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Five takeaways from the California jobs report

September 20, 2013|By Ricardo Lopez | This post has been corrected. See note at the bottom for details.
  • The unemployment rate in California ticked up for the second month in a row, rising to 8.9% from 8.7% the month before. Above, a woman attends a job fair in Arcadia last month.
The unemployment rate in California ticked up for the second month in a row,… (Frederic J. Brown/AFP/Getty…)

In what can best be described as tepid, California's jobs report Friday showed the state added 29,100 net payroll jobs even as the unemployment rate ticked up to 8.9% from 8.7% the month before.

Figures from the state's Employment Development Department show that California's year-over-year payroll job growth slowed to 1.5%. Earlier this year, that rate was hovering around 2%.

Economists say California has lost steam partly because of the ongoing recession in Europe, the economic slowdown in China and sluggishness in the retail sector.

Photos: Fastest-growing jobs in California

Here are five takeaways from Friday's jobs report:

1.) The civilian labor force has declined by 65,000 since June. California over much of the past year has bucked the national trend of a decline in the labor force. When the pace of job growth earlier this year was stronger, the labor market was strong enough to absorb job-seekers who had been encouraged enough to resume looking for work. 

Normally, a decline in the labor force artificially causes the unemployment rate to fall, a trend that has partly caused the U.S. jobless rate to drop. 

That hasn't happened in California because:

2.) Civilian employment has also decreased in the last two months. Civilian employment includes payroll jobs and those who are self-employed or working as contractors. It's a broader measure of employment. 

The unemployment rate has ticked up, signaling that the labor market is not strong enough to absorb newcomers, said Esmael Adibi, director of Chapman University's A. Gary Anderson Center for Economic Research. 

3.) August job gains were broadly based. One of the more positive bits of news in Friday's report was that nine sectors added jobs last month. They included construction, which added 7,700 jobs and led payroll growth. The professonal and business services sector, which includes lawyers, accountants and architects, added 6,300 jobs. 

Manufacturing, surprisingly, added jobs as well, but over the year, the sector is still down 0.1%.

4.) Over the year, California has added 223,900 jobs. It's important to remember that the monthly data are highly volatile and subject to revisions, so the better measure of the labor market is the long-term view. Though the rate of job creation has slowed, economists had been expecting the summer months to be a slower period for hiring.

Economists worry that the threat of a government shutdown could weigh on the economy's future growth.

That threat has become more real this as week as House Republicans approved a spending bill Friday that would defund President Obama's healthcare law, setting up a showdown with the Democratic-controlled Senate that risks causing the first government shutdown in nearly two decades. 

Barring any other unexpected headwinds (and assuming the government doesn't screech to a halt here in the next two weeks), economists expect California's job growth to accelerate later this year. 

5.) July's job gains were revised downward. The state's Employment Development Department had intiailly reported that employers added 38,100 jobs in July, but that number has now been revised to 27,800. 

Though a small drop, it points to a softening in the labor market during the summer months.  

[For the record, 2:25 p.m. PDT, Sept. 20: A previous version of this post had an incorrect number for the July job gains revision.]


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