The unemployment rate drop is attributable to a labor force decline that outweighed the job decline. The June labor force decline continues a decline from last month that is an offset to labor force gains in the previous four months. In the past six months the labor force rose 1.7 million persons from the December 2009 low, then fell by about 1 million people in the last two months. These imply that the current labor force level is still about 700,000 people above the cyclical low. If it is true that the recent labor force increase was an unsustainable blip, then we might expect another labor force decline next month.

If next month’s expected labor force decline were similar in magnitude to the employment decline, the unemployment rate would remain essentially unchanged. One reason to expect an employment decline next month would be due to an ongoing contraction of temporary Census workers. The remaining temporary Census worker count is roughly 250,000 jobs. We expect the July labor force decline to outweigh the employment decline, but to less extent than this month, resulting in another unemployment rate decline.

The private-sector employment change was mostly driven by declines in Construction, Information, and Finance more than offset by gains in Manufacturing, Professional services, Education/Healthcare services, and Leisure/Hospitality services. The gains and losses in Manufacturing and Information, respectively, are small and offset each other.

The June gain in Professional services of 46,000 workers is welcome in this barely-a-recovery recovery. These are helpful because they are typically well-paying positions that will benefit the recovery better than low-paying positions. The Leisure/Hospitality gain is the first significant gain in this sector thus far in this cycle. This gain is dominated by amusements, gambling, and recreation, so aside from Casino cities, the gain may not be consistent with stabilization of rent and lease trends in most restaurants and hotels.

Our back-of-the-envelope July job change projection would be driven by a presumed Census worker contraction of 230,000 that would be offset by private-sector gains of 80,000 resulting in an overall 150,000 non-farm job drop. If the employment survey drop matched the job drop and the labor force contracted by 300,000 then the unemployment rate would be a bit over 9.4 percent in July.

California’s April jobs grew at 1.6 percent, annualized, from March. However, if we remove Agriculture and Government, this growth rate falls to zero percent. California’s April year-on-year growth improved from March, but still declined by 2.3 percent.

The reason for the unchanged April private non-farm job level is that gains in Leisure and Hospitality, Personal/Repair/Maintenance Services, and Professional/Technical Services were offset by declines in Construction, Manufacturing, Trade, Transport/Warehousing/Utilities, and Education/Healthcare.

The driver behind the Government increase was Federal, obviously due largely to the U.S. Census effort. The Census effort may be partly responsible for the increase in Labor Force we have seen across the county in recent months.

We are unfortunately still waiting for a California Employment Situation that we can get excited about.

The 3,900 jobs gained comprised of 2,800 government jobs where 1,300 of these were Federal. The Federal jobs, of course, were likely related to the Census effort that is underway. That leaves 1,100 private sector jobs gained. The annualized growth rate for non-farm private sector jobs is 1.0 percent. These gains were brought by Personal & Maintenance Services (600 jobs), the Financial Services (400 jobs), Education & Healthcare (200 jobs), and Construction (100 jobs). While the job gains in Education and Healthcare are nothing new in this cycle, the gains in the other three sectors are new. Monthly data are intrinsically volatile. We will wait for at least two more months of similar data before claiming that a trend of improvement for Personal & Maintenance Services, Financial Services, and Construction sectors are underway.

The April Oregon unemployment rate remained at 10.6 percent, unchanged from the May level. This was driven by the fact that the labor force grew, which offset the jobs increase. This phenomenon might continue in the next few months: a slowly recovering economy might bring sidelined workers back into the labor force, but job growth might not be strong enough to absorb all of them, keeping the unemployment rate high. It is also possible that the unemployment rate might subside, but only slowly. This is likely to be the pattern that exists for most of 2010.

The year-on-year job growth rate continued improving, that is to say the declines are not as big, extending a trend that started in January 2010. Improvements in the year-on-year job growth rates since January have been fairly consistent. The problem is that we started from losses of seven percent. Last year’s seven percent job losses were likely to be the worst in the California’s job market history. The year-on-year growth rate declines were 3.7 percent in February, and 3.1 percent in March.

Month-on-month job growth, the more volatile measure, jumped 570 basis points from December 2009 to January 2010. After the January gains, the month-on-month measure slowed to barely positive numbers in February and March.

The question of recovery is in the air, and with the March California jobs report we might hope to claim that we are past the worse of the recession. However, even though the job growth decline is improving, the level of jobs is still falling relative to last year. If the rate of improvement in the year-on-year job growth rate continues, we would not arrive at positive job growth until August 2010. As well, the unemployment rate will continue to remain high for some time.

A negative risk factor is the public sector. Despite the fact that the state has a very large structural budget deficit, public sector job losses have been much smaller than for the private sector thus far in this cycle. Public sector jobs could be the other shoe to drop. If this did happen, it would lengthen and weaken the return to growth.

Finally, a few months ago jobs were being lost in virtually all sectors, but in this release there are a variety of sectors that are up. These include: Professional and Business Services, Retail Trade, and Durables Manufacturing, seasonally adjusted, from last month. The upticks in Professional/Business and Durables Goods manufacturing are particularly good for the household sector and the economy since these are decent-paying jobs.

