California's state jobs report for December 2016 was released by the state Employment Development Department (EDD) on January 20, 2017. (Because of our office's heavy workload during recent weeks on the state budget, we delayed releasing this brief recap of the December jobs data until now.)
Small Job Growth Reported in December. Seasonally-adjusted nonfarm employment grew by just 3,700 in December, according to the EDD report. Generally, we urge focusing on multiple months of job data, given the month-to-month "noise" in these sorts of surveys. We note, however, that state job growth generally seemed to slow in the final months of 2016, based on the data available through December. Specifically, the EDD jobs data through December showed that job growth in some of the state's key export sectors (such as manufacturing, professional and technical services, information, and finance) has stagnated in recent months. For technology-related sectors, this stagnation is correlated with weaker venture capital investments in the Bay Area (the lowest since 2013 according to PwC). The jobs data for the construction sector also has been weak. On the other hand, personal income tax withholding generally has remained strong--running 7 percent over the same period from the prior fiscal year through the end of January. It will be important to monitor job growth trends in the coming few months to gauge their possible effects on taxable wage growth, which is an important variable in the state budget process.
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