In a surprisingly strong economic report, California employers increased their hiring in May and the statewide unemployment rate fell for the first time since the summer of 2022, the government reported Friday.
Employers in the state added 43,700 jobs last month across a broad spectrum of industries, breaking a recent pattern of lagging behind the country in job creation. In April, California's economy produced only 4,100 jobs.
The state Employment Development Department noted that May's payroll increase accounted for 16.1% of the nation's overall gains of 272,000 jobs, surpassing California's 11% share of employment nationally.
However, the manufacturing industry in California continued to shed jobs, as did the well-paying information sector, which includes the struggling film industry.
Last month, California's unemployment rate fell to 5.2%, from 5.3% in April, even as the U.S. unemployment figure rose one notch in May to 4%. Until last month, the state's unemployment rate had been gradually rising since hitting a low of 3.8% in August 2022.
In April, California had the highest unemployment rate in the country, reflecting weakness in some of the state's major sectors, including technology, information and professional services.
The improvement in May, although only one month, was a welcome relief for officials after the state's recent poor performance and amid signs that the national economy is slowing. Consumer spending is weakening and job postings in California and other states have slowed in recent months.
Job gains in California last month continued a pattern of solid growth in health services and government offices. Leisure and hospitality companies also increased their payrolls, despite pressure from higher minimum wages, especially at fast food restaurants.
Significantly, several sectors that had been weak (professional services, trade and transportation, and financial services) also posted job growth last month.
“Before the state government celebrates too much, it's worth pointing out some of the labor dynamics that didn't make it into the state's press release,” said Michael Bernick, former director of the state EDD.
He noted that California has a huge number of unemployment claims — nearly double the state's share of the U.S. workforce. A large portion of last month's job gains came in industries that offer lower wages and fewer hours.
What's more, job growth continues to come disproportionately from publicly funded sectors, such as health care and social assistance, as well as government agencies, Bernick said. He and other analysts worry that California's large budget deficit will spread to the broader economy in the coming months.
