Bay Area sees job surge in January

Region is said to be poised for long-term growth, but picture unclear of coronavirus effect

The Bay Area economy roared out of the gate to begin 2020 by adding 7,700 jobs in January, state officials reported Friday, but the latest statistics were compiled before any global coronavirus effects would have registered here in staffing decisions by employers.

The January job gains were fueled by robust employment increases in Santa Clara County, the San Francisco-San Mateo metro area, and the East Bay, a new report from the state’s Employment Development Department showed. The figures were the most recent available from the California labor agency, which altered its usual schedule so staffers could compile an annual revision of previously released job statistics.

“The Bay Area remains poised for long term job growth if we can solve the many housing challenges, ” said Steven Levy, director of the Palo Alto-based Center for Continuing Study of the California Economy.

Santa Clara County added 2,900 jobs in January, while the San Francisco-San Mateo region gained 3,500, and the East Bay added 1,000, the EDD determined. All the numbers were adjusted for seasonal variation.

What was missing, however, because of the timing of when coronavirus woes first became widely known, was a clear picture of how the outbreak of the illness will effect employment in the Bay Area and California. Many of the Bay Area’s largest employers have a global reach, and tech companies have close ties to factories and consumers in China, which has been hard hit by the virus.

Now the virus is hitting the Bay Area and the state.

“The numbers, as surveyed mid-January, showed 119 months of job growth and an unemployment rate of 3.9%.” said Lenny Mendonca, chief economic and business adviser to Gov. Gavin Newsom. “Currently, we are monitoring the economic impacts of the coronavirus very closely.”

It might be late spring before any impacts from the coronavirus outbreaks in China, other international regions, and in California become apparent in new state EDD surveys.

“The next several months will bring turmoil to residents and the economy” in the Bay Area, Levy said.

In an unsettling component of the jobs report, the EDD’s annual revision of employment statistics released previously by the EDD showed that the Bay Area and California economies were weaker than initially estimated.

During 2019, California added 38,900 fewer jobs than the EDD had first calculated. The statewide annual pace of job gains was revised lower, to 1.5 percent rather than the original 1.7%.

Similarly, in the Bay Area, instead of adding 91,500 jobs during 2019, as first estimated by the EDD, the revised gain for 2019 was 57,900. That means the nine-county region actually added 33,600 fewer jobs in 2019 than first calculated. The annual gain in total payroll jobs for the Bay Area was 1.4% in 2019, rather than the 2.3% originally estimated by the EDD.

California added 21,400 nonfarm payroll jobs in January, the EDD reported. The statewide unemployment rate remained at a recordlow level of 3.9%.

“The monthly job numbers are from a California economy that now seems like the distant past, January

2020,” said Michael Bernick, a Milken Institute fellow and a former director of the state EDD. “They show an economy humming along with a historic low unemployment rate and strong job growth.”

Economic experts, though, warned that matters could shift as the EDD begins to measure more precisely whatever employment impacts have occurred in the Bay Area and California due to the virus. .

“In just the past two weeks, employment dynamics have moved with unprecedented speed,” Bernick said. “Major Bay Area tech employers, including Twitter, Salesforce, LinkedIn, and Google asked workers to work remotely. Then remote work spread more widely.”

The key issue is the concept of containment, according to a report and analysis released Friday by economists Christopher Thornberg, Taner Osman, and Brian Vanderplas of Beacon Economics and UC Riverside.

“In a world of containment, in the short-term, we’ll likely see a precipitous fall in discretionary spending which will almost surely lead to job losses in ‘experiential’ sectors of the economy, such as the arts and entertainment, and restaurants and tourism,” said Osman, research manager with Beacon Economics.

Indications have emerged that the virus woes have begun to slow their spread in points of origin such as China. Were the virus to similarly abate in the Bay Area as winter yields to spring and summer, the regional economy also might become inoculated against pandemic-linked job losses.

“If containment is short-lived, we should expect spending to rebound quickly, and job growth to return,” Osman said.