California's Job Growth Slows; Unemployment Rate Falls To 3.9%

By Seth Sandronsky | The Center Square contributor, The Center Square California

October 24, 2022

(The Center Square) – California’s growth in new hiring fell to 6,500 nonfarm payroll jobs in September versus 19,900 in August. "The slowdown in payroll expansion arrived as the Golden State’s unemployment rate dipped to 3.9% in September from August’s 4.1%," according to the state Employment Development Department.

California’s employment data comes from two separate federal surveys. The rate of unemployment rate comes from a federal survey of 5,100 California households. A federal survey of 80,000 California businesses delivers data on nonfarm payroll jobs.

Against the backdrop of mixed economic signals in California, the national unemployment rate was 3.5% in September compared with August’s 3.7%. National employment data collection from the federal household and establishment surveys occurred before Hurricane Ian hit Florida.

In September, five of California’s 11 industry sectors added nonfarm payroll jobs, down from the seven with hiring growth in August. Education and health services employment, with 15,000 new hires in September, led the way. "Hiring growth within colleges, universities and professional schools sparked this sector’s employment numbers," according to the state EDD.

California’s leisure and hospitality employers, hit hard by the pandemic of 2020, added 8,700 jobs in September. "Employment growth in this sector was due to the expansion of special food services like catering and food trucks," according to the state EDD.

Meanwhile, government payrolls shed 16,100 jobs in September. The statewide decline was due to a slowdown in local government hiring, namely in administration and services.

Worsening drought is harming California farm employment. Growers are cutting back due to a lack of rain. Agricultural payrolls lost 700 jobs in September.

California’s unemployment rate across its 58 counties varied considerably, with big differences between coastal and inland areas. Case in point is a state-leading low unemployment rate of 1.9% in San Mateo County north of Silicon Valley compared with a high of 16.0% in Imperial County east of San Diego.

California, as the nation’s biggest economy, is not immune from the impacts of central bank policy to fight inflation, a general rise in prices, at a 40-year high currently. Accordingly, the Federal Reserve Bank’s hike of interest rates is increasing the price of borrowing money for businesses and the consumers they serve. A rise in unemployment could be another part of that scenario.

The focus of the work of The Center Square California is state and local-level government and economic reporting that approaches stories with a taxpayer sensibility.