There were a number of data revisions in this release. Contrary to some press reports, one should not worry too much about these revisions. The establishment survey revision, which drives the non-farm jobs data in charts below, impacted data starting in April of 2008. Our analysis of this data is based on relative changes either one month back or one year back and so do not go earlier than April of 2008. I.e. there is no break in the data we are analyzing. The household survey revision, which drives the unemployment rate data in charts below, impacted data starting in January of 2010. This might impact our analysis of the change from December 2009 to January 2010. However, the BLS uses the revised data and methodology to recalculate the December results, pages 6 and 7, and they find that the December unemployment rate estimate would not have changed and the implied change from December 2009 to January 2010 would not have changed.

We are tentatively encouraged by this press release. While jobs are still being lost, and while the long-term unemployed continue to rise, other aggregate indicators have been improving for at least a few months now, in some cases improvements have been occurring for almost a half a year. Keep in mind that jobs are still down from this time last year. So while we speak of a job market that is improving we are not quite speaking about a recovery yet. Recovery for us means job growth, which is not yet wide-spread. However, it is encouraging to see the job losses slowing down.

The Bend MSA (Deschutes County) seasonally-adjusted unemployment rate fell from 14.2 percent in November to 14 percent in December. The Jefferson County unemployment measure fell from 14.4 to 14.1 percent, while the Crook County measure rose from 16.7 percent to 16.8 percent. The declines are due to labor force declines, and not new jobs.

Year-on-year non-farm jobs changes were negative for each of the three counties, which was the case in November. The year-on-year job declines moderated slightly for Crook County, from a 13.6 percent decline in November to a 11.1 percent decline in December. The year-on-year job declines for Deschutes County and Jefferson County were unchanged at 2.5 percent declines and 3.2 percent declines, respectively.

In Crook County, the year-on-year job declines are in all sectors except Retail Trade and Leisure/Hospitality, which is counter to the trends in the State and the United States. In Deschutes County, the year-on-year job declines are in all sectors except Leisure/Hospitality, Personal/Maintenance Services, and Government. In Jefferson County the year-on-year job declines are in only six sectors, in contrast to the State and the Nation. The non-declining sectors include: Construction, Wholesale Trade, Retail Trade, Technology, Education/Healthcare, Leisure/Hospitality, and Personal/Maintenance services.

Central Oregon’s job resilience in Leisure/Hospitality is due to tourism and December tourism at least as evidenced by this jobs report, is providing support to the Central Oregon economy. In part at least, this is due to better early-season ski conditions. Tourism will likely support the Central Oregon labor market for a few months yet to come, which is good news indeed.

We interpret the Central Oregon December jobs report as indicating the area is still “Bumping Along the Bottom”. However, if the non-tourism sectors can begin a process of recovery, then along with the strength in Tourism, the area’s economy could begin a nice recovery.

Almost two-thirds of California’s 600,000 fewer jobs from December 2008 are accounted for by losses in only four sectors: Construction (-116,000), Manufacturing (-106,200), Trade (-109,200), and Professional/Business (-90,400). The public sector lost more than 44,000 jobs from December of 2008.

California’s job market appears to be bumping along the bottom of this recession. The question for the next year is the balance of public versus private sector. The private sector does appear to be improving while the public sector will likely worsen due mostly to budgetary problems at the state level. Given that the private sector is 83 percent of the total, it is likely that the improving private sector will offset the worsening public sector at a rate that implies that overall jobs will improve. However, these are just improvements, as year-on-year job growth will remain negative for at least a few more months.

The State’s Year-over-year job losses are improving a bit, from a loss of about five percent in November to a loss of 4.3 percent in December.  The seasonally adjusted unemployment rate rose about three tenths of a percent, from 10.7 percent to 11.0 percent.  The seasonally-adjusted non-farm job growth rate was actually up 0.2 percent in December, the first increase month-on-month in four months and one of only two cases of an increase during all of 2009. 

As with other areas that we cover, the year-on-year declines are in all sectors except (private) Education and Healthcare where this is being driven mainly by Healthcare.  For a variety of reasons, including overall population aging and inelasticity of demand, Healthcare has been somewhat resistant to the gale-force winds of this Great Recession.  The hardest-hit sectors in December were: Construction, Manufacturing, Retail Trade, Financial & Real Estate, Professional & Business, and Leisure & Hospitality.

We interpret the Oregon December jobs report as indicating the State is still “Bumping Along the Bottom”.  If the improvements in job growth continue then the status might change to “Recovery”.  Given the intrinsic volatility of monthly data, we will wait until a couple more months of data to verify that. 

The November jobs number was revised to show a month-on-month gain of jobs. The December jobs number was down 0.8 percent from November and down three percent from the previous year. The unemployment rate held steady at ten percent, which means that the labor force is still declining, or in other words, some people who had been out of work and looking for a job have stopped looking.  Long-term unemployed persons, those who have been out of work for more than 27 months, grew from 5.8 million people in November to 5.9 million people in December.

Our read of the data going forward: we are still in a recession. However, the decline is subsiding. Using the monthly year-on-year non-farm job changes, which are the most stable indicator of jobs, we see that there have been consistent improvements for four months now. See the various job-measure charts below.

The report shows that year-on-year jobs are declining in all major sectors except Education and Healthcare.  This is being driven by job gains in Healthcare.  The sectors losing the most jobs in September were Construction (down 146,000 jobs) and Professional/Business Services (down 135,000 jobs).  This is the 36-th consecutive month that Construction jobs have declined on a year-over-year basis.  The job losses in Professional/Business Services are contributing to declines in California’s average salary, since this is a relatively well-paying sector.   These declines in both jobs and pay will contribute to ongoing weakness in real estate and consumer sales, and these factors will keep California’s economy weak for a while.