July State and Local Employment Report

The Employment Development Department (EDD) released the state and local employment reports for the month of July. Total California nonfarm employment increased by 80,600 jobs over the month in seasonally adjusted (SA) terms.

The year-over-year change showed an increase of 494,200 jobs (SA). The equated to a growth rate of 3.2% and exceeded the July national increase of 2.1%. California’s private sector added 468,600 jobs (an increase of 3.5% over the year, while employment in the public sector rose by 1.1% (25,600 jobs).

Industry sector trends were little changed from the past several months. Ten of the 11 super-sectors added jobs over the year to July: construction; manufacturing; trade, transportation and utilities; information; financial activities; professional and business services; educational and health services; leisure and hospitality; other services; and government for a combined gain of 496,500 jobs. Professional and business services posted the largest gain on a numerical basis, adding 156,100 jobs (up 6.4%), while construction claimed the largest gain in percentage terms, increasing by 7.3% or 48,900 jobs. 

The only sector to record a decline over the year was mining and logging, down 2,300 jobs, an annual decline of 7.3%.

California’s unemployment rate declined slightly from 6.3% in June to 6.2% in May and was down from the year ago rate of 7.4%. The civilian labor force was unchanged over the month but was up by 1.3% over the year. Over the last 12 months, 236,800 workers have joined California’s labor force.

County highlights:

(Note: With the exception of the Los Angeles unemployment rate, county level numbers are not seasonally adjusted, which means there can be large month-to-month fluctuations in job counts. A truer picture of how local labor markets are faring is revealed by focusing on the year-over-year numbers. Annual trends “correct” for the seasonal factors that influence certain industry sectors over the course of the year.)

§  In Los Angeles County, the seasonally adjusted unemployment rate was 7.1%, down from 7.5% in June and below the year ago rate of 8.1%. Total nonfarm employment declined by 32,600 jobs over the month (almost entirely due to a seasonal decline in public education employment) but was up over the year by 107,900 jobs, an increase of 2.5%.

Educational and health services posted the largest year-over-year gain in employment in July with an increase of 26,600 jobs for the largest year-over-year industry increase. Gains in health care and social assistance jobs were responsible for 80% of the increase.

Also recording significant job gains were trade, transportation and utilities (20,800 jobs), and leisure and hospitality (20,100 jobs). Restaurant jobs accounted for 83% of the gains in leisure and hospitality.

Two of the major industry sectors reported year-over-year declines in July: mining and logging (-200 jobs) and manufacturing (-1,300 jobs).

§  In July, the unemployment rate in Orange County was 4.7%, up from 4.3% in June but below the year-ago figure of 6.0%. Nonfarm payroll jobs increased by by 11,700 over the month and were up by 49,600 over the year (an increase of 3.3%).

§  In the Riverside-San Bernardino area, the unemployment rate in July was 7.1% compared with 6.5% in June but below the year ago rate of 8.9%. The region lost 12,200 nonfarm payroll jobs over the month (due to a seasonal decline in public education employment) but gained 50,300 over the year. This represented an increase of 3.9%.

§  In Ventura County, the unemployment rate was 5.9%, down from the year ago estimate of 7.0%. Total nonfarm employment fell by 4,600 jobs compared with June (due to a seasonal decline in public education employment) but was up over the year by 3,100 jobs (1.1%).

Summary: California added 80,600 jobs last month, the largest gain of any state and well ahead of Texas and Florida, which each added just over 30,000 jobs. In yearly terms, California added nearly half a million jobs with solid gains occurring locally in Orange County, the Inland Empire and in Los Angeles, which reported the largest annual job increase on over a year.

Sources:  http://www.labormarketinfo.edd.ca.gov/

SoCal Home Sales and Median Prices in July

Southern California home sales increased over the year in July, rising by 16.9% to 24,235 units (new and resale houses and condominiums). Although sales fell slightly (-0.6%) over the month, the decline between June and July is typically much larger, averaging 6.1%. Sales have now risen on a year-over-year basis for six months and are approaching what might be considered a normal level. Last month’s sales were just 4.0% below average for the month of July, while in July 2014 sales were 18% below average. Cash, investor and distressed sales are continuing to trend down so that means more traditional buyers are jumping back into the market.

