California’s Unemployment Rate Reaches All-Time Low
January 23, 2018 | Source: Pacific Union Bay Area Real Estate Blog
- In the last two months of 2017, California employers added more than 105,000 jobs, ending the year on an incredibly positive note. In fact, with more than 200,000 jobs added in the last four months of the year, it was the strongest streak of job growth in the state since the data series began almost 30 years ago.
- California’s unemployment rate dropped to 4.3 percent, which marks the lowest point since 1976 according to a report from the state Employment Development Department. California’s unemployment rate is now only 0.2 percent higher than the national rate of 4.1 percent. This is incredible progress for California given that the unemployment rate peaked at more than 12 percent in 2010.
- Nevertheless, the sharp drop in the state’s unemployment rate is a function of rising household unemployment but also a declining labor force. The decreasing labor force will pose further challenges for employment gains in 2018 as the state’s population growth continues to slow. In 2017, there were 240,200 new residents in California, which is a 0.6 percent annual increase. The long-time average population growth rate has generally been around 0.9 percent. Slower international migration and an increase in domestic migration are two factors that are contributing to lower population growth. We will expand on California’s population changes in a future analysis.
- Jobs gains were broad-based across many industries, with the most additions in the administrative support and leisure and hospitality sectors. The other industries with solid additions included transportation and warehousing, construction, financial services, and information. The construction, education, and information sectors, which all generally pay solid wages, put up the largest relative annual gains. Also, job growth in the information sector is good news, as the industry saw some losses earlier in 2017. On the other hand, while any job growth is welcome, the administrative support and leisure and hospitality sectors do not generally pay above-average wages.
- A few sectors shed jobs from the previous month, including, professional, scientific, and technical services; wholesale trade; retail trade; and educational services.
- Regionally, solid job gains were seen in all California metropolitan areas.
- Los Angeles County added 8,300 jobs in December to reach 4,518,900. On a monthly basis, the largest gain was in the trade, transportation, and utilities sector, followed by retail trade. Other industries that posted gains were financial activities, with a concentration in real estate and rental and leasing, which added 1,900 jobs. Unlike in the rest of the state, the construction and leisure and hospitality sectors saw jobs losses in Los Angeles. On an annual basis, the education and health services industries added the most positions, with information services following. Most of the information sector jobs were concentrated in motion pictures and sound recording.
- San Francisco and San Mateo counties created 2,600 jobs over the month, with most additions in sectors that generally create far fewer jobs between November and December. The increase was concentrated in the leisure and hospitality sector, which gained 2,300 jobs. On average, that sector gained about 300 jobs between November and December over the previous 10 years. Similarly, trade, transportation and utilities, as well as financial services, all posted significantly higher job gains than usual for that time of the year. However, the professional and business services sector also lost well in excess of its usual monthly gain. The unemployment rate is currently 2.4 percent in San Francisco County and 2.1 percent in San Mateo County.
- With 900 new jobs created from November to December, Alameda and Contra Costa counties saw a broad range of gains across most major industries. The private education, health services, and construction sectors have added the most jobs over the past year. The unemployment rate is currently 3.0 percent in Alameda County and 3.1 percent in Contra Costa County.
- Marin, Napa, and Sonoma counties saw either no changes or some job declines since November. On an annual basis, all three regions added about 1,500 jobs, and unemployment rates have reached cyclical lows. Napa County’s monthly jobs decline was more pronounced, though on an annual basis there were more jobs. Most of the decline came from the loss of manufacturing jobs, which includes beverage and tobacco product manufacturing. This could be a post-wildfire impact that we will continue to monitor.
- Santa Clara and San Benito counties enjoyed solid monthly gains of 5,300 jobs, with the private educational and health services sectors leading the increase. Those sectors also created the most jobs on an annual basis. The other industries that posted large monthly gains were trade, transportation, and utilities, which was driven by holiday hiring for retail jobs. Again, the leisure and hospitality sectors added a solid 1,300 positions, which is well above the 10-year average gain of 200 jobs between November and December.
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.
(Promotional photo: iStock/g-stockstudio)