San Diego’s unemployment rate has settled into a more stable zone in September, dropping to 4.6% after a surprising spike to 5.1% in the previous month. According to state labor officials, this improvement comes alongside a gain of 4,700 jobs, primarily in government and education as schools resumed. Although the rate isn’t as low as some historic levels from recent years, economist Daniel Enemark notes that this situation is advantageous. He explains that rates near 5% are indicative of full employment, and when unemployment drops significantly below 4.6%, there is a greater risk of inflation.
Enemark, the chief economist at the San Diego Regional Policy and Innovation Center, highlights that the current labor market stability counters predictions of a recession that assumed higher unemployment was necessary to control inflation. The region’s inflation rate has decreased to 2.5%, which he describes as a positive "soft landing" that the Federal Reserve had been aiming for, a scenario that hasn’t commonly been seen before. Unlike August, when a rise in job seekers caused an increase in the unemployment rate, September remained steady with only a marginal increase in the labor force.
This calmer environment contrasts with the over 16,000 new workers joining in July and August combined. Typically, there is more significant labor force growth between August and September, according to Enemark, but the modest change can be seen as encouraging. It suggests that people feel secure enough to participate in the workforce, which is crucial for economic growth. The region’s unemployment compares with a 5.3% rate for California and 3.9% nationwide at the same time.
Government roles, primarily in education, saw an increase of 7,400 positions, with additional growth in private education and health services climbing by 1,900 jobs. However, there were declines across seven sectors, totaling a loss of 5,300 jobs. Leisure and hospitality industries, influenced by the end of the summer tourist season, led these reductions. Despite this, when accounting for seasonal variations, these sectors showed a slight increase.
Phil Blair, CEO of Manpower, notices a shift in post-COVID trends where mass job resignations are dwindling. Companies now focus on filling specific permanent positions rather than temporary roles. Blair notes current demand for professionals such as CFOs and civil engineers, particularly those skilled in mental health. There's also preparation for holiday hiring, with companies like UPS and warehouses ramping up. Blair, for instance, has requests for 450 workers from two separate companies.
San Diego County’s unemployment rate positions it in the middle compared to other California counties: Los Angeles stands at 6%, Orange County at 4.1%, San Francisco County at 3.6%, and Riverside County at 5.6%. Statewide commentary from economist Christopher Thornberg highlights a gap between job creation and worker availability. He points out over the past five years, job numbers have grown by 640,000, whereas the workforce has expanded by only 10,000. Thornberg theorizes this could be due to individuals taking multiple jobs or undocumented labor, suggesting a full employment economy facing a labor shortage. He anticipates a downward revision in payroll figures, suspecting current job counts are overestimated.
