Long Term Concern: Labor Force Declines For 6th Consecutive Month

Riverside, CA —Nonfarm employment in California expanded at a steady pace, increasing by 34,500 jobs in the latest numbers from the California Employment Development Department, according an analysis released jointly by by Beacon Economics and the UC Riverside School of Business Center for Economic Forecasting and Development. This level of growth exceeds the monthly average over the last twelve months, which comes in at 26,200.

From a year-over-year perspective, California has added 314,200 as of August 2019. This is equivalent to a 1.8% year-over-year increase, which matches the fastest yearly growth rate out of any month in 2019 and is a better showing than the nation’s 1.4% rate.

“Once again, California and its regions experienced a month of job gains and record low unemployment rates,” said Robert Kleinhenz Executive Director of Research at Beacon Economics. “Notably, these numbers continue to defy all the headline grabbing predictions that a recession is just around the corner.”

California’s unemployment rate has also held steady and is near an historic low, at 4.1%, as of August. Still, declining labor force growth is cause for concern. The state’s labor force contracted by 7,800 in July, the sixth consecutive month of decline. From August 2018 to August 2019, California’s labor force decreased by 0.2% (-41,500), however, the state’s faster growing regions are continuing to attract workers.

Key Findings:

• Government led the way in monthly job gains in August, increasing payrolls by 14,500 positions. Local Government was responsible for the bulk of the gains, increasing payrolls by 10,900 during the month. This industry has posted steady increases over the last year, which has helped push year-over-year growth in the sector to 1.6%. Leisure and Hospitality also had a strong month, boosting payrolls by 7,900 positions. Year-over-year gains for Leisure and Hospitality now stand at a solid 2.5%.

• Other sectors posting strong gains in August were Administrative Support (+6,100), Health Care (+4,400), Education (+3,500), Information (+2,900), and Manufacturing (+1,700). From August 2018 to August 2019, in percentage terms, Construction (+4.0%) led the pack, followed by Professional, Scientific and Technical Services (+3.6%), Education (+3.1%), Health Care (+2.9%), Administrative Support (+2.6%), and Information (+2.6%).

• Despite overall growth in the state, a handful of sectors shed positions in August. Retail Trade and Construction experienced the largest declines, both decreasing payrolls by 1,700. Other sectors posting sizeable declines last month were Finance and Insurance (-1,400), Wholesale Trade (-1,200), Transportation, Warehousing & Utilities (-1,100), and Real Estate (-500). In percentage terms, Retail Trade declined 0.7% from August 2018 to August 2019, marking the largest decrease, followed by Mining and Logging (-0.4%) and Wholesale Trade (-0.2%).

• Regionally, job growth was led by Southern California. Los Angeles (MD) captured the top spot, boosting payrolls by 9,900 positions in August. That was followed by San Diego (+2,900) and Orange County (+2,200). From a year-over-year perspective, the Inland Empire (+2.1%) has experienced the fastest rate of growth, followed by San Diego (+1.8%), Los Angeles (MD) (+1.3%), and Orange County (1.0%).

• In the San Francisco Bay Area, the East Bay led the pack increasing payrolls by 2,400 jobs over the month. That was followed by San Francisco (MD) (+2,200), San Jose (+1,900), and Vallejo (+500). From a year-over-year perspective, San Francisco (MD) (+3.4%) grew the fastest, followed by San Jose (+2.9%), the East Bay (+1.9%), San Rafael (MD) (+1.9%), Napa (+1.6%), and Santa Rosa (+1.3%).

• In the Central Valley, Fresno topped the list, increasing payrolls by 2,600 positions from in August. That was followed by Visalia (+1,200), Merced (+900), Stockton (+800), and Bakersfield (+700). From a year-over-year perspective, Merced (4.1%) was the fastest growing, followed by Fresno (+3.5%), Visalia (+2.1%), and Bakersfield (+2.1%).
• On the Central Coast, Santa Cruz led the way, boosting payrolls by 200 jobs over the month. That was followed by San Luis Obispo and Salinas, where payrolls held steady from July to August. From a year-over-year perspective, Salinas (+4.6%) added jobs at the fastest rate, followed by Santa Barbara (+2.7%), Santa Cruz (+2.4%), and San Luis Obispo (+1.3%).