The median price across Southern California increased by 5.5% over the year to $438,000. The median price has now risen for 40 consecutive months and was the second highest (coming in just behind June 2015), since October 2007 when it was $445,000. With prices continuing to rise, the share of home sales priced above $500,000 is also increasing – 40.7% compared with a 37.7% share in July 2014.

Rising demand for homes is a result of the confluence of job growth, low mortgage rates and more confident consumers. Concerns about the Fed moving to increase interest rates also may have prompted some buyers to get off the fence, and now that eight years have passed since the housing bust, former homeowners caught up in the first wave of foreclosures may be returning to homeownership.

Source:  http://www.corelogic.com/solutions/configurable-real-estate-data-reports.aspx/ 

Retail Sales Perk Up in July

Americans spent more on new cars, clothing and eating out in July, pushing U.S. retail and food services sales up by 0.6% over the month. Additionally, the decline of 0.3% originally posted in June was revised up to a flat reading – an indication that the consumer sector is not as bad off as the initial weak June numbers seemed to suggest. Core retail sales, which strip out autos, gasoline and building supply centers were up by 0.3%. 

Sales were stronger across the board last month. Among the major sectors reporting an increase in sales were motor vehicles (1.4%); furniture and home furnishings (0.8%); home improvement centers (0.7%); health and personal care stores (0.3%); gasoline stations (0.4%); and apparel retailers (0.4%). U.S. consumers also spent more on sporting goods, books, music and their hobbies (0.9%), they ate out more (0.7%) and spent more on online shopping (1.5%), thanks in no small part to Amazon’s “Prime Day” on July 15.

The only two sectors posting a decline in sales were the long struggling electronic and appliance stores (-1.2%) and general merchandize stores (-0.5%). Sales at food and beverage stores were unchanged over the month.

On a year-over-year basis, total retail sales in July were up by 2.4%, which is still below the average growth rate of 3.0% over the last 12 months. Most major sectors are reporting year-over-year gains with the exception of electronics and appliance stores (-2.5%), department stores (-2.7%) and gasoline stations (-15.2%), primarily because of declining prices (retail sales are not adjusted for prices changes). The biggest winners over the year have been restaurants and bars (9.0%), motor vehicles (6.9%) and the catch-all category sporting goods, hobby, book and music stores (6.4%).

This was a good report and should partially help ease concerns over the health of U.S. consumers and their willingness to spend. Americans remain cautious in their spending habits and since the end of the recession, an uptick in spending is usually accompanied by a decline in the saving rate. If recent gains in labor market continue, and if stronger wages are realized, it will help support consumer demand and retail spending through the end of this year. 

Source:  http://www.census.gov/retail/marts/www/marts_current.pdf

Consumer Credit Increases Faster than Expected

Running ahead of expectations, total consumer credit outstanding increased by 7.3% ($20.7 billion) over the month in June to $3.42 trillion (seasonally adjusted, annualized rate). Consumer credit in May was revised slightly upward from a gain of $16.1 billion to $16.6 billion. Over the 12 months ending in June, total non-mortgage consumer debt was up by 6.5%.

Both revolving and non-revolving debt posted gains last month. Non-revolving debt, which is composed mainly of auto and student loans, increased by 7.3% or by $15.2 billion. Over the year ending in June, non-revolving debt was up by 7.7% to $2.5 trillion. A major driver of non-revolving debt, student loans rose sharply during the recession and in the years since, have shown little sign of backing off. Since student loan debt was first included in the consumer credit report back in 2006, they have nearly tripled.

Revolving debt, primarily spending on credit cards rose by 7.4% to $9 billion and was up over the year by 3.5%. In spite of substantial and continuing improvements in the labor markets, consumers are not shopping like they used to. Revolving debt is still 11.3% below peak levels reached before the recession.

On a year-over-year basis, consumer debt growth is slowing but remains healthy. Low interest rates and further gains in employment will help consumer spending and borrowing, but will only go so far while weak wage gains remain a restraint on spending for many households. 

Source:  http://www.federalreserve.gov/releases/g19/current/default.htm

Light Vehicle Sales Accelerate

In July, U.S. light vehicle sales were up by 6.2% over the year to 17.5 million units (seasonally adjusted annualized rate), accelerating from June’s tepid increase of 1.3%. On a per unit volume basis, 1.51 million light vehicles were sold last month, an increase of 5.3%. Year to date, 10.0 million passenger cars and light trucks have been sold in the U.S.



