CALIFORNIA UNEMPLOYMENT HITS ANOTHER RECORD LOW

Job Growth, Labor Force Continue Expansion; Annual Labor Force Growth Still In Negative Territory

November 15, 2019—LOS ANGELES, CALIFORNIA—The latest figures released by the California EDD reveal that nonfarm employment in California expanded at a steady pace in October, growing by 23,600 jobs, according to an analysis released jointly by Beacon Economics and the UC Riverside School of Business Center for Economic Forecasting and Development. October’s gains are slightly below the state’s average monthly job expansion of 25,677 over the past twelve months. Since October 2018, California has added 308,000 jobs, which is equivalent to a 1.8% year-over-year increase, exceeding the nation’s growth rate of 1.4%.

California’s unemployment rate dipped to 3.9% in October, which represents a new record low. Still, declining labor force growth is a cause for concern. While the state’s labor force expanded for a second straight month, growing by 40,800 workers, since October 2018, California’s labor force has decreased by 0.3% or -57,400 workers. 

“At 3.9%, California’s unemployment rate has dipped below 4% for the first time on record,” said Taner Osman, Research Manager at Beacon Economics and the UCR Center. “October’s figures also extend the record highs in the number of jobs in the state and reveal that employers in California have added over 300,000 jobs this year, a pace that exceeds the rate of growth in the national economy.”   

Key Findings:

• Government added more jobs than any other sector in October, boosting payrolls by 5,400 positions. State Government was the largest contributor to these gains, where 5,600 positions were added over the month. Since October 2018, Government payrolls have expanded by 1.4%, with State Government leading the way (2.8%), followed by Local Government (1.1%) and the Federal Government (0.8%).

• The Health Care and Leisure and Hospitality sectors also saw strong employment growth in October, adding 4,800 and 4,600 jobs, respectively. The Finance and Insurance (2,800), Real Estate (2,500), Manufacturing (2,300), Wholesale Trade (2,200), and Construction (2,100) sectors also posted gains in October. 

• Over the period from October 2018 to October 2019, Construction has been the fastest growing industry, where employment has grown by 4.0%. Strong growth has also occurred in Educational Services (3.5%), Health Care (3.3%), Real Estate (2.6%) and Leisure and Hospitality (2.5%). 

• Despite job growth in the state, payrolls decreased in a handful of sectors in October. Administrative Support posted the largest declines, where payrolls shrunk by 3,300. Despite the one-month decline, employment in the sector has grown by 2.4% since October 2018. Payrolls in Professional, Scientific, and Technical Services (-2,900) and Information (-1,800) also contracted in October. The Retail Trade sector is the only sector to have declined since October 2018, shrinking by 0.3% jobs from October 2018 to October 2019.

• Regionally, job growth was led by the San Francisco Bay Area. The East Bay saw the biggest gains, where payrolls grew by 2,900 during the month. San Francisco (MD) (2,800), Vallejo (700), and San Jose (500) also saw job gains. Over the past year, San Francisco (MD) (3.5%) saw the fastest job growth in the region, followed by San Jose (3.0%), San Rafael (MD) (2.8%), and the East Bay (2.2%).

• In Southern California, it was a mixed month. Ventura saw the biggest job gains, where payrolls increased by 1,200. Gains also occurred in El Centro (200) and San Diego (200). At the same time, payrolls declined by 3,400 in the Inland Empire. Over the past year, the Inland Empire (2.0%) and San Diego (2.05%) have experienced the fastest rate of job growth, followed by Los Angeles (MD) (1.3%) and Orange County (1.2%). 

• In the Central Valley, Modesto saw the biggest gains, where payrolls increased by 1,200 positions. Fresno (700), Merced (700), Stockton (700), and Visalia (500) added jobs as well. Over the past 12 months, Merced (4.1%) saw the fastest growth, followed by Fresno (3.0%), Visalia (2.8%), and Madera (2.6%).

• In the Central Coast, San Luis Obispo led the way, where payrolls grew by 800 jobs over the month. In Salinas, 500 positions were added to local payrolls. Over the period from October 2018 to October 2019, Salinas (2.9%) added jobs at the fastest rate, followed by San Luis Obispo (1.9%), Santa Barbara (1.7%), and Santa Cruz (1.3%).

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Beacon Economics is an independent economic research and consulting firm based in Los Angeles. The UCR School of Business Center for Economic Forecasting and Development is the first world class university forecasting center in the Inland Empire. This analysis was authored by Christopher Thornberg, Taner Osman, and Brian Vanderplas. Learn more at www.beaconecon.com and www.ucreconomicforecast.org.