It’s been slow and steady, with few jolts of energy, but Sacramento unemployment has fallen to levels not seen in five years.
The region’s unemployment rate declined to 7.9 percent in September, a drop of six-tenths of a point, before edging back up to 8.1 percent a month later, according to figures released Friday. The state Employment Development Department’s jobs report includes two months of data, not one, because last month’s report was canceled due to the federal government shutdown.
The numbers suggest the economy continues to gain strength as the kickoff of the all-important holiday shopping season approaches next week.
California’s statewide unemployment rate dropped to 8.7 percent in September but was unchanged in October, according to the EDD. Even with the unemployment rate stalling, California employers added 39,800 payroll jobs last month – the most of any state.
One more bit of encouraging news: The government shutdown probably made the October unemployment rates look a little worse than they actually were. Many but not all of the federal employees who were furloughed last month were counted as unemployed even though they eventually were paid for the two weeks they missed. California has more than 240,000 federal workers, including nearly 14,000 in greater Sacramento.
Bottom line: The recovery continues, although it’s still not robust.
“It still looks like it’s improving – not improving very fast, unfortunately,” said Irena Asmundson, chief economist at the state Department of Finance. But she said she was encouraged that every major economic sector added jobs last month, except for manufacturing and finance.
“Very broad-based gains,” she said. “We’re not just seeing job gains in one sector or a couple of sectors.”
In the Sacramento area, unemployment hadn’t been below 8 percent since October 2008, when it was 7.7 percent and rising swiftly. Back then, although the stock market crash was barely a month old, the recession was already well underway. Unemployment in Sacramento peaked at 12.9 percent in March 2010 as the collapse of the housing market wiped out thousands of jobs.
Now the housing market is getting healthy again, and commercial real estate is improving as well. Even with the uptick in October, the Sacramento region’s unemployment rate has fallen nearly 2 percentage points in the past year. About 7,800 jobs have been created, a growth rate of 0.9 percent, since October 2012.
“It shows that we’re moving in a positive direction,” said EDD labor market consultant Heather Chamizo. “We’re doing something good here.”
But Jeff Michael, an economist at the University of the Pacific, said part of the decline in unemployment is because thousands of Sacramentans have exited the job market and aren’t counted as unemployed. The number of area residents holding payroll jobs – the statistic that’s often deemed most credible by economists – is still about 35,000 shy of the figure from five years ago.
“I’ll be more excited when we recover our pre-recession level of jobs,” Michael said. “Still, it’s progress.”
He said there are definite pockets of good news. State government added 2,100 jobs in the Sacramento area last month, amid a report earlier this week by the nonpartisan Legislative Analyst's Office that the state budget is in line for multibillion-dollar surpluses over the next few years.
“Obviously that’s important to this region,” Michael said. State government accounts for about 10 percent of the Sacramento area workforce, not counting the two state universities.
There also are signs of hope in the private sector, beyond the housing market. As reported last month, a buyer is in escrow to purchase the Campbell Soup Co. factory on Franklin Boulevard, which was closed over the summer.
The deal was originally supposed to close in mid-November, but that’s been pushed back to the end of the month or early December, said Barbara Hayes, executive director of the Sacramento Area Commerce and Trade Organization. The prospective buyer’s identity and plans for the massive site haven’t been disclosed.
“They’re just in the due diligence process,” she said.
Hayes said her organization, which recruits businesses to the region, is getting more inquiries from companies interested in setting up operations in the Sacramento area. “It’s the highest we’ve seen since the 2007-08 fiscal year,” she said.
Last month, SACTO and West Sacramento officials announced that a Japanese rice company will build a $10 million plant in the city’s Southport Business Park. to produce gluten-free hamburger buns.
The region added 4,000 payroll jobs last month even as the unemployment rate crept back up. The unemployment rate and payroll statistics are based on two different surveys, and the figures don’t always move in sync. Economists tend to put more faith in the payroll numbers.
Even with the improved results, the comeback in Sacramento and other Central Valley cities continues to lag most of coastal California, as it has throughout the recovery. San Francisco’s unemployment rate was 5.1 percent last month, San Diego’s was 7 percent, and San Jose’s was 6.4 percent.