The economy really is getting better, in Sacramento and across California. Sometimes, though, the economic statistics create confusion.
Friday was one of those times. The Employment Development Department reported that California unemployment rose to 8.9 percent in August, up two-tenths of a point from the month before. But statewide payrolls grew by 29,100 – the second-highest job growth in the nation.
The results for Sacramento were muddled, too. Unemployment plunged four-tenths of a point, to 8.5 percent, even though employers added just 1,800 jobs. That’s a meager increase in light of the steep drop in unemployment.
What’s going on?
Payroll figures and unemployment rates are based on two different surveys, and it’s not unusual for the numbers to conflict with one another. Generally, economists look to the payroll data, which are based on a broader sample, and those figures showed more hirings than layoffs during August. In any event, analysts concluded that the economy continued to get healthier during the month.
“It does seem like the labor market is improving,” said Irena Asmundson, chief economist at the state Department of Finance. At the statewide level, nine of the 11 major sectors of the economy showed job growth in August, according to the EDD. Still, she said, the increased unemployment rate is “worrisome.”
As for Sacramento, economist Jeff Michael said the report of 1,800 new jobs doesn’t tell the whole story. He said he thinks the surveys are failing to pick up job growth in key sectors such as construction and finance.
The EDD figures, for instance, reported that Sacramento’s construction payrolls actually fell slightly in August and are 12 percent smaller than they were a year ago. Those results are completely at odds with widespread reports that the region’s all-important construction industry is doing better.
“Employment growth in the Sacramento area is really stronger than what the numbers show,” Michael said. “Their sample is clearly missing some of the growth, some of the new firms.”
In a somewhat troubling sign, the broad professional and business services sector lost 800 jobs in Sacramento last month, following seven months of gains. On the other hand, the “other services” sector gained 900 jobs. EDD labor market consultant Heather Chamizo said “other services” include nail salons, hair salons and other industries that depend on discretionary income.
“These are the extras that people didn’t pay for when they couldn’t,” she said. “That’s a good sign.”
The latest report left California with the fifth-highest unemployment rate in the country. Nevada has the nation’s worst unemployment, at 9.5 percent.
The state has added 223,900 jobs over the past year, second-highest in the nation after Texas. California has recaptured roughly half of the 1.4 million jobs that disappeared in the recession.
“California’s job growth is continuing to run ahead of the nation,” said San Francisco labor lawyer Michael Bernick, who was EDD director under former Gov. Gray Davis. “At the same time, we’re still well behind the job numbers we had prior to the recession.”