Total passenger car sales, including foreign and domestic models, declined by 1.8% over the year to 7.6 million units.

• Sales of domestic autos were up by 2.1% over the year to 5.8 million units,
• But a precipitous drop in sales of foreign passenger cars of 12.3% (to 1.8 million units) overwhelmed the slight increase in domestic auto sales
• Compared with June, total passenger car sales were up by 2.7%.

Sales of pick-up trucks and SUVs continue to dominate demand for light vehicles. Sales increased by 13.3% over the year in July to 9.8 million units and accounted for 56% of the light vehicle sales mix. This was the highest share of truck sales recorded since December 2005.

• Sales of domestic trucks increased by 11.1% over the year to 8.1 million units
• Foreign light truck sales, which comprise only about 20% of the light truck market, shot up by 24.7% to 1.7 million units
• Compared with May, sales of pick-ups, SUVs and crossovers were up by 3.3%

Sales of medium-heavy truck continued at strong pace, rising by 18.7% over the year in July to 496,000 vehicles. Since these heavier trucks are used by firms to haul freight and make deliveries, an increase in demand for these vehicles is an indication of stronger business activity.

Most auto makers reported sales gains in July with strong retail (as opposed to fleet) sales. Customers were drawn to dealer show rooms by slightly higher incentive levels last month. Momentum in the automotive industry is expected to carry forward through the rest of the year, bolstered by moderating gasoline prices and positive news regarding economic growth and job creation.

Source: www.bea.gov

Another Solid Month of Job Growth

The U.S. Labor Market Report covering the national employment situation in July showed continuing improvement with a gain of 215,000 jobs. The unemployment rate remained unchanged at 5.3%. The average hourly wage increased by five cents to $24.99. Over the year, average hourly earnings were up by 2.1%.

The employer payroll survey reported that total nonfarm employment in the United States increased by 215,000 jobs in July. Accompanying last month’s job gain were revisions to the May figure (revised up from 254,000 jobs to 260,000) and the June number which was also revised up, from 223,000 to 231,000. With these revisions, the gains in May and June combined were 14,000 higher than previously reported. Over the past three months, job gains have averaged 235,000 per month.

On a year-to-year (YTY) basis, U.S. employment expanded by 2.92 million jobs, an increase of 2.1%. Every major industry sector added jobs over the year with the exception of mining and logging. The fastest growing sectors in YTY percentage terms were construction (3.8%, 231,000 jobs); professional and technical services (3.6%, 301,300 jobs); administrative, waste and support services (3.5%, 304,700 jobs); leisure and hospitality (3.0%, 436,000 jobs); and health care and social assistance (2.9%, 526,600 jobs).

New record high levels of employment were reached last month in the following super-sectors: trade, transportation and utilities; professional and business services; education and health; leisure and hospitality; and other services (these are mainly jobs in repair and maintenance, personal and laundry services, and membership organizations).

The unemployment rate remained unchanged over the month at 5.3% but was down from the year ago rate of 6.2%. The labor force participation rate also held steady over the month, but remains at a 38-year low. The more comprehensive U-6 unemployment rate, which counts part-time workers who would prefer full-time work and individuals who would like a  job but have given up looking for work was 10.4%, down from 10.5% in June and 12.2% in July of last year. The percentage of individuals working part-time (under 35 hours) edged down to 18.3% in July from 18.6% in June and 19.1% a year ago. More people are working part-time by choice and fewer are doing so because they have no alternative. This was the lowest part-time share since December 2008 when it was also 18.3%. The long-run average (since 1990) is 18.0%.

Improvements in the labor market have also helped bring down the share of workers who have been jobless for 27 weeks or more. In July, that share was 26.9%, which was up slightly from June (25.8%), but down from 33.0% in July of 2014. The long-run average is 25.0%. Over the past 12 months, the number of long-term unemployed persons has fallen by 986,000.

Summary: July was another solid month of job gains accompanied by consistent improvements in a number of other labor market indicators.

Source:  http://www.bls.gov/news.release/pdf/empsit.pdf