By Dr. Lynn Reaser, Ph.D., CBE
JOB GAINS CONTINUE
California launched the second quarter with a strong jobs report as California’s economy continued to show solid momentum. Following softer gains in February and March, the state’s non-farm employers added 39,300 jobs to their payrolls in April. The gains were widespread across almost all industry segments. Only manufacturing lost jobs due primarily to a decline in the food processing sector. California factory jobs remained well above their level of a year ago.
California extended its record in outperforming the nation in terms of growth to 74 months in April. Its year-over-year advance in non-farm jobs of 2.1% compared with the 1.6% rise posted by the U.S. as a whole.
April also saw California’s jobless rate fall to a new record low (records go back to the beginning of 1976). The state’s jobless rate in April was just 4.2%, only slightly above the national 3.9% average. This low jobless rate has two primary implications. First, it suggests that companies’ major challenge will remain finding qualified workers. Second, it implies that key employees may be in the best position in years to obtain larger raises as firms strive to retain their current workers and recruit new talent.
JOB TRACKER 2.0
At the beginning of this year we introduced Job Tracker 2.0, which has three major components
Ø 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 the basis of its metropolitan statistical areas (MSAs).
Ø 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.
Ø The Jobs Dispersion Index shows the net percentage of MSAs in any month that are experiencing increases as opposed to declines in employment. A number of 100 would indicate that all 29 MSAs are recording 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 are 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.
April’s Heat Map (Figure 1) shows that with the exception of just one of the state’s MSAs, San Rafael, all posted job performance that was either flat or increasing. Areas in yellow (indicating steady jobs over the prior three months) and green (showing growth) were dispersed across the southern, central, and northern parts of the state. Almost 60% of California’s 29 MSAs posted gains versus less than 40% that showed essentially no change.
The Regional Growth Tracker (Figure 2) showed the Bay Area in the lead in April, with a 0.4% job advance over the prior three months. The Coastal Area followed with an advance of 0.3%. These gains were followed by increases of around 0.2% in the Central Valley and Southern California.
The Jobs Dispersion Index (Figure 3) dropped to 60.3 in April from 70.7 in March and the recent peak of 91.4 in December. With any number above 50 indicating more of the state’s MSAs experiencing job gains rather than losses, April’s Index level remained in clear positive territory.
April’s strong jobs report indicates that the impact of tax cuts, pent-up demand for housing, a robust start to the tourist season, and the state’s lead in technology are offsetting any negatives from trade frictions, higher gasoline prices, rising oil costs, and advancing interest rates. While this battle between positive and negative forces is likely to continue, California’s solid momentum and resilience appear likely to prevail at least in the near term.
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.