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THIRD QUARTER 2011 UPDATE
Sustained positive job growth will return to the six-county Sacramento Region by the end of the fourth quarter of 2011 as demonstrated in the third quarter 2011 update to the Sacramento Region Business Forecast. Annual job growth throughout the first three quarters of 2012 will range between 0.6 percent and 1.4 percent, which reflects a considerable improvement over the negative growth posted during the same period of 2011. On average, over the 12-month forecast period (October 2011 to September 2012), Sacramento will see job growth of around 0.8 percent, equating to a gain of roughly 6,400 jobs. Regional job growth has demonstrated a general upward pattern since the low point in the recession of -7.0 percent in September 2009. Improvements stalled briefly for a period in late-2010 and early-2011 before picking back up again at the end of the second quarter. After a one-month jump into positive territory, the Region dropped back down with the most recent job growth showing an annual job loss of -0.3 percent (September 2011). Sacramento’s job growth remains well behind the state and nation, which both began posting positive and generally increasing job growth in the fourth quarter of 2010. Several forecasts suggest that job growth in these two benchmarks will remain stable through the rest of 2011 and increase somewhat in 2012. The continued upward momentum at the statewide and national levels should have a positive effect on economic conditions regionally; however, recovery in the Region will likely continue to lag other markets as a result of relatively high unemployment that has just begun to turn around, concentration in the unstable Government sector, and slightly negative business sentiment (as reflected in the Sacramento Region Business Confidence Index). It is important to note that, among other dynamics, two wildcards that cannot be fully accounted for in the forecast could substantially affect the economic outlook including government revenue shortfalls and downturns in global markets.
Sacramento Region Annual Job Growth Outlook
October 2011 to September 2012 Forecast
Data Sources: Historical from CA Employment Development Department; Forecast from CSER Business Forecast model
Major Sector Annual Average Job Growth Outlook
Q4-11 to Q3-12 Forecast, Sorted by Sector Size
Data Sources: Historical from CA Employment Development Department; Forecast from CSER Business Forecast model
The forecast update shows conditions improving in most of the Sacramento Region’s major sectors in the next 12 months with six of the 11 expected to see positive average job growth. The most dramatic turnarounds are forecast within the Construction, Financial Activities, and Information sectors, all three of which are anticipated to shift from negative to positive growth in the outlook period. The most robust average growth in the next 12 months is anticipated in two of the larger sectors, Educational & Health Services and Leisure & Hospitality (with respective average growth of 4.6 percent and 3.1 percent). Only four sectors are expected to see notable rates of job losses including Government; Manufacturing; Other Services; and Mining & Logging. In addition to these four sectors, Professional & Business Services will dip slightly into negative growth. The outlook for the Manufacturing sector is the weakest among the major sectors (excluding the small Mining & Logging sector) with an average of -5.2 percent job growth. Performance over the next four quarters is mixed across all major sectors with many expected to see the strongest performance in the first and second quarters of 2012 and the weakest performance for most sectors anticipated in the fourth quarter of 2011 and third quarter of 2012. Total Nonfarm employment in the Sacramento Region is forecast to reach close to 841,000 by September 2012. This upward movement extends what appears to be the beginning of an expansion period, signaling that the recovery has finally taken hold in Sacramento.
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