EMPLOYMENT GROWTH IN THE SACRAMENTO REGION, THE BAY AREA, CALIFORNIA, AND THE UNITED STATES

Deteriorating economic conditions pulled the Sacramento Region’s job growth into negative territory.

The six-county Sacramento Region posted negative job growth for the first time in 15 years due to slowdowns in nearly every major sector, according to May 2008 preliminary data. Despite showing some positive signs in recent months, continued losses in the housing-related sectors, rising prices, and the strain on consumer spending weakened economic conditions. The drop from stagnant to negative growth places the Region below both the statewide and national averages. The Region’s -0.7 percent growth rate translates to a loss of 6,500 jobs in the past 12 months.

The state dropped back into negative job growth in May 2008. Besides parts of the Bay Area and Fresno, all of California’s largest regions are experiencing negative year-over-year employment growth rates with a handful well over 1 percent. Between May 2007 and 2008, California posted -0.1 percent job growth with a decline of 16,900 jobs. The state is still tracking below the nation, which continued its decreasing job growth pattern, but still showed minimal growth as of May 2008. Over the past year, the nation added only 104,000 jobs to payrolls.

Job growth in the Bay Area also dropped in May 2008 to a level of 0.4 percent (reflecting a year-over-year gain of 12,500 jobs). The Bay Area continues to outperform the state and nation. In fact, two of its core sub-regions rank at the top of the list of major regions in the state—the San Francisco market and Silicon Valley. Nevertheless, most major sectors in the Bay Area have seen slowing growth, which has led to some of the lowest levels of growth the region has seen since shifting back into sustainable positive growth in its most recent economic recovery (late 2004 and early 2005).

Major Sector Employment Gains and Losses Sacramento Region, California, and Bay Area Sacramento Regional Research Institute, June 2008 Data Source: Employment Development Department

The Sacramento Region saw job losses in six major sectors during the past 12 months, leading to an overall net employment decline.

Six sectors in the Sacramento Region posted year-over-year losses equating to a combined decline of 14,200 jobs. The Construction sector showed the largest decrease followed by Trade, Transportation, & Utilities (concentrated in the Retail Trade component). Government; Educational & Health Services; Professional & Business Services; and Other Services all added jobs between May 2007 and 2008, but only created a 7,700 job gain, which helped cushion, but did not completely make up for, the other relatively heavy losses.

Six sectors in the Sacramento Region posted year-over-year losses equating to a combined decline of 14,200 jobs. The Construction sector showed the largest decrease followed by Trade, Transportation, & Utilities (concentrated in the Retail Trade component). Government; Educational & Health Services; Professional & Business Services; and Other Services all added jobs between May 2007 and 2008, but only created a 7,700 job gain, which helped cushion, but did not completely make up for, the other relatively heavy losses.

The housing woes and spillover into Retail Trade are also affecting the Bay Area’s economy; however, unlike the state overall, only Financial Activities; Construction; and Trade, Transportation, & Utilities experienced employment declines in the past year. Similar to the state, the Bay Area’s strongest job gains are in the Professional & Business Services; Government; and Educational & Health Services sectors. With sustained gains in the other major sectors, the Bay Area was able to generate net positive job growth.