 jobs from last May in Los Angeles, mostly in administrative and support and waste services, followed by professional, scientific, and technical services. The educational and health services industries registered 16,200 job gains, with increases mostly in health care and social assistance. The trade, transportation, and utilities sector reported the largest annual loss, which was equally divided between wholesale trade and retail trade.

Selma Hepp is Pacific Union’s Chief Economist and Vice President of Business Intelligence. Her previous positions include Chief Economist at Trulia, senior economist for the California Association of Realtors, and economist and manager of public policy and homeownership at the National Association of Realtors. She holds a Master of Arts in Economics from the State University of New York (SUNY), Buffalo, and a Ph.D. in Urban and Regional Planning and Design from the University of Maryland.

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