California Job Tracker — March

By Dr. Lynn Reaser, Ph.D., CBE

MOMEMTUM CONTINUES

California’s economy remained strong in January as the state’s nonfarm employers added another 35,500 jobs, following a similar 35,000 new jobs added in December. Job gains were sufficient to not only absorb new entrants into the workforce but also drive the unemployment rate down to 4.4%. This marked a new low in the record books, which date back to 1976.

January’s employment gains were widespread and brought the year-to-year climb to more than 400,000 (400,100). Notably, every single major California sector showed year-over-year employment increases. The 2.4% rise also substantially outpaced the national rise of 1.6%.

Revised numbers, based on a complete count of all nonfarm employers in California, showed that the state ended 2017 with 22,500 more jobs than previously estimated. The increases were centered in trade and transportation as well as education and health care, but also included manufacturing.

The overall report shows that California’s economy remains strong and is outperforming the rest of the nation. The approach to full employment also bodes well for additional wage gains for many of the state’s workers.

JOB TRACKER 2.0

Last month we introduced Job Tracker 2.0, which has three major components

+The California Heat Map shows which areas are gaining jobs (green), reporting no change (yellow), or losing jobs (red). It is intended to present a snapshot of the current health of California’s economy on a MSA basis.

+The Regional Job Growth Tracker depicts the job performance over time of California’s major regions (Bay Area, Southern California, Central Valley, and the Central Coast). Its purpose is to call attention to differences that may be developing across California and to show which areas might be accelerating or decelerating.

+The Jobs Dispersion Index shows the net percentage of MSAs in any month that are experiencing increases as opposed to declines. A number of 100 would indicate that all 29 MSAs had recorded growth, whereas a 0 reading would reflect job losses in all of California’s regions. A Jobs Dispersion Index score of 50 would indicate that equal numbers of MSAs were reporting increases and decreases in jobs or all are unchanged. The Jobs Dispersion Index is designed to illustrate swings that might be occurring in large numbers of individual regions across the state.

January’s Heat Map (Figure 1) shows that almost all of California’s 29 MSAs were in the green in January, having achieved positive job growth over the prior three months. Only three areas, displayed in red, posted jobs losses: El Centro, Vallejo-Fairfield, and Napa. The Napa area may still have been experiencing the impact of last year’s devastating fires. Just three regions were flat: Chico, Hanford-Corcoran, and Ventura County.

The Regional Growth Tracker (Figure 2) indicates that California’s major aggregated regions displayed a very modest slowing in their growth trends in January. The only significant slowing was in the Central Coast. However, its growth rate remained above that of both the Bay Area and Southern California. Significantly, all of the state’s primary sub-regions regions remained on a solidly positive growth trend.

The Jobs Dispersion Index (Figure 3), dipped slightly in January, but remained solidly in the positive zone with a reading of 84. Any number above 50 shows that more of the state’s MSAs are exhibiting job gains as opposed to losses. The Index had dropped sharply in early 2017 before rebounding around midyear. It never stood last year below the break-even level of 50.

On balance, California has begun 2018 on a positive footing. The primary risk now facing the state regards international trade. Any retaliatory moves against the U.S. imposition of tariffs on steel and aluminum could jeopardize some of California’s major trade markets. If the repercussions are limited, as hopefully will be the outcome, California‘s economy is poised to register further gains as the year progresses.

Lynn Reaser is chair of the treasurer’s Council of Economic Advisors and chief economist at the Fermanian Business and Economic Institute for Point Loma Nazarene University. The opinions in this article are presented in the spirit of spurring discussion and reflect those of the author and not necessarily the treasurer, his office or the State of California. Job data used in this article is compiled by the Fermanian Business and Economic Institute for Point Loma and is not meant to be used as an official State of California source or replace official information released by the State of California and/or State Department of Finance.