California’s Unemployment Rate Drops to 16-Year Low

Executive Summary:

  • The April jobs report from the California Employment Development Department came as a disappointment following upwardly revised March numbers. Job numbers were mixed across the state, with San Francisco showing solid gains and Southern California registering losses. The state’s 16,300 job losses were largely concentrated in Los Angeles and Orange counties.
  • The state’s unemployment rate continued to decline to 4.8 percent, which is the lowest since February 2001. Further improvement in the unemployment rate was driven by a large increase in household employment, which measures the number of people who report being employed. The substantial increase in household employment suggests that April’s job numbers will be revised upward.
  • Sectors that added jobs in April include leisure and hospitality, construction, mining and logging, and educational and health services. Industries that lost jobs include professional and business services; trade, transportation, and utilities; manufacturing; information; financial activities; and government. On an annual basis, only three sectors posted job declines: manufacturing; information; and mining and logging.
  • Most Bay Area counties fared relatively well for job growth in April. San Francisco and San Mateo counties gained 4,000 jobs, with almost twice the average increase in the leisure and hospitality sector. Losses in those two counties were primarily in transportation and warehousing and financial activities, which experienced larger-than-typical seasonal cutbacks. On an annual basis, all sectors saw job growth from past year.
  • The South Bay — consisting of Santa Clara and San Benito counties — lost 100 jobs in April, mostly driven by declines in the professional and business services, government, construction, and mining industries. On an annual basis, job additions outpaced losses, the latter of which was driven by fewer positions in the trade, transportation, and utilities sector. That industry lost 2,000 jobs over the past year, with more than two-thirds of the decrease occurring in wholesale trade. The information sector added 3,900 jobs, which marked the 87th consecutive month of gains on an annual basis.
  • Alameda and Contra Costa counties created 1,400 jobs, primarily in the construction sector, which registered more than four times the usual monthly increase — mostly specialty trade contractors. The private educational and health services, manufacturing, and professional and business services industries showed job declines. On an annual basis, only the manufacturing sector posted a decline from last April.
  • Los Angeles County lost 7,300 jobs, with professional and business services reporting the largest month-over-month decline of 5,500 positions. Most of the losses were in the administrative and support and waste-services industries. Similar to the Bay Area, Los Angeles County’s largest increase was for leisure and hospitality jobs, followed by the construction industry. On an annual basis, the largest job losses were in the information sector, with motion pictures and sound recording contributing the biggest share to the overall decline. Apparel manufacturing contributed the biggest share in the drop of manufacturing jobs, while employment services led administrative and support-service jobs declines.
  • Overall, April’s employment report is in line with expectations at the current point of the economic cycle. Monthly job additions will slow as fewer people remain unemployed. Job losses are likely to reflect underlying economic and business conditions, such as fewer positions in the retail and employment and support-services sector and continuing losses in the financial-services industry. Strong job growth in the leisure and hospitality sector was not anticipated but is a welcome sign of demand from tourists and improved consumer spending.

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.

(Photo: iStock/Georgeijevic)

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