Unemployment Rate Remains Near A Historic Low But Still Higher Than Nation

California’s labor market grew slowly in March, with total nonfarm employment in the state expanding by just 8,700 positions, according to an analysis released today by Beacon Economics.

Recent extreme weather and flooding likely played a role in the slowdown as major storms hit California during the survey week and impacted sectors including Construction and Real Estate. February’s gains were also revised down to 21,800 in the latest numbers, a 10,500 decrease from the preliminary estimate of 32,300.

“Given the adverse weather last month, it’s difficult to get a true read on how California’s labor market actually performed,” said Taner Osman, Research Manager at Beacon Economics. “Interestingly, while labor markets in inland communities had been outperforming coastal communities since the start of the pandemic, we are now starting to see these differences level out, with stronger job growth in some coastal communities.”

Statewide, as of February 2023, there were 295,200 more people employed in California compared to February 2020, the pre-pandemic peak. Total nonfarm employment in the state grew 1.7% over this time, compared to a 2.1% increase in the United States as a whole. Annually, California payrolls increased by 2.5% from March 2022 to March 2023, trailing the 2.7% national increase over the same period.

California’s unemployment rate held steady at 4.4% in March 2023. While this is near historic lows, the state’s unemployment rate remains elevated relative to the United States overall (3.5%). California continues to struggle with its labor supply, which grew by 32,700 in March, an increase of 0.2% on a month-over-month basis. Since February 2020, the state’s labor force has fallen by 229,600 workers, a 1.2% decline.

Industry Profile  

• At the industry level, job gains were mixed as extreme weather impacted several of California’s job sectors. Health Care led the gains in March, with payrolls expanding by 7,400, an increase of 0.3% on a month-over-month basis. Health Care jobs are now up 4.8% on a year-over-year basis.
• Other sectors posting strong gains during the month were Government (6,900 or 0.3%), Information (5,400 or 0.9%), Leisure and Hospitality (4,900 or 0.2%), and Transportation, Warehousing, and Utilities (4,300 or 0.5%).
• Payrolls decreased in a handful of sectors in March. Due to the major storms that hit the state, Construction posted the largest declines, with payrolls falling by 8,200 during the month, a 0.9% decline on a month-over-month basis.
• Other sectors with significant job losses included Administrative Support (-5,000 or -0.4%), Real Estate (-2,400 or -0.8%), Finance and Insurance (-1,300 or -0.2%), and Other Services (-1,200 or -0.2%).

Regional Profile

• Regionally, job gains were led by Southern California. Los Angeles (MD) saw the largest increase, where payrolls grew by 14,800 (0.3%) during the month. San Diego (3,100 or 0.2%), Ventura (1,200 or 0.4%), and El Centro (300 or 0.5%) also saw their payrolls jump. In contrast, Orange County (-2,400 or -0.1%) and the Inland Empire (-2,300 or -0.1%) experienced payrolls drop in March. Over the past year, El Centro (3.6%) enjoyed the fastest job growth in the region, followed by San Diego (3.2%), Orange County (2.8%), Los Angeles (MD) (2.5%), Ventura (1.9%), and the Inland Empire (0.7%).
• In the Bay Area, San Jose experienced the largest increase, with payrolls expanding by 2,200 (0.2%) positions in March. Santa Rosa (300 or 0.1%) and Napa (100 or 0.1%) also saw payrolls expand. In contrast, the East Bay (-6,400 or -0.5%), San Francisco (MD) (-1,400 or -0.1%), and San Rafael (MD) (-400 or -0.4%) all had payrolls drop in March. Over the past 12 months, Napa (4.5%) has experienced the fastest job growth in the region, followed by San Jose (3.5%), San Francisco (MD) (3.2%), Santa Rosa (2.9%), Vallejo (1.3%), the East Bay (1.0%), and San Rafael (MD) (0.4%).
• In the Central Valley, Bakersfield experienced the largest monthly increase in March as payrolls expanded by 400 (0.1%) positions. Payrolls in Sacramento (200) and Fresno (100) increased as well. In contrast, Yuba (-400 or -0.8%), Merced (-300 or -0.4%), Redding (-200 or -0.3%), Madera (-200 or -0.5%), Visalia (-100 or -0.1%), and Modesto (-100 or -0.1%) all saw declines. Over the past year, Hanford (3.6%) has enjoyed the fastest growth, followed by Fresno (3.4%), Visalia (2.8%), Yuba (2.6%), Stockton (2.4%), Redding (2.3%), Madera (2.1%), Modesto (2.1%) and Sacramento (2.0%).
• On California’s Central Coast, Salinas (800 or 0.5%) and Santa Barbara (800 or 0.4%) added the largest number of jobs. San Luis Obispo (500 or 0.4%) and Santa Cruz (100 or 0.1%) also saw payrolls increase. From March 2022 to March 2023, San Luis Obispo (3.7%) has added jobs at the fastest rate, followed by Santa Cruz (3.5%), Salinas (3.3%), and Santa Barbara (2.0%).