California Unemployment Rate is Up to 12.5%, but payroll report shows gain.
Don't get excited about the 26,000 gain in CA non-farm payrolls. It comes on the heels of a downward revision of 25,000 for September. Thus, we are still stuck at 14.2 million non-farm jobs, a 1 million decrease from peak. It is better described as a sideways move, and I still think we have a few more negative months in our future before we see consistent job growth. Sideways is still good news and suggests that we are getting close to the bottom.
In contrast, the household survey (used to calculate the unemployment rate) shows a different pattern. A huge decrease in employment for October after a small decrease in September. Thus, we are up to 12.5% unemployment, a level I didn't anticipate we would reach until this winter.
In the metros, Sacramento appears to be the worst performer - driven primarily by weakness in consumer driven sectors such as retail and hospitality.
Modesto had a strikingly large seasonal jump in unemployment, all the way up to 16.6%, whereas Stockton's report is not as bad. Fresno did not have a great month either. Some drought effects are now showing up in farm and food manufacturing, as well as budget cut impacts at schools, Fresno State and local governments.
In the Bay area, there are signs that the worst may be over for the tech. sector, and the Bay area looks like it could have a better than average recovery, after a very steep decline over the past 12 months. With unemployment still around 12% in Silicon Valley, it is a long, long climb back to normal.