Despite Hiring Surge, California and Sacramento Unemployment Rates Rise in June

From the Sacramento Bee - July 23, 2011

In Sacramento, hiring was especially strong in the leisure and hospitality sector, which includes restaurants, hotels and entertainment venues. Some 3,800 jobs were created, about three times as many as usual for June.

"People are feeling more confident about the economy ... which psychologically frees up their discretionary spending," said Doug Elmets, a spokesman for Thunder Valley.

The Lincoln casino has 100 job openings, he said.

 

 

The job market shook off the blahs in surprising fashion in California and Sacramento last month.

But in spite of a surge in hiring reported Friday, unemployment rates actually increased in June.

And it's unclear if the latest report from the Employment Development Department means the economy is truly gaining momentum – or if June was just another tease.

On the plus side, Sacramento's job market had a historic month: Payrolls grew by a resounding 13,500 jobs. That was the single best month since modern record keeping began 21 years ago, said EDD labor market consultant Justin Wehner.

Big job gains were reported in the restaurant, travel and entertainment industries, among others. Employers such as Thunder Valley Casino have put out help-wanted banners.

"It could be a sign we've finally joined the recovery," said economist Jeff Michael of the University of the Pacific. "Sacramento has just been the caboose on this thing."

But Michael cautioned that the numbers probably include some "statistical noise" that won't hold up over time. Put another way, June likely wasn't quite as strong as Friday's report suggests, particularly in greater Sacramento, he said. The June job gains could be revised downward next month.

Statewide, California employers added 28,800 jobs in June, the Employment Development Department said. It was the second best number in the country (behind Texas) and the strongest one-month performance in California since February.

The state's job growth was a pleasant surprise to analysts. California created more new jobs in June than the entire country. The U.S., as previously reported, added just 18,000 jobs.

Yet unemployment rates keep climbing – up a tenth of a percentage point statewide, to 11.8 percent. Sacramento's unemployment rate shot up six-tenths of a point, to 12.3 percent.

Granted, analysts pay less attention to unemployment rates. Their main focus is on payroll numbers, which are based on a larger survey sample and so more reliable. Also, it's typical for unemployment rates to go up in June, when students flood the labor force.

But the high unemployment rates are a sign that the economy is still fairly weak. The recovery has come in fits and starts, with encouraging reports often followed by setbacks.

"We're on this piano-key pattern, alternating ups and down," said economist Dennis Meyers of the state Department of Finance. "Still not roaring back."

California's unemployment rate is the nation's second highest, trailing only Nevada (12.4 percent).

And while the state has added 157,000 jobs in the past year, "it still leaves us well behind the 1.4 million jobs we lost in the recession," said Michael Bernick, a former EDD director who analyzes the job market for the Milken Institute.

Nonetheless, the June jobs report saw some industries perking along nicely.

In Sacramento, hiring was especially strong in the leisure and hospitality sector, which includes restaurants, hotels and entertainment venues. Some 3,800 jobs were created, about three times as many as usual for June.

"People are feeling more confident about the economy ... which psychologically frees up their discretionary spending," said Doug Elmets, a spokesman for Thunder Valley.

The Lincoln casino has 100 job openings, he said.

Along the same lines, attendance has jumped 17 percent at the State Fair so far this year. Spending is up as well on food and drink, the Midway attractions and the race track, said Cal Expo spokesman Brian May.

The good vibe extends to Lake Tahoe, where business has picked up now that gas prices have subsided and the weather improved.

"The town has been hopping," said Jerry Bindel of the Lakeland Village resort at South Lake Tahoe. He said he's hired more employees for the summer this year than last year.

Another surprisingly strong sector was government, particularly local schools. Districts added 1,700 jobs in a month when they typically scale back, Wehner said.

A likely explanation: Districts scrambled to rehire teachers who'd been pink-slipped, he said.

More hiring is likely to show up in the employment numbers later this summer, now that the Legislature prohibited school districts from making any further job cuts for this fall's school year.

California is still bracing for more cutbacks in some industries, Bernick said. Silicon Valley giant Cisco Systems said this week it will eliminate 6,500 jobs worldwide in August. Hundreds of California jobs will disappear with the liquidation of the Borders bookstore chain.

 

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