California’s job engine appears robust in the eighth year of an economic expansion, even if there are growing headwinds on the horizon after President Trump announced new tariffs this week.
The state added 14,000 net jobs to payrolls last month, while the unemployment rate fell to 4.3% from 4.4% a month earlier, according to data released Friday from the Employment Development Department.
The February job numbers mark a slowdown from an upwardly revised gain of 48,900 in January. Even so, the unemployment rate hit a new record low of 4.3%, and six of the state’s 11 industry sectors added jobs.
“The economy looks very solid,” said Lynn Reaser, chief economist of the Fermanian Business and Economic Institute at Point Loma Nazarene University. “The biggest risk factor now is what will happen in terms of trade.”
The professional and business services sector saw the largest increase: a net 8,300 jobs. Payrolls in construction and manufacturing grew by 6,800 and 3,500 jobs, respectively.
Education and health services, leisure and hospitality and financial activities also added jobs.
Sectors that lost jobs included trade, transportation and utilities, where employers shrank payrolls by 3,100. The government and information sectors also saw declines.
Protectionist federal trade policy — including new tariffs on Chinese goods that President Trump announced Thursday — has the potential to throw the state off course. If a trade war erupts, a large swath of industries could be hit, including agriculture, technology and tourism, as well as the logistics industry.
Late Thursday, the Chinese government retaliated with tariffs on $3 billion worth of U.S. goods, including California wines, fruits and almonds.
“We are all kind of connected by a spider web,” said Sung Won Sohn, an economist at Cal State Channel Islands. “If you touch one part of the spider web, the entire thing will shake.”
Sohn said the job losses last month in trade and transportation were likely an anomaly and not related to any fears of a trade war, though going forward, the sector could see a significant hit. Last year, $159 billion worth of imports flowed from China to California, according to federal data compiled by Beacon Economics. Not all of those goods stay in the state, but the activity creates paychecks for legions of California longshoremen and truck drivers who ferry cargo from docks to warehouses and beyond.
The growth in trade has transformed the Inland Empire in particular, where developers have constructed massive warehouses to hold goods going into and out of the nation’s largest ports in San Pedro Bay. In 2017, Riverside and San Bernardino counties saw the state’s fastest job growth: 3.9%.
John Husing, chief economist of the Inland Empire Economic Partnership, said even if a full-blown trade war doesn’t erupt, Southern California still could be hit if tariffs lead to a slowdown in trade.
“We have a huge number of jobs directly related to trade, and China is a huge piece of it,” Husing said. “None of this is helpful.”