Tag: Economic Intelligence

Q2: San Diego’s new unemployment numbers and what they mean.

By Sofia Nelson-Ferezi,

Each quarter, EDC’s Research Bureau releases its Economic Snapshot to analyze key economic indicators in San Diego’s economy. Read on as we dig deeper to assess the region’s labor force, unemployment, and talent supply.

As 2022 came to a close, San Diego celebrated a relatively low unemployment rate at three percent. However, across just a few months, the region saw a slight bump up to four percent in the second quarter of 2023. What does this increase signify, and why is it essential to comprehend the broader employment landscape in San Diego?

Understanding San Diego’s labor force involves more than just examining unemployment rates. It requires considering historical context, peer metro comparisons, labor force dynamics, seasonal trends, and the complex factors shaping employment and workforce trends.

San Diego’s unemployment rate has hovered between 2.9 percent and four percent over the past five years, with the exception of the pandemic-induced peak of 13.6 percent. Since then, San Diego’s unemployment rate has been steadily declining until its first increase in Q1 2023.

With this context in mind, here are some different ways we approach the data.

HOW SAN DIEGO STACKS UP

To gain a comprehensive understanding of local employment, we compare San Diego’s numbers with its peer metros and the nation. In the first two quarters of the year, the U.S. and our peer metros saw an increase in unemployment rates after continuously declining throughout 2022. See how San Diego stacks up in our interactive dashboard, where you will notice similar trend lines in most comparisons. Still, the region ranked amongst the highest increases in this national trend, following Riverside, St. Louis, and San Francisco.

‘TIS THE SEASON

Employment in specific industry sectors can fluctuate due to seasonal factors. For instance, in Q2 2023, tourism and hospitality experienced an expected seasonal spike of 7,100 jobs as San Diego prepares to receive tourists in the spring. To account for these fluctuations, analysts often examine the percentage change from the previous year. In Q2 2023, there was a three percent growth in employment compared to the previous year, slightly exceeding the typical annual employment growth rate (ranging between 1.2 and 2.5 percent) and indicating anticipated recovery from the pandemic.

BREAKING DOWN THE LABOR FORCE

One crucial aspect to consider when analyzing rising unemployment rates is the overall labor force composition. Sometimes, an increasing unemployment rate can be attributed to a growing labor force as individuals re-enter or join the workforce. This usually results in temporarily higher unemployment rates, as these individuals search for employment and the hiring process takes time. However, for Q2 2023, this was not the case. Data indicates a decline in the total labor force while the number of unemployed has risen. This phenomenon contributed to the increase in the unemployment rate during the first half of 2023. To put this into perspective, Q2 2023 saw a labor force decline of 25,889 since the last quarter. In contrast to the year before, the labor force declined by 8,966 in Q2 2022. While historical data indicate that labor force declines at the beginning of Q2 are typical, this year’s Q2 decrease marked the highest in the past five years, even exceeding Q2 2020 when employment was first affected by the pandemic.

WHY THE CHANGE?

Here are some factors that can collectively help explain San Diego’s labor force fluctuations:

Remote work trends. The widespread adoption of remote work during the pandemic has led to a preference for flexibility and convenience. As a result, workers may seek remote-only or hybrid work arrangements, potentially contributing to the “great resignation” phenomenon. This trend also has implications for the use—or lack thereof—of office space and commercial real estate. Office asking rates have remained high after the pandemic spike ($3.26 per square foot), while rates for industrial space have been more stable.

Rising cost of living. While San Diego is home to top universities producing talent in key economic sectors such as innovation, the increasing cost of living may drive workers away from the region. EDC’s Inclusive Growth framework highlights the disconnection between the unaffordable housing market and compensation. Competitive wages are a must to keep our locally produced talent in the region.

Limited talent supply. There are more open positions in San Diego than unemployed people available to fill them—on par with the national trend. Employers are responding to talent supply challenges by prioritizing inclusive talent recruitment. Job opportunities are opened to a new subset of the unemployed population, expanding the talent pool for employers. To do this, there have been employer-driven efforts to reevaluate training requirements and accessibility, as well as amplified focus on opportunity populations. On the educators side, efforts are being made to leverage the bi-national comparative advantage to fill high-demand positions with talent produced in the Baja region by collaborating with universities across the border. UC San Diego’s ENLACE summer research program invites high school and university students from the Baja region to participate in research programs at UC San Diego.

While the unemployment rate itself is not always sufficient to indicate concern, historical economic context and analysis helps us gather the following takeaways:

  • High-level unemployment numbers for Q2 2023 are in alignment with historical and national trends, as most peer metros experienced similar increases. In other words, San Diego is not experiencing any unusual trend activity.
  • However, labor force composition trends should command our attention in upcoming quarters, being that Q2’s labor force number decreased significantly compared to the past five years.
  • Total labor force and unemployment numbers are particularly important to track given the region’s talent supply. Lower unemployment rates can generally indicate a limited talent pool; however, this quarter’s unemployment rate increase was mostly due to people exiting the labor force, not people joining and looking for jobs.

Explore the data in our Economic Snapshot.

San Diego’s Economic Snapshot: Q2 2023

By EDC Research Bureau,

Every quarter, San Diego Regional EDC analyzes key economic indicators that are important to understanding the regional economy and the region’s standing relative to the 25 most populous metropolitan areas in the U.S.

EDC explains San Diego’s Q2 2023 economic data:

Key findings from Q2 2023:

  1. Unemployment grows as people exit the labor force. Unemployment in San Diego began to rise at the turn of the new year, reaching four percent in Q2 2023. On par with the national rate, most peer metros also saw unemployment rates rise in Q2. In San Diego, the labor market has softened as the number of unemployed people increased by 3,751 while the labor force declined by 25,889 since last quarter. In contrast to Q2 2022, the labor force declined by 8,966 and unemployment decreased by 3,316.
  2. VC resumes pre-pandemic upward trend. San Diego’s total Q2 VC exceeded last quarter but lags compared to Q2 2022. The largest recipient of VC this quarter was Avenzo Therapeutics at $196 million; the company is building a pipeline in preclinical or early clinical antibody-drug conjugates, bispecifics, and small molecules. This deal marks the 18th largest VC investment secured in San Diego since 2019. The region closed a total of 227 VC deals in 2022, compared to 96 deals in the first half of 2023.
  3. Office space asking rates grow while industrial asking rates decline. Office asking rates reached an all-time high of $3.26 per square foot, even as vacancy rates continued to increase over the past four quarters to 14 percent. On the other hand, industrial real estate has responded to a 0.5 percent increase in vacancy rate by offering lower asking prices of $1.66 per square foot. These more stabilized rates may be in part because industrial work requires employees be in-person, unchallenged by remote work trends.

Check out our most recent Economic Snapshot below

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San Diego’s Economic Snapshot: Q1 2023

By EDC Research Bureau,

Every quarter, San Diego Regional EDC analyzes key economic indicators that are important to understanding the regional economy and the region’s standing relative to the 25 most populous metropolitan areas in the U.S.

EDC explains San Diego’s Q1 2023 economic data:

Key findings from Q1 2023:

  1. OFFICE SPACE: Firms look to cut costs as remote work remains popular. In Q1, office space experienced a huge decline in net absorption, meaning more offices became vacant than occupied. The last time San Diego experienced this level of negative net absorption was in Q4 2020, during the height of the pandemic. Downtown (92101) continues to experience rising vacancy rates since 2020. With asking rates at an