Center for Strategic Economic Research (CSER)

The Sacramento Region Business Forecast highlights the results of econometric models that analyze the relationship between indicators of economic performance, job growth, and unemployment rates in the six-county Sacramento Region (El Dorado, Placer, Sacramento, Sutter, Yolo, and Yuba Counties). Job growth, or the year-over-year growth rate in Nonfarm employment, is one of the best and most closely monitored measures of regional economic performance. Total Nonfarm employment is made up of 11 major industry sectors that group the Regions establishments together based on similarity in business processes used to produce goods or services. The unemployment rate measures the extent to which residents are able to find employment opportunities, specifically capturing those individuals who are part of the labor force and are not working, but are able, available, and actively looking for work. A forecast of job growth, major sector performance, and unemployment rates provides the business and economic development communities an outlook for the Regions economy 12 months into the future.

The Center for Strategic Economic Research (CSER) developed the forecast to serve as a forward-looking resource for the Sacramento Regions business and economic development communities. It is currently the only locally-produced regional economic forecast for the six-county Sacramento Region.

FIRST QUARTER 2014 UPDATE

The first quarter 2014 update to the Sacramento Region Business Forecast shows that annual job growth in the six-county Sacramento Region will slow over the next 12 months. On average during the forecast period covering April 2014 to March 2015, the Region will see 1.8 percent annual job growth, which equates to a gain of approximately 16,400 jobs. In the previous 12 months, Sacramento experienced annual average job growth of 2.2 percent, adding over 19,000 jobs to payrolls. The forecast shows regional job growth picking up through the summer, reaching rates above 2.0 percent, before steadily slowing in the fourth quarter of 2014 and the first quarter of 2015 and falling below 1.0 percent job growth.

Sacramento Region Annual Job Growth Outlook
April 2014 to March 2015 Forecast

Data Sources: Historical from CA Employment Development Department; Forecast from CSER Business Forecast model

Major Sector Annual Average Job Growth Outlook
Q2-14 to Q1-15 Forecast, Sorted by Sector Size

Data Sources: Historical from CA Employment Development Department; Forecast from CSER Business Forecast model

The forecast anticipates positive annual job growth in 9 of the Sacramento Regions eleven major sectors over the next 12 months, similar to the past 12 months. The strongest rates of growth are expected in the Educational & Health Services; Construction; and Mining & Logging sectors while annual job losses will be confined to only the Financial Activities and Information sectors. Five of the Regions sectors are expected to see improved performance relative to the previous year while the forecast show six major sectors posting slower growth. Of note, the forecast indicates that the high-value Manufacturing sector will shift from negative to positive annual job growth in the next 12 months. Corresponding with the period of stronger regional job growth in the 12-month forecast, the third quarter of 2014 is anticipated to be the healthiest for most major sectors. Weaker performance is expected for many major sectors in the first quarter of 2015 with the expected slowing overall annual job growth. With continued positive annual job growth and an expected gain of over 16,400 jobs, total Nonfarm employment in the Sacramento Region will reach roughly 923,500 by the end of the first quarter of 2015. At this point, the Region will be only about 44,400 jobs below the peak from the summer of 2007 and more than 73,000 jobs above the recession trough from the winter of 2011.