Despite an ongoing drought and economic hurdles, California continues to enjoy strong overall economic growth, according to a recent report by the California Chamber of Commerce Economic Advisory Council.
The report indicates that while challenges such as a high cost of living, regulatory burdens and a spotty housing recovery continue to plague the state, California’s overall numbers remain strong. The unemployment rate has fallen 1.2 percentage points to 6.3%, with 482,000 net new jobs added over the last year. Tourism is another bright spot in California’s economy, as neither the stronger dollar nor slower economic growth overseas has yet to cut into the flow of international tourists into the state.
Below are some of the highlights from the economic report.
Hiring Remains on Fast Track
California businesses continue to add workers at a steady clip. Nonfarm employment rose 0.1% in June, as 22,900 nonfarm jobs were added across the state. Employment increased in most major industry categories and continues to be driven higher, primarily by strong gains in the state’s large information technology and life sciences sectors.
The strongest job growth is coming from the Bay Area, which has the lowest local unemployment rates in the state.
The San Francisco metropolitan division added 2,400 jobs in June, which is the largest monthly gain in the state. Payrolls in San Jose-Sunnyvale-Santa Clara added 1,900 jobs and Oakland added 1,400 jobs during the month.
Professional and business services account for the largest number of new jobs added over the past year, with hiring jumping 5.5% and 133,100 net new jobs added in the sector. Much of this gain has been in professional and technical services, which includes many high-tech occupations in both the information technology and life sciences industries.
Employment conditions were generally soft throughout most of Southern California during June. Overall nonfarm employment declined by 3,700 jobs for the month but remains up solidly on a year-to-year basis.
Most of June’s weakness was in Orange County, which lost 4,300 jobs in June. That marks the largest seasonally adjusted drop for Orange County since August 2009. Despite the drop, employment in Orange County remains 3.0% higher than its level a year ago, led by strong gains in construction, manufacturing, and professional and technical services. Unemployment also remains low. Orange County’s 4.3% unemployment rate is the lowest of any California county outside of the Bay Area.
The Los Angeles metropolitan division added just 900 jobs in June and the Inland Empire added just 800 jobs. Unemployment rates have declined steadily across much of Southern California. Los Angeles County has seen its jobless rate dip 0.9 percentage points over the past year to 7.3%.
While that rate appears relatively high compared to the 5.5% national rate, the unemployment rate has averaged 7.4% in Los Angeles since 2000. Moreover, the Los Angeles area has a large grey market economy that is not captured well in the official unemployment statistics.
Trade
International trade, tourism and commercial construction have all gained momentum. Port activity has bounced back smartly following the disruptions at West Coast ports earlier this year, and activity at inland distribution facilities has surged. Most of the improvement has been on the import side of the ledger, however, and exports have slowed in recent months.
While West Coast ports have rebounded from the first quarter shutdown, the negative trends experienced during January and February have weighed on year-to-date growth for 2015. Activity has slowed in Los Angeles, California’s largest container port, as well as in Oakland.
For the first seven months of 2015, overall volumes were down 3.5% in Los Angeles compared to the same period in 2014. Port of Los Angeles exports fell from 183,294 to 136,402 TEUs over the year in July, a decline 16.4% year-over-year. Container volume was down 6.3% in Oakland over the same period. The Port of Long Beach, however, experienced a 2.8% increase in volume in July, year-to-date.
