March Data Suggests Potential Job Recovery

According to the California Employment Development Department’s latest estimates, the San Diego economy added jobs in March and the year-over-year rate of employment decline fell to its slowest pace since December 2008.

Here is the usual chart of year-over-year job growth or decline.  Notice the sudden shrinkage that took place in January.  I noted at the time that this unusually small decline in January (a month that always sees job losses) was suspicious given that the prior months’ employment numbers had just been substantially revised downward.  It is still suspicious, and I continue to note this, but the EDD has not issued any revisions and all we have to go on is the data they provide.

The year-over-year decline rate is nice because it smoothes out the large seasonal changes that affect employment.  But since it measures at an entire year’s change, an inflection point in job growth from negative to positive might not show up in the year-over-year number until long after it had happened. 

So this next graph represents a different way of looking at employment that shows monthly job growth while still allowing us to take seasonality into consideration.  It shows the number of people employed in San Diego each month since January 2007.

The blue 2010 line is lower than the  rest because the region has been steadily losing jobs for nearly two years at this point.  However, the rate of change indicates something more positive.  Employment has been increasing for two months, while at this time last year it was dropping in spite of a tendency towards seasonal strength.  There may be fewer people actually employed than last year, but that number is now growing instead of shrinking.

It’s too early to tell whether a more enduring employment recovery is underway, but for the first time in a while, the data suggests that it’s at least a possibility.  We should get a clearer picture in the months ahead.

— RICH TOSCANO