TURLOCK — The San Joaquin Valley's economy continues to improve, but Stanislaus and Merced counties are lagging behind in job growth, a newly released business forecast shows.
Employment throughout the valley grew 1.92 percent in 2012, which was more than double the growth rate for 2011. Stanislaus and Merced, however, added only 0.8 percent more jobs last year, according to California State University, Stanislaus, business economics professor Gökçe Soydemir.
Despite that, Soydemir's Business Forecast Report update predicts that economic recovery valleywide will continue gaining momentum through at least mid-2015. His forecast, released today, anticipates employment will expand by nearly 3 percent per year, with job growth in San Joaquin County being among the valley's strongest.
While job opportunities have grown the past six months, valley wages are not keeping up with inflation.
"Valley weekly wages are projected to increase at an average yearly rate of 2.25 percent from mid-2013 to mid-2015," Soydemir predicts. That's not good, considering that inflation is expected to be 2.43 percent per year.
"Factors such as structurally high unemployment rates in the valley contributed to the lingering excess supply of labor causing wages to lag behind inflation."
But Soydemir expects the valley's home prices to rise at double the inflation rate as "a new period of price appreciation" begins."
"As recovery buildup continues, average yearly appreciation in housing prices is projected to be 6 percent," Soydemir contends. He considers that good news because higher home values help homeowners feel more economically secure.
"Rising consumer wealth will contribute to the much-needed impetus in the valley's construction sector," Soydemir explains. "Valley building permits are projected to grow at an average annual rate of 14.65 percent from mid-2013 to mid-2015."
As more homes are built, more construction jobs will be created. The forecast predicts the construction sector will add about 5,000 employees during the next two years, which would be an annual increase of about 10.7 percent. That will make it the valley's fastest growth sector.
Here's a sampling of other findings in Soydemir's 28-page update:
Health services: "Despite the announced change of ownership of some medical centers, such as Emanuel Hospital in Turlock, health care providers in the valley continue to fall drastically short of meeting existing demand," which Soydemir says means the health sector will continue to grow steadily.
Education: "Despite the financial difficulties of some schools in cities such as Denair," he predicts education employment will continue to expand. Medical and education jobs are expected to grow by 2.6 percent in 2014 and 2.8 percent by 2015.
Manufacturing: "Valley manufacturing employment is projected to grow at average rate of 4.55 percent from mid-2013 to mid-2015," Soydemir predicts. Last year, manufacturing jobs grew 4.08 percent.
Leisure: "Hotel occupancy rates soared in cities such as Stockton and Turlock. Resulting greater demand had a positive impact on valley leisure and hospitality services employment," he says. In 2012, valley jobs in that sector grew 2.1 percent, and they are expected to expand even more than that during the next two years.
Retail trade: "Retail employment is expected to pick up speed in the second half of 2013," Soydemir predicts. "Since the end of the Great Recession (in 2009), valley retail employment increased by 3,100 on a yearly basis. Our projections point to an increase of 3 percent per year from mid-2013 to mid-2015, which roughly corresponds to about 4,000 annually."
Bee staff writer J.N. Sbranti can be reached at email@example.com or (209) 578-2196.