California set for more exports, strong manufacturing, Beacon finds

A new report from Beacon Economics anticipates an upswing in exports out of California and says most new jobs created in the state aren't low wage.
(Reed Saxon / Associated Press)

The outlook for growth in California is optimistic, according to a Beacon Economics report predicting expansion in manufacturing and exports and a job market recovery driven by more than low-wage work.

The report, conducted for City National Bank, notes that 56% of new jobs created in the state in the last year are in industries with average annual wages above $50,000. Most of those positions, according to the report, are full-time.

The findings seem to challenge other economists’ assertions that wages aren’t keeping pace with the job recovery. More low-wage positions will be created or opened by 2020 in Southern California than will mid-level or high-paying jobs, according to the Center for Continuing Study of the California Economy.


But according to Beacon, employers in the professional and business services field added 24,300 new jobs statewide since the fourth quarter. That’s more than half of the 44,200 net nonfarm job gains made in the state in the same period.

That’s more than half of the 44,200 net nonfarm job gains made in the state in the same period. The industry pays $29.11 an hour on average as of May, according to the Bureau of Labor Statistics.

The Beacon report also said that California’s 1.2% job growth in the first quarter trailed the 1.5% nationwide rate.

But Los Angeles and Orange counties each created 12,200 new jobs in the first quarter, helping pull the statewide unemployment rate down 0.3 percentage point from the fourth quarter to 8.1%.

And the Central Valley, often maligned as an economic dead zone, is showing surprising strength, according to Beacon.

The south San Joaquin Valley, which includes Fresno, Tulare and Kern counties, has boosted nonfarm employment by more than 50% in the last 25 years. The population has also swelled at nearly double the overall state rate.


The workforce participation rate in the state ticked up to 62.6% from 62.4% the previous quarter and the proportion of people working part-time due to economic reasons fell 0.6 percentage point to 6.8%, according to the report.

Beacon added that California’s growth slowed slightly in the first quarter due to the frigid, stormy weather bedeviling the rest of the country earlier this year.

Real gross state product, a metric of economic output, grew just 2.8% after surging 4.2% during the fourth quarter, according to the report. But manufacturing, thought by many experts to be a shriveling industry, continues to support a generous portion of the California economy.

The state is responsible for producing a quarter of the computers and electronics made in the country, according to the report. The products, which constitute nearly half of all California manufacturing output, are centered in Silicon Valley and, to a lesser degree, in the Los Angeles metropolitan area.

Beacon estimates that exports leaving California rose 2.8% in the first quarter from the fourth. The effects of a weak dollar, slower growth in China, Europe shaking off its recession and Japan emerging from a decade-long stagnancy will likely propel increasing outbound trade for the rest of the year.