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California's Economy Strengthened in September | L.A. Times

Dr. David Smith is Quoted in the Los Angeles Times

October 20, 2017  | 2 min read

The California economy picked up steam in September, adding 52,200 net new jobs and leaving the unemployment rate unchanged at 5.1%, according to data released Friday from the state’s Employment Development Department.

The report marks a rebound from a month earlier, when employers trimmed payrolls by 7,700.

“It was a very good report,” said Lynn Reaser, chief economist of the Fermanian Business & Economic Institute at Point Loma Nazarene University. “It appears the state is back on track.”

The improvement came in large part from an increase in government jobs, as well as those in trade, transportation and utilities. Those two sectors added 27,000 jobs and 13,000 jobs on a seasonally adjusted basis.

Employment also increased in the construction, finance, and leisure and hospitality sectors.

The California economy has alternated between job gains and losses in recent months. And economists were waiting to see whether the state would lose jobs consecutively for the first time since 2010. Instead, payrolls swelled.

Dave Smith, an economist at the Pepperdine Graziadio School of Business and Management, said that’s a sign the “economy is humming along,” despite slowing compared with last year.

Between January and September, the state added 177,300 net new jobs, compared with 233,000 during the same period in 2016.

The slowdown is to be expected. For years, the economy has been picking up slack from the Great Recession, and that’s now changing, according to Smith.

“I think we are at full employment or near it,” he said.

Regionally, there was growth as well. Los Angeles County saw an increase of 16,900 net jobs on a seasonally adjusted basis in September.

Job gains in the county were particularly strong in educational and health services, up 20,000 on a non-seasonally adjusted basis, as teachers went back to work.

The logistics industry and professional and business services also saw an increase.

Though California’s expansion continued last month, there were communities that lost jobs, including some in the San Francisco Bay Area.

The San Francisco metro area lost 1,700 jobs, while the San Jose area saw a decrease of 1,300. It was the second straight month those two places experienced declines.

Reaser said the extremely high cost of housing likely played a role in the disappointing Bay Area figures.

Employers say the high cost of housing makes it difficult to recruit workers from out of state. Indeed, some economists say the toll of sky-high rents and home prices is being felt more broadly across the state.

Smith agreed that job growth would be stronger if housing was more affordable, though he said the losses in San Francisco and San Jose could simply be a statistical anomaly. And he noted the affordable housing problem is also a sign of success.

“The fact that it is getting more difficult for employers is related to the fact we are doing well and we are getting more expensive,” he said.