Los Angeles County will finally regain the number of jobs it lost during the Great Recession next year, with Orange County and the Inland Empire expected to follow soon after, a new study projects.
After facing a more severe downturn than many other parts of the nation, Southern California and the state as a whole are expected to see continued declines in unemployment over the next five years, according to an annual economic forecast released Wednesday by the Los Angeles County Economic Development Corp.
"As we look into 2015, we should finally hit our groove with growth that's closer to the long-run trends," said Robert Kleinhenz, chief economist for the nonprofit economic development group. "It has taken an extremely long time to get here."
The analysis projects that the state's unemployment rate will drop from its current rate of 7.4% to an average of 7% next year, which would be the lowest rate since 2007. Los Angeles County's unemployment rate is expected to fall to an average of 7.7% next year, the lowest since 2008.
Among the other findings in the report:
•The Inland Empire, one of the nation's hardest-hit housing markets, is projected to be one of the fastest-growing metro areas in the state over the next five years.
•The once-beleaguered construction industry is forecast to be the top growth sector in the state through 2019, making up ground after tremendous job losses during the recession.
•Rapid job gains are projected for the temporary employment industry, which has grown at a fast pace during the economic recovery.
In July, California hit a symbolic milestone in its economic recovery, posting more jobs than the peak number reached before the recession, in 2007.
But most Southern California counties have yet to regain the jobs lost during the downturn.
The report finds that Los Angeles County, for example, had about 115,000 fewer jobs last year than at its peak in 2007. Although the county is expected to surpass that peak next year, population growth will cause the unemployment rate to be much higher — a projected 7.7%, compared with 5.1% in 2007.
Job growth in Los Angeles County is projected to increase at an average rate of 1.2%, slower than surrounding counties and the statewide average of 1.6%.
Kleinhenz, the LAEDC chief economist, said the size and diversity of the county makes job growth slower than in areas with smaller population bases.
"It's essentially a state within a state," he said. "That means the numbers we look at are much larger, the problems that we have are often much larger and change occurs more slowly in many instances."
At the opposite end of the spectrum is the Inland Empire, which suffered an economic crisis during the housing bust but is now one of the state's fastest-growing areas.
The area's jobs are expected to grow at an average rate of 2.6% over the next five years. The next fastest-growing area in Southern California is Orange County, with an average annual rate of 1.8%.
Experts point out that much of the Inland Empire's growth is catching up from past losses, but they also note that the economy is rebuilding in a much stronger way. Rather than a boom in construction jobs — tied to an overheated housing market — much of the recent job growth in the Inland Empire is in the warehousing and logistics industry, tied to the ports in Los Angeles and Long Beach.
Because much of the rest of Southern California is built out, Riverside and San Bernardino counties offer ample land for industrial warehouses and shipping centers for e-commerce companies such as Amazon.com Inc.
"Everybody is buying everything online, and the result of that is these facilities have to be built out here," said John Husing, vice president of Economics & Politics Inc., who specializes in the Inland Empire's economy. "A million-square-foot facility takes up to 52 acres. There isn't 52 acres left in L.A., Orange County or San Diego."
The forecast also estimates that, after years of stagnant growth, the construction industry will grow at an annual rate of 6.8% in the state over the next five years, nearly triple the rate of other fast-growing sectors such as healthcare.
Growth in construction jobs is driven by what the report projects to be far faster growth in housing permits through 2019. From 2010 through 2014, the analysis found an average of about 64,000 housing permits each year. That number is expected to more than double to 143,000 each year for the next five years.
The projections for job growth come with the caveat that the state lost 40% of its total construction jobs during the recession.
"I still think we will be stuck at an employment level in the construction sector that is chronically below where it was during the boom years of the last decade," Kleinhenz said. "We arguably had excessive building take place, which was artificially induced, and we'll be hard-pressed to get back to that."
John Benson, a vice president of human resources at construction firm Skanska, said California is a major growth market for commercial real estate and infrastructure projects, requiring additional labor. He said the company has benefited from a skilled set of construction workers in the state, many of whom had struggled to find work in prior years.
In the San Francisco Bay Area, in particular, Benson said, the firm has seen increased demand for new projects as tech companies expand corporate campuses.
"We've seen a large increase in our business," he said. "Part of that has been hiring new employees into the firm, and also a pull for employees from other parts of the country."