Cooling-off period ahead in region’s jobs?

‘You can’t keep up 4 percent annual job growth forever,’ an East Bay analyst notes

The Bay Area employment picture in September saw “modest” improvement over the previous month’s tepid gains, but signs have emerged that the

“Job growth in the Bay Area was what I would call modest.” — Scott Anderson, Bank of the West chief economist

region’s job market may be losing steam.

Powered by sturdy growth in Santa Clara County and the East Bay, the region added 3,600 jobs, according to the latest state figures. But that number, coupled with the 2,300 jobs added in August, was significantly below the pace the nine-county Bay Area enjoyed in the first seven months of 2016.

“The job markets in the Bay Area and Santa Clara County are still stronger than we would have expected them to be at this point in the economic cycle, but you can’t keep up 4 percent annual job growth forever,” said Jeffrey Michael, director of the Stocktonbased Center for Business and Policy Research at University of the Pacific. “It has to slow down.”

Santa Clara County — driven by the tech sector — added 1,500 jobs in September, the East Bay gained 1,100 jobs and the San Francisco-San Mateo region added 1,600 jobs, according to seasonally adjusted figures from the state Employment Development Department.

“Job growth in the Bay Area was what I would call modest,” said Scott Anderson, chief economist with San Francisco-based Bank of the West. “The trend for job creation has definitely slowed since the early part of the year.”

The Bay Area has added 8,700 jobs per month in 2016. Through July, the average monthly gain was 10,400.

Nevertheless, the growth in Santa Clara County and the East Bay in September were a welcome contrast to unexpected job weakness during August in those areas. In August, Santa Clara County lost 2,900 jobs and the East Bay gained a puny 100 positions, EDD figures show.

Jobless rates in the Bay Area’s largest urban centers were unchanged to slightly higher in September, according to seasonally adjusted numbers from Beacon Economics. Santa Clara County was unchanged at 3.9 percent; the East Bay was at 4.5 percent, up from 4.4 percent; and the San Francisco-San Mateo area was at 3.3 percent, up from 3.2 percent.

All of those levels were slightly higher than the lowest unemployment rates on record for those respective regions, reached in December 1999.

California added 30,000 payroll jobs in September, a marked slowdown from August, when employers added 48,400 jobs. The state’s jobless rate was 5.5 percent in September, unchanged from August.

Despite September’s cooler pace of expansion, California still accounted for 20 percent of the 156,000 jobs created nationwide.

An array of industries contributed to the Bay Area’s employment upswing, according to a Beacon Economics analysis of the EDD figures.

Santa Clara County added 2,500 tech jobs, an indication that Silicon Valley continues to fuel the region’s economic engine.

“Tech is very strong, but it’s encouraging that we are seeing good job gains in industries other than tech,” said Robert Kleinhenz, an economist and executive director of research with Beacon.

Along with the gains in tech, the South Bay added 900 health care jobs and 1,300 administrative support jobs, a category that includes temporary staffing services. The weakest industry in the South Bay was manufacturing, which lost 1,000 jobs in September.

The East Bay added 1,600 health care jobs, 700 construction jobs and 500 tech jobs. The Alameda County-Contra Costa County area also added 900 wholesale trade jobs, a possible indication of strong activity at the Port of Oakland or hiring activity among suppliers working with big companies such as Tesla or Apple.

The San Francisco-San Mateo region gained 1,500 tech jobs and 2,300 support jobs. And in a possible sign of cutbacks after the summer tourism season wound down, hotels and restaurants cut 800 jobs.

Experts also believe the overall strength of the Bay Area employment market, combined with rising wages, could encourage job seekers who had given up on finding work.

“The recovery is not only bringing residents back into the workforce, it is reaching areas of the state previously left behind,” said Stephen Levy, director of the Palo Alto-based Center for Continuing Study of the California Economy. “All major regions are now solidly above pre-recession peaks.”

The slower pace of job gains doesn’t mean the Bay Area is headed for a recession or even a downturn. Experts believe Santa Clara County, the East Bay and the San Francisco-San Mateo region can all expect ongoing employment growth.

“Nothing suggests that we will see a deterioration from here,” Anderson said. “The Bay Area will continue to muddle along in terms of adding jobs, but employment growth will continue.”