June 16, 2012

California, Sacramento see job numbers slowly improving

California's job market is defying the slowdown in the national economy. The job numbers are even turning positive in Sacramento, for the first time since the start of the recession.

California's job market is defying the slowdown in the national economy. The job numbers are even turning positive in Sacramento, for the first time since the start of the recession.

Unemployment in California fell a tenth of a percent last month, to 10.8 percent, the Employment Development Department reported Friday. About 33,900 jobs were added to payrolls across the state.

Economists said the numbers suggest the state is continuing to make steady but not spectacular progress.

The Sacramento region is also slowly recovering, despite weaknesses in construction and the public sector. Unemployment dipped to 10.4 percent in May, down a tenth of a percent. That's the lowest unemployment rate in the area in three years.

Until recently, the falling jobless rate has mostly been a function of people pulling out of the job market, so they're no longer counted as unemployed.

But now payrolls are starting to grow – 4,400 jobs were added in May.

Also, 2,600 more Sacramentans held jobs last month compared with a year ago. It was the second straight month of year-over-year job growth, an indicator of economic health.

"That hasn't happened in 4 1/2 years," said EDD consultant Justin Wehner. "To see us kind of emerge into positive territory is a positive sign."

The monthly jobs report was a relief. Just two weeks ago, experts were fretting that California would get dragged down by the national slowdown, which has driven the U.S. unemployment rate back up to 8.2 percent. So far, that hasn't happened.

Economist Stephen Levy said many of the state's bedrock industries – including technology, tourism and international trade – remain resilient. The tech sector is a big reason for California's strength.

"The Bay Area is surging and that's enough to push the state above the national average," said Levy, of Palo Alto's Center for Continuing Study of the California Economy.

Still, it's not as if the economy is roaring in California. The addition of 33,900 jobs in May followed an April that saw only 1,300 jobs created.

"We're getting this saw-toothed pattern, a good month and a bad month," said Dennis Meyers, principal economist with the state Department of Finance. On average, California is adding about 19,000 jobs a month, he said.

"It's not 'jump up and down time,' but we're making slow and steady progress," he said.

Tourism, in particular, is making a comeback, as evidenced by the throngs that descended on Disney's California Adventure in Anaheim on Friday for the debut of the Cars Land attraction. The leisure and hospitality industry added 13,200 jobs last month, more than any other industry.

In Sacramento, one of the major job generators continues to be the health care industry, which largely ignored the recession. But other sectors are hiring, too.

"We don't have a broad-based recovery (but) we're starting to see growth in more areas than just health care. We're seeing growth in finance, in retail," said economist Jeff Michael of the University of the Pacific.

The public sector will continue to be a trouble spot. State workers face the prospect of reduced hours, and considerable uncertainty remains about budget cuts. Even with the Legislature passing a main budget bill Friday, lawmakers still hadn't worked out key details on spending with Gov. Jerry Brown.

"Nobody knows what the budget means," Levy said.

Construction is another drag on the Sacramento economy. Payrolls in the building trades actually fell by 500 in May, a month that usually sees hiring. There were 3,300 fewer construction workers on the job than a year ago.

Michael said a key reason is that some big public-works projects have ended.

"We were still putting up a $1 billion airport terminal this time last year, and rebuilding highways in Roseville," he said. "We're a little bit in the shadow of that stuff."

Real estate agents say the housing market has stabilized, with prices firming up. But area home building hasn't taken off to the point that a hiring binge is justified.

Still, things are starting to stir. The New Home Company, a fledgling Southern California builder founded by executives from bankrupt John Laing Homes, said Friday it will open up 79 new houses for sale in Folsom next month. The homes are expected to sell in the low $300,000 range.

At the company's other Sacramento area projects, in Elk Grove, Granite Bay and Lincoln, sales activity has picked up. The company sold six homes in Lincoln in the past two months – compared with two all of last year.

Kevin Carson, president of the company's Northern California division, said much of the demand for new homes comes from the growing medical field.

"With the expansions of Mercy and Sutter, with this region becoming the (medical) hub for the whole Valley, there are lots of nurses, administrators (buying homes)," Carson said. "Not just the doctors."

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