Featured Column: Despite Small August Uptick, Jobless Rate Likely to Decline

Published October 10, 2013

By Lynn Reaser

California's jobs picture was mixed in August.

After declining earlier in the year, the jobless rate moved up for the second month in a row during August, rising to 8.9% from 8.7% in July. The rise came despite a drop each month in the labor force. 

In contrast, the report on nonfarm payrolls, which is typically more reliable since it is based on company records as opposed to a survey of households, has shown an acceleration in job growth during the past two months following a slowdown during the spring.

August saw California adding 29,000 jobs during the month, following a job gain of 28,000 during July.  Job growth was also broad-based last month and was notably strong in the goods producing area--mining (oil and gas), construction, and manufacturing.

Other areas that saw solid job gains included transportation and warehousing; finance; leisure and hospitality; and health care. Government employment was flat as hiring in that area may be stabilizing.

(Due to the Federal Government shutdown, no additional figures were released in the month of September).

On the weaker side, retail jobs declined last month -- a concern since this sector has typically been a sector of sizable growth. Jobs in scientific research fell, which could reflect sequestration cuts in funding by federal agencies. Employment in the motion picture industry also declined.

California faces a number of risks during the balance of the year, including issues related to the federal budget, oil prices, interest rates, and uncertainty about the Affordable Care Act.  

On balance, the state is likely to see some moderation in job growth during the remainder of 2013, but the unemployment rate is likely to resume a modest decline.

Lynn Reaser is Chief Economist of the Controller's Council of Economic Advisors.

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