Merced County job growth remains Valley’s leader

For three years, Merced County has led the San Joaquin Valley in employment growth, according to a just-released business forecast.

Employment grew in every Valley county expect Madera, which had a slight decline, according to Gökçe Soydemir, a business economics professor at California State University, Stanislaus. Employment in Stanislaus County grew the same rate as the Valley average.

His annual report, which will be available later this month, said Merced’s employment rate has grown 2.46 percent this year, compared with the 1.14 percent increase in Stanislaus and a 1.26 percent increase for the entire San Joaquin Valley.

But Merced’s unemployment rate remains higher than the Valley average.

“Obviously, the ongoing drought has negatively affected the Valley,” he said. “However, the non-farm-related categories of employment partially mitigated the farm-related categories.”

Soydemir said that’s an indication of the region’s diversification into other job sectors.

Soydemir’s annual report compares numbers from the past year to their 10-year averages to measure the health of the economy and to predict where it’s headed.

The Valley’s unemployment rate has continually fallen since the end of the Great Recession. Perhaps the best news in the report, he said, was that the region’s 12-month unemployment rate fell to 11.7 percent – below what would be expected in the 10-year average of 12.2 percent.

Consumers gained purchasing power during the year, as changes in wages outpaced inflation. The average yearly increase in inflation was 1.91 percent, compared to the increase in weekly wages of 2.55 percent in 2014. “That’s another positive development,” Soydemir said.

Projections point to further increases in purchasing power for the average consumer in the Valley as long as inflation remains low, according to the report.

The U.S. dollar’s improving position against other currencies will also mean lower prices of imported goods for the Valley consumer, the report said.

On the flip side, it means higher prices for goods exported from the Valley, affecting exporters of ag products and other goods who are trying to keep their prices down to remain competitive in international markets.

Valley home values climbed the most in Merced County at 21.3 percent in 2014 followed by a 20.6 percent increase in Stanislaus County. Soydemir said those increases are expected to level out in the coming years, returning to normal, healthy growth.

“We don’t want explosive growth,” Soydemir said. “We want steady, stable growth year over year.”

Merced, as well as the Hanford-Corcoran area, issued the fewest housing permits to build new homes over the last year.

Net loans and leases are now back to the levels that existed before the recession and are projected to rise further, but at a slower pace. “Those deposits that are being put in the bank are being channeled into loans and leases in the Valley,” Soydemir said. “It wasn’t like that before, during the recessionary years.”

Job growth across the Valley posted some surprises.

Information employment, which was expected to fall, actually grew by nearly 3 percent. That employment sector includes any jobs based around gathering data, like publishing, website-building and media positions.

The fastest-growing categories of employment in the Valley were construction, and leisure and hospitality services. Meanwhile, manufacturing and financial services employment saw a slight decline in 2014 from the year before.

The full report is set to be released May 25, Soydemir said. For more, call him at (209) 667-3296.

This story was originally published May 1, 2015 at 4:00 PM with the headline "Merced County job growth remains Valley’s leader."