Job growth slowing in California but incomes rising, Chapman says

California consumers are feeling good and earning more, even though job growth is slowing, according to a new economic forecast from Chapman University.

Employers in the state are still adding jobs at a faster pace than the rest of the country. But annual job growth nationwide expanded to a nine-month average of 1.8% this year from 1.7% in 2013, while the California rate has fallen to 2.2% from 3% last year.

Last year, the state’s job growth was the third fastest in the U.S.

In Orange County, the rate is down to 1.9% from 2.5%. Last year, the county had the eighth fastest job growth among large metropolitan areas in the state and was outpaced by Los Angeles, San Diego and a resurgent Inland Empire.


But Chapman economists say the data, based on statistics from the state Employment Development Department, underestimate the volume of jobs added or created by small businesses. Researchers said they expect the EDD to update the figures next year to reflect stronger job growth.

In 2015, Chapman expects California to add more than 364,000 jobs, a 2.4% gain. Payroll employment in Orange County is projected to rise 2.6%.

The state unemployment rate has steadily declined since the recession to 7.3%. In California, personal income is expected to rise 5% next year, according to economists.

Those trends, along with higher home values and equity, have helped Chapman’s survey of consumer sentiment in the state hit its highest level since the recession began in late 2007.


Housing, however, has become less affordable, despite low mortgage rates. As builders draw up more permits to loosen the housing supply, construction spending is pegged to increase, economists said.

Commercial and industrial developers are also likely to whip up new projects now that the high vacancy rates and unpredictable lease rates of the last five years are reversing.

The trend could lead to a 4.1% increase in construction jobs next year as well as indirect upticks in retail, wholesale and transportation industries, according to the report.  

The state’s healthcare industry is also headed for jobs growth, according to economists. Aging baby boomers, the passage of the Affordable Care Act and a surge of 3.4 million Californians signing up for health insurance this year will help boost jobs in healthcare services and social assistance 3.6% from 2013 to 2020.

That’s 498,000 jobs added, according to economists. Jobs in pharmaceutical and medical devices manufacturing will swell 2.1% over the same period.

But some industries, such as the state’s financial services sector, have seen weak job growth for months. Chapman economists said the hiring struggles are the result of declining home sales and slowing demand for mortgage refinancing this year.

Manufacturing, a key sector in California, has also been a laggard. Aided by automation and higher expectations, employers managed to boost output with only lackluster hiring.

But there’s hope for a slight uptick in manufacturing jobs, according to Chapman. Investments in goods, including equipment and machinery, are expected to surge 6.1% next year, while a projected 3.4% increase in exports could push California factories to produce more.


The Chapman report also suggests that the national economy has room to grow. The current recovery has taken longer than past recoveries, with slower economic expansion and an unemployment rate that, at around 6%, is still relatively high.

Twitter: @tiffhsulatimes

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