California Job Tracker-September
By Dr. Lynn Reaser, Ph.D., CBE
CALIFORNIA SPRINTS AHEAD
California’s economy dashed forward in August as the state’s nonfarm employers added 44,800 workers to their payrolls. This was the largest gain since January.
The state has now outperformed the nation in terms of year-over-year job growth for 78 consecutive months or 6–1/2 years. The number of jobs in August was 2.1% ahead of a year ago in California versus a national gain of 1.6%.
Job gains between July and August were widespread, encompassing health care, construction, business and professional services, the financial sector, entertainment, and government.
While hiring in retail was flat, e-commerce created more jobs in warehousing and transportation.
Manufacturing loss jobs last month, but remains above its level of a year ago. The only sector showing pronounced weakness is the small mining and logging industry.
California’s jobless rate held at a record low 4.2% even as more people entered the labor market. August was the fifth consecutive month for the 4.2% reading, suggesting that the state may be nearing full employment.
The August jobs report indicates that California’s economy remains robust with few signs that trade tensions or other concerns have dampened business confidence and the willingness of firms to continue to expand.
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.
It should be noted that all three elements of Job Tracker 2.0 are based on the average number of jobs in the last three months versus the average for the prior three months. This methodology is intended to remove some of the month-to-month volatility in order to understand the progress of underlying trends.
The August Heat Map (Figure 1) shows that 17, or about three-fifths, of California’s 29 MSAs registered job gains during the month, while three declined and nine were flat. These changes were based on the average job levels during the last three months through August versus the prior three months. Gains were widespread in the Central Valley, extending from Sacramento to Bakersfield. San Francisco and Silicon Valley (San Jose) scored gains. In Southern California, Los Angeles, the Inland Empire, and San Diego were all in the green, while Orange County was flat.
The Regional Growth Tracker (Figure 2) shows that Southern California and the Central Valley accelerated significantly during the last three months in terms of job growth. The Bay Area recorded a modest rise in its growth rate, which remains above that of all regions. In contrast, the Central Coast (including Santa Barbara, San Luis Obispo, Salinas, and Santa Cruz) decelerated and showed the lowest growth rate among the four regions.
The Jobs Dispersion Index (Figure 3) moved lower for the second month in a row. At 63.8, it remained in solid positive territory and was close to the levels recorded in the spring. The August number shows that the preponderance of California regions were still posting job gains as opposed to losses.
The Job Tracker data, because it is based on three-month averages, displayed an economy that was not quite as robust as the data for August alone. The data combined shows that California’s expansion remains strong despite the ongoing pressures of high housing prices and other constraints. A U.S. trade treaty with Mexico is good news for California, but developments with respect to China will merit close attention in the period ahead.
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.