Jobs Dip, But Not Demand: Inland Empire Economy Shows Mixed Start to 2026

Short-term losses hit key industries while healthcare drives steady annual growth

The Inland Empire’s labor market is showing signs of both resilience and adjustment as 2026 begins, according to new data released by California’s Employment Development Department. While year-over-year job growth remains positive, January figures reflect short-term contraction across several key sectors.

The unemployment rate in the Riverside-San Bernardino-Ontario metropolitan area rose to 5.4% in January 2026, up from 5.1% in December and slightly above the 5.3% rate recorded one year ago. The region’s rate remains closely aligned with California’s 5.5% but higher than the national average of 4.7%.

Short-Term Declines Reflect Seasonal and Sector Adjustments

Total nonfarm employment dropped by 23,600 jobs between December 2025 and January 2026, bringing total employment to 1.72 million.

The largest decline occurred in the trade, transportation, and utilities sector, which lost 17,200 jobs. Much of this contraction was concentrated in transportation and warehousing — a cornerstone of the Inland Empire economy — which saw a loss of 9,300 jobs. Retail trade also contributed to the decline, shedding 7,500 jobs over the month.

Professional and business services followed with a loss of 3,600 jobs, driven largely by declines in administrative and support services. Construction also saw a reduction of 1,300 jobs, signaling a slowdown in development activity.

Despite these losses, a few sectors posted modest gains. Government employment increased slightly, with local government adding 500 jobs, while leisure and hospitality and other services each added 100 jobs.

Long-Term Growth Anchored by Healthcare Sector

While monthly data points to contraction, the broader picture remains more encouraging. Over the past year, the Inland Empire added 15,100 jobs, representing a 0.9% increase in total nonfarm employment.

The region’s growth continues to be driven by the private education and health services sector, which added 27,000 jobs year-over-year. Health care and social assistance accounted for the vast majority of that growth, reinforcing the sector’s critical role in the regional economy.

Agricultural employment also saw a notable increase, rising by 1,000 jobs — a 7.9% gain compared to the previous year.

Ongoing Challenges in Construction, Manufacturing, and Business Services

Not all sectors shared in the region’s annual growth. Construction experienced the most significant decline, losing 5,300 jobs over the year, primarily among specialty trade contractors.

Professional and business services also contracted, shedding 3,700 jobs annually, while manufacturing declined by 2,500 jobs, signaling potential shifts in industrial activity across the region.

Outlook: Balancing Growth and Economic Headwinds

The Inland Empire continues to demonstrate long-term economic strength, particularly in healthcare and population-driven sectors. However, recent monthly declines in logistics, retail, and construction highlight the region’s sensitivity to broader economic trends, including consumer demand, supply chain activity, and development cycles.

As 2026 progresses, attention will remain on whether the region can sustain its job growth momentum while navigating short-term fluctuations in key industries.