California’s unemployment rate fell to 11.1 percent in December as the state added 10,700 jobs and the number of people employed in November was revised upward by another 18,000.
Contrary to some depictions of California as a failing economy, the state’s employers added more jobs as a percentage of the workforce than did the nation as a whole in 2011.
The recovery is being led by the technology sector and other business and professional services, but even the deeply troubled construction industry saw growth in December.
Here is a quick analysis from economist Steve Levy at the Center for the Continuing Study of the California Economy:
The California economy took another step into recovery mode in December. The unemployment rate fell to 11.1% while non-farm jobs increased by 10,700 with an additional 18,200 jobs added to the November total.
The data from the household survey were even stronger with an increase of 73,000 people holding jobs. The unemployment rate has declined two months in a row while at the same time people were rejoining the labor force, which increased by 88,500 since October.
The household survey data is often a better indicator of labor force trends at turning points in the economy as it reflects new companies and jobs faster than the establishment survey that reports payroll jobs. It is also true that in the early stages of recovery payroll job estimates are revised upward as has happened often in recent months.
Job gains for the month and year were strongest in information and professional services reflecting the surging growth of technology companies, where job gains were accompanied by wage increases and continuing job openings. Gains were also recorded in construction, which is finally starting a slow recovery after the loss of more than 400,000 jobs.
The recovery slowly is broadening beyond technology and exports with small gains in retail trade, health services and restaurants. The finance sector lost jobs over the year. If growth in technology and exports continue and housing has finally hit bottom, 2012 should see a broadening of the recovery is terms of industries and geography.
Job gains continue to be led by the coastal technology centers in Silicon Valley (+3.0%), San Diego (+2.6%), San Francisco (+2.1%) and Orange County (+1.8%). For the year California added 240,300 jobs (+1.7%) outpacing the national 1.3% increase. The household survey reported a larger gain of 319,300 jobs.
The Inland Empire was one of the few inland areas to see a recovery in 2011 with job gains of 22,000 (+2.0%). For the most part other inland areas remain mired in recession.
There are still 2 million Californians looking for work but that is down by 250,000 from last December. The state’s December unemployment rate of 11.1% is far below the 12% forecast in the Governor’s budget economic forecast for 2012.
The recovery remains at risk from world events although California is more insulated from Europe than the rest of the country. Still, the state legislature and Congress remain gridlocked on most important economic policy issues, which undermine the opportunities for economic progress in 2012.
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