March 24, 2017
Welcome to the Beacon Employment Report, a unique analysis of California's employment numbers and trends. Each month, Beacon Economics links its own econometric predictions to data released by the U.S. Bureau of Labor Statistics and the California Employment Development Department to identify important changes in employment across industries and regions. The Beacon Employment Report is also one of the few analyses that uses seasonally adjusted numbers. Click here to learn more about why seasonal adjustment is so critical in revealing accurate trends and insights within data. The analysis is a sample of the kind of research available from Beacon Economics.
Note About the Inland Empire: All employment and other data regarding the Inland Empire region of California (Riverside and San Bernardino Counties) is now housed at the UC Riverside School of Business Center for Economic Forecasting and Development. This includes a monthly employment report specifically focused on the region. Beacon Economics' researchers and other staff hold their same positions at the Center and are responsible for all analysis and products.
SLOWER PACE OF JOB GROWTH EXPECTED AS STATE HITS ‘FULL EMPLOYMENT’
The latest release from the California EDD shows that the state added jobs but saw year-over-year growth decline, according to an analysis released jointly by Beacon Economics and the UCR School of Business Center for Economic Forecasting and Development. Today’s EDD release indicates the state added 22,900 jobs in February, building on the upwardly revised 15,300 job gain in January.
Year-over-year growth declined to +1.9%, the lowest year-over-year growth since April 2012. However, this more modest pace of annual growth was expected given how far and long the current economic expansion has continued. Moreover, year-over-year gains in California are still outshining the nation overall, where employment grew by 1.6% year-over-year.
“Like the nation as a whole, California is essentially at full-employment,” said Robert Kleinhenz, Executive Director of Research at Beacon Economics and the Center for Forecasting. “It’s true we’ll see a somewhat slower pace of job growth compared to recent years, but the wage and income gains that accompany these added jobs will sustain economic growth as we move through the year.”
The state’s unemployment rate declined to 5.0% in the latest numbers month, the lowest rate since February 2007. This was driven by a slight decline in the state’s labor force (-8,200) and a 13,800 job increase in household employment. Despite this one month dip, the state’s labor force has expanded by 0.6% over the past year.
Consumer spending continues to drive many of the job gains in the state. Trade, Transportation, and Utilities (+11,100) posted the greatest gains this month. Retail Trade (+7,600), Transportation, Warehouse, and Utilities (+2,300), and Wholesale Trade (+1,200) also posting solid gains. With sustained job growth and with wages rising steadily across the state, consumer spending is lending significant momentum to the overall economy.
The uptick in consumer activity this month was not limited to durable goods sectors. The Leisure and Hospitality sector also posted solid gains during the month, adding 5,600 jobs. Both business and leisure travel had a strong year in 2016 and with rising wages more people are spending on entertainment activities.
The Construction sector also enjoyed solid growth in February with a welcome gain of 5,100 jobs during the month. Having lost one-third of its jobs during the Great Recession, employment in this sector is still over 100,000 positions shy of its pre-recession peak. With real estate values across the state steadily rising, investors are tapping into the market in the hopes of high returns. The Professional, Scientific, and Technical Services sector also posted solid gains during the month, adding 2,800 jobs. These jobs are often on the higher end of the skill and wage spectrum, signaling jobs gains were spread across wage groups during the month.
Not all sectors posted gains in the latest numbers. The sectors posting the largest declines were Manufacturing (-4,000), Health Care (-2,400), Financial Activities (-2,200) and Government (-1,500). But despite these one-month declines, most these sectors are still posting year-over-year gains in payrolls.
Regionally, growth was a mixed bag for the state with some areas seeing solid growth while others posted declines. In Southern California, the Inland Empire (+7,900) and San Diego (+700) posted gains, while Los Angeles County (-3,500) and Orange County (-1,800) lost jobs. In the San Francisco Bay Area, Santa Rosa (+1,500) and San Francisco (MD) (+900) posted gains, while San Jose (-5,700) posted declines. Along California’s Central Coast, San Luis Obispo had a strong month, adding 1,700 jobs. In the Central Valley, Sacramento (+900) and Bakersfield (+600) posted gains, while Visalia (-700) and Fresno (-500) saw declines. In percentage terms, San Luis Obispo (+1.5%) experienced the largest gains in payrolls during the month and Visalia (-0.6%) saw the steepest declines.
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