August Was a Mixed Month for Job Creation in California

Economic Straight Talk

  • Following incredible job growth in July, which was revised upward to 84,500 positions, the August data release from the California Employment Development Department was a mixed bag, showing a decline of 8,200 jobs. However, the overall state number carries some discrepancies with California’s combined metropolitan area numbers, which showed an increase of about 15,800 jobs in August.
  • Over the last 12 months, California has added about 265,000 jobs, which is a 1.8 percent increase and still outpaces the national growth rate of 1.4 percent. Nevertheless, as this year’s numbers have indicated so far, job growth has slowed from previous years.
  • California’s unemployment rate increased slightly to 5.1 percent in August, which is largely due to a sizable addition to the labor force of 31,600 new workers. This is the largest monthly increase in the labor force since the spring of 2010. Despite the 0.2 percent year-over-year increase in the labor force, California’s job markets remain tight.
  • Sectors that gained jobs in August include services, which encompasses personal-care services and equipment and machinery care. The manufacturing, retail, trade, and health care sectors also added jobs. What is interesting to note is that some industries are reversing previous trends. For example, data shows strong performance for manufacturing and retail jobs, which have been trending down so far this year.
  • Sectors that lost jobs in August included leisure and hospitality, another reversal of previous positive increases. But despite the one-month dip, year-over-year growth levels for the leisure and hospitality industry remain positive, showing an increase of 39,500 positions. Other notable declines were in professional, scientific, and technical services; government; and educational services. The professional, scientific, and technical services sector now shows a 0.4 percent jobs decline for the year, which could be concerning as it is the higher-wage segment of the labor market. The government and educational services sectors are still in the positive and show strong year-over-year increases.
  • In the Bay Area, San Francisco and San Mateo counties added 3,600 jobs in August. Government added a substantial 2,000 jobs net, which is double its average between July and August over the previous 10 years. The construction sector added 1,600 jobs, a change from its usual downward trend at this time of year. Leisure and hospitality gained 1,400 jobs seasonally, primarily within food services and drinking establishments. By contrast, the private educational and health services industries, with 1,500 fewer jobs, experienced a larger-than-typical cutback over the month. The professional and business services and information sectors both lost jobs, which countered the usual upward trends.
  • Alameda and Contra Costa counties lost 500 jobs from July, mostly in private education services; specialty trade contractors; trade, transportation, and utilities; government; leisure and hospitality; financial activities; and other services. Note that these sectors have actually posted year-over-year gains so far in 2017.
  • In Santa Clara and San Benito counties, the seasonal gain in local public schools dominated the monthly job growth, with a net increase of 3,800 positions, outpacing the combined prior 10-year average gain of 2,300 jobs between July and August. Statewide, public schools lost 200 jobs. Other sectors that showed gains include trade, transportation, and utilities; manufacturing; and electronic computer manufacturing. The information sector countered this year’s downward trend and added 900 jobs in August. By contrast, the leisure and hospitality industry lost 2,900 jobs from July.
  • Los Angeles County added 8,300 jobs, with the largest increase in the government sector. Most of the growth was in local government, while state and federal government jobs declined. The professional and business services sector saw notable gains, as well as job additions in the trade, transportation, and utilities; construction (up 1,300); and other services sectors. The information sector also posted a strong increase. Similar to other metros areas, Los Angeles’ leisure and hospitality industry posted the largest month-over-decline, with 67 percent of the decrease in accommodations and food services.

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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