California's Unemployment Rate Grows To 4.3% As Job Growth Slows

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

March 27, 2023

(The Center Square) - "California’s unemployment rate rose a percentage point to 4.3% in February from 4.2% in January," according to the state Employment Development Department. Employers added 32,300 nonfarm payroll jobs, down from 96,700 new hires in January. The labor force data for February is from two separate federal surveys, businesses and households.

Employment grew in eight of California’s 11 industry sectors in February, the same fraction as January. Education and health care employers led the way with 11,300 new hires in February, for a year-over gain of 153,000 jobs.

Leisure and hospitality employers, after hiring 20,800 new workers in January, added 11,200 jobs in February, for a year-over 151,100 new hires. "Hiring picked up at eating establishments, performing arts venues, sporting events and related spectator subsectors in February," according to the state EDD. The upcoming National Basketball Association playoffs should help to propel this sector’s hiring upswing.

Government employment dropped sharply in February. After adding 46,000 new hires in January, government payrolls added 2,400 jobs in February. The construction industry, which lost 7,300 jobs in January, added 7,600 new hires in February.

Moving forward, the Federal Reserve Bank’s policy of hiking interest rates will affect the state’s construction industry, as it relies upon borrowed money, along with other commercial activity such as the buying and selling of real estate.

"California’s mining and logging, and financial activities sectors showed no month-over change in employment for February," according to the EDD. The information sector shed 2,900 jobs in February, the sole industry sector experiencing such a decline, in part due to software publishers.

Against this backdrop, the Fed’s policy of rapid interest-rate increases to bring down inflation, a general rise in prices, also decreases the prices of long-term bonds. This contradictory dynamic has been a major factor in the recent financial distress of the Silicon Valley Bank, heavily invested in long-term bonds, recently.

Meanwhile, the state EDD has waived any penalty for late payroll tax from companies doing business with SVB.

In February, San Francisco County registered a 2.8% unemployment rate, a statewide low. Colusa County in rural Northern California had an unemployment rate of 18.1%, a high among California’s 58 counties.

"In February, 380,768 Californians certified for Unemployment Insurance benefits during the February 2023 sample week that includes the 19th of the month, versus 368,865 in January and 425,221 in February 2022," the EDD reported.

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.