Job outlook improves for Valley and California

mrowland@modbee.comMay 29, 2014 

California’s job picture is doing better than expected, and even the Central Valley should share in the improvements – albeit more slowly.

A new report from the Business Forecasting Center at the University of the Pacific in Stockton says the state will reach its prerecession job-level peak next month, nearly a year earlier than previously predicted. The milestone of 15.4 million non-farm jobs, which equals the highs seen in 2007 before the economic crash, has been led largely by the strength in the technology and science industries, said Business Forecasting Center Director Jeff Michael.

Still, the sunnier outlook statewide is due to across-the-board growth, Michael said. The 2013 employment figures recently were revised, showing a more robust 3 percent job growth last year.

“The growth now is much more balanced across the sectors,” he said. “A big part of the reason California is improving and will reach that milestone is it is more than just tech now doing well. There’s growth across industries and growth across regions. Even places like Modesto are contributing now.”

Modesto is expected to reach its prerecession employment peak sometime in late 2015, Michael said. That also is an improvement from earlier forecasts that showed the area would not reach that level until 2016.

But in the agriculture-reliant Central Valley and Modesto areas, job growth will be hampered by the ongoing drought. According to the report, water issues could reduce employment growth in the San Joaquin Valley this year, but not enough to stop the region’s slow climb out of the recession. In Modesto, 2 percent job growth is predicted this year, which will climb incrementally over the next few years to 2.6 percent growth in 2016.

“The drought takes some of the edge off of employment growth in the area,” Michael said. “If you are one of the farmers that is leaving fields unplanted this year, it is obviously a major impact. For all of our landscape in the valley, it depresses things somewhat in 2014. And that is part of the reason for 2014 the forecast is lower than last year across the San Joaquin Valley.”

The region also reaped little of the statewide growth of the technological and scientific industries. San Francisco and San Jose, which benefit the most from the state’s tech boom, should see 2.7 and 3.6 percent job growth this year, respectively.

Through 2016, construction will see the most dramatic growth in the Modesto region. The forecast suggests the industry, which was battered during the recession and mortgage crisis, will jump from job loss – a 1.3 percent drop this this year – to 11.5 percent growth next year. Professional and business services, trade and transportation, health care and government jobs are expected to have moderate growth during the same period.

Modesto also should experience a small increase in population in the coming years. The report forecasts 1.2 percent population growth by 2016. Meanwhile, the labor force (the number of people employed or looking for employment), which shrunk significantly during the recession, should hit 1.5 percent growth in 2015.

The state’s unemployment rate is expected to fall to 5.7 percent by the end of 2017, but the report shows that Modesto will continue its historical trend of remaining significantly higher than California overall and decrease to 10 percent during that same time. The Stanislaus County unemployment rate for April was 12.3 percent.

Bee staff writer Marijke Rowland can be reached at mrowland@modbee.com or (209) 578-2284. Follow her on Twitter @marijkerowland.

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