California Economic Update, January 2013

The Department of Finance released its January 2013 Finance Bulletin which includes the following review of the latest economic indicators for California.

California’s labor markets continued to improve in October with accelerating job growth and a drop in the unemployment rate. There was also improvement in real estate conditions.

Labor Market Conditions

• California nonfarm payrolls grew by 45,800 jobs in October, and September’s initially reported gain of 8,500 jobs was revised up substantially—to 32,000. This was the sixth consecutive month-over-month job gain.
• California’s private sector added 54,400 jobs in October—the highest monthly job growth in this sector since October 2004. This increase more than offset the loss of 8,600 government jobs.
• Industry job gains in October were led by trade, transportation and utilities (24,700), followed by educational and health services (11,400), professional and business services (9,000), construction (4,100), leisure and hospitality (3,600), and manufacturing (1,400).
• Four industry sectors lost jobs in October, led by government employment which fell by 8,600. Information employment dropped 1,700; financial activities, 1.600; and mining and logging, 500.
• Total nonfarm payroll employment rose by 295,300, or 2.1 percent, from October 2011 to October 2012.
• On a year-over-year basis, employment rose 86,000 in professional and business services; 65,200 in leisure and hospitality; 64,900 in educational and health services; 61,500 in trade, transportation, and utilities; 27,700 in construction; 23,100 in information; and 17,700 in financial activities.
• Over the year, employment fell by 37,800 in government; 9,500 in manufacturing; 3,200 in other services; and 300 in mining and logging.
• During the first 10 months of 2012, California gained 244,300 nonfarm jobs, or an average of 24,400 jobs per month, which was the strongest pace of job growth since 2005. This acceleration was broad-based—six of eleven major industry sectors have grown faster in 2012 than in 2011. The acceleration was led by leisure and hospitality and by professional and business services.
• The unemployment rate improved in October, falling 0.1 percentage point to 10.1 percent, which is 1.4 percentage points lower than a year earlier. The number of unemployed Californians fell 29,000 in October while the number employed rose 56,000. Most importantly, this drop was achieved amid a strong increase in the labor force and an uptick in the labor force participation rate.

Real Estate

• After slowing in the preceding two months, home sales rebounded in October. Sales of existing, single-family detached homes totaled 544,380 units at a seasonally adjusted annualized rate, which was up over 10 percent from October 2011.
• Even though home prices slipped in October, they were still up substantially from a year earlier. The median price of existing, single-family homes sold in October was $341,370, up 23 percent from 12 months earlier.
• The California Association of Realtors’ unsold inventory index fell to 3.1 months in October, which was the lowest inventory reading since August 2005.