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A blog about the economy and the Sacramento-area real estate market.

November 20, 2009
State unemployment at 12.5 percent, but job growth returns

California unemployment increased to 12.5 percent last month, but the state actually added jobs for the first time in more than a year.

The Employment Development Department today said California payrolls grew by 25,700 in October, the first job growth the state has seen since April 2008. California was one of 28 states recording job growth, according to federal officials.

The unemployment rate grew three-tenths of a percent, to 12.5 percent.

It's not unusual for the payroll statistics and unemployment rate to provide mixed signals. Economists generally look at the payroll numbers, which are derived from a broader survey, as a more reliable indicator of the health of the job market.

In the Sacramento area, unemployment increased to 12.3 percent, a four-tenths of a percent increase from September. The region lost 3,600 jobs.

A key reason was the leisure and hospitality sector - everything from restaurants to hotels to theater companies - shedding 1,900 jobs. Normally that sector cuts back around 1,200 jobs in October.

State government added 600 jobs in the region as university instructors went back on payrolls. But normally the start of the school year translates into 1,300 more jobs.

Justin Wehner, a labor market consultant at EDD, said the Sacramento region is suffering worse than many other parts of California because of continued downsizing in construction. That sector has lost 12,700 jobs in the past year.

Unemployment in Sacramento is "the highest it's ever been since 1990 and it's still going higher," he said. "Definitely no daylight at this point."

There was disagreement about the significance of the gain in jobs statewide. Howard Roth, chief economist at the state Department of Finance, said "I think it's going to turn out to be the start of something."

Others noted, however, that the EDD job-loss figures for September were worse than originally believed. The new estimate is that California lost 66,400 that month, a loss of 27,100 additional jobs.

The two months taken together mean "we're going sideways right now," said Jeff Michael, director of business forecasting at the University of the Pacific. "I'm not sure this is the bottom quite yet, but I think we're getting close."

Stephen Levy, an economic consultant in Palo Alto, added, "I think this is a false signal to say this is the beginning of a sustained period of growth (but) we're nearing the end of the job losses." 

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