July 21, 2012

Hiring is up in California -- including Sacramento

Jobs creation is picking up in California. Even Sacramento's lagging economy enjoyed its biggest jolt of hiring last month since before the recession.

Jobs creation is picking up in California. Even Sacramento's lagging economy enjoyed its biggest jolt of hiring last month since before the recession.

The latest monthly unemployment report Friday suggested California's economy continues to recover at a decent clip – and so far is ignoring the slowdown in the national economy.

Statewide unemployment fell a tenth of a point in June, to 10.7 percent, the Employment Development Department reported. Payrolls across California grew by 38,300, more than any other state.

The numbers aren't gangbusters, but "our recovery has definitely taken hold," said Sung Won Sohn, an economist with California State University's Channel Islands campus in Camarillo. "It's improving faster than the national economy." For the second straight month, California accounted for nearly half the jobs created in the United States.

Sohn warned, however, that the U.S. slowdown will be felt in California sooner or later.

The idea that California is doing better than the nation takes some getting used to. Because of the housing crash, California took a worse beating in the recession than most other states. But lately it's been outperforming the U.S. economy, thanks in large part to the boom at social-networking companies and other Bay Area tech firms.

June's report shows the recovery isn't just about tech anymore. Hiring has spread to industries such as tourism and construction, and payrolls beyond the Bay Area are getting a little fatter.

"The recovery is kind of broadening out, it's covering more sectors than it was before," said Dennis Meyers, principal economist at the state Department of Finance. "Some of the weaker sectors are showing signs of life."

In Sacramento, one of the weakest regions of the state, employers added 9,400 jobs in June. It was the greatest one-month hiring surge in the Sacramento area since 2006, said EDD consultant Justin Wehner.

There was more hiring in Sacramento last month than in San Francisco or San Jose – the hottest job markets in the state for the past year or so.

About half the new Sacramento jobs were in construction, a critically important industry to the region.

The unemployment rate in Sacramento actually rose to 10.8 percent in June, up four-tenths of a point. But that was a seasonal phenomenon. There simply weren't enough new jobs to absorb the students and others flooding into the labor market, Wehner said.

Meyers said employers in California added 147,700 jobs in the first six months of 2012. It added up to the best half-year run in California since 2005, he said.

That's not to say the economy is back to where it was. Since the worst of the downturn in late 2009, the state has recouped just 475,300 jobs, or around one-third of the jobs that were lost.

"We're still climbing out of a pretty deep hole," Meyers said.

And hiring still comes grudgingly, even in fast-growing sectors of the economy. Former EDD director Michael Bernick, a labor lawyer in San Francisco, said applicants far outnumber the job openings at the Bay Area's booming social-networking companies.

"It's striking that in the hottest industry in California, it's still very competitive," Bernick said. "Even here, it's tough to get in."

In Sacramento, a one-month jump in jobs doesn't make up for years of struggle. The region still trails the statewide average in job creation over the past year. But the evidence is piling up that the Sacramento economy is finally heading up.

"Last year was the bottom," said economist Jeff Michael of the University of the Pacific. "Now we're seeing growth again for the first time."

The 4,800 new jobs in construction means contractors are responding to the strengthening of the housing market. Instead of waiting for a customer to place an order, home builders are getting bolder about building houses in advance.

Well, somewhat bolder.

"They're not building 15-unit phases," said Greg Paquin of the Gregory Group, a market research firm. "It's five or six."

Paquin forecasts 2,800 new homes will sell in the Sacramento area this year, about 70 percent more than in 2011. But it's still a fraction of the 17,000 sold in 2004.

All told, the construction industry in Sacramento is barely half as big as it was during the boom. About 35,000 jobs have been erased, and no one is predicting full recovery anytime soon.

Sacramento's biggest industry, state government, remains another trouble spot. Gov. Jerry Brown's austerity plan includes furloughs for thousands of state workers, amounting to a nearly 5 percent pay cut.

And Sohn said it's a matter of time before the U.S. slowdown reaches California. National unemployment has stalled at 8.2 percent as job growth has tailed off.

A member of the board that oversees the Port of Los Angeles, Sohn noted that much of California's economy depends on exports – to other states and other countries. As their economies falter, they'll buy fewer goods from California.

"If the U.S. economy is slowing down, that will have a definite impact on California," he said.

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