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California gained 44,800 jobs in August; unemployment holds at record low

TORRANCE, CA - JANUARY 11, 2018: Nurses and doctors work at a station set up to triage flu patients
Nurses and doctors work at Torrance Memorial Medical Center this year. The state’s education and health services sector grew by 18,700 jobs in August.
(Gina Ferazzi / Los Angeles Times)

The California economy barreled forward in August as employers added 44,800 net jobs and the unemployment rate held at a record low of 4.2%, according to data released Friday by the state’s Employment Development Department.

Wages grew but barely enough to top the increase in consumer prices.

All in all, the data reveal a resilient economy that is improving despite high housing costs and rising trade tensions with China, a major trading partner for the Golden State.

“California’s economy continues to sizzle,” said Sung Won Sohn, president of SS Economics in Los Angeles.

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The good news could change as the Trump administration ratchets up trade actions, Sohn cautioned. This coming Monday, for example, new tariffs on $200 billion worth of Chinese goods are set to take effect. Those 10% duties will hit many household items and are expected to bring more pain to everyday Americans than previous rounds.

California unemployment held steady at 4.2% for the fifth straight month, suggesting the state is at or reaching full employment, experts said.

Job gains in August accelerated from July, when payrolls grew by 34,400 jobs. July’s growth was revised down from an earlier estimate of 46,700.

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In August, eight of California’s 11 industry sectors saw a rise in employment. Education and health services saw the largest net gain — 18,700 jobs — followed by professional and business services, with a gain of 7,700.

Government posted an increase of 6,100, construction added 5,200, and trade, transportation and utilities saw payrolls grow by 4,700.

Financial activities, information and the leisure and hospitality sector also saw job gains.

Manufacturing and the mining and logging sector were the only ones to experience job losses.

“Other services,” which includes businesses such as equipment repair shops and nail salons, saw no change in jobs in August.

Locally, Los Angeles County gained 13,200 net jobs; Orange County, 7,000; Ventura County, 2,300; and San Diego County, 3,700. The Inland Empire region of San Bernardino and Riverside counties gained 4,500.

In California, average hourly earnings rose 3.1% in August from a year earlier, to $30.80. That was the largest annual increase since October of last year. However, national consumer prices increased 2.7%, according to the Bureau of Labor Statistics, which does not track statewide inflation.

Los Angeles and Orange counties saw faster wage growth, with average hourly earnings rising 5.4%. Inflation in the two counties was up 3.9%.

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Lynn Reaser, chief economist of the Fermanian Business & Economic Institute at Point Loma Nazarene University, said hitting an unemployment floor should accelerate wage gains as employers fight for available workers. But she acknowledged the “$64,000 question” during the recovery has been why wage growth hasn’t been stronger.

Blame has been placed on a variety of factors, including low productivity growth, declining union power and increased competition from low-wage workers overseas.

“Wage gains are happening,” said Robert Kleinhenz, an economist with Beacon Economics. “It’s just one would have expected faster wage gains to occur at this stage in the economic cycle.”

andrew.khouri@latimes.com

Follow me @khouriandrew on Twitter


UPDATES:

1:50 p.m.: This article was updated throughout with additional analysis and comment from economists.

This article was originally published at 10:25 a.m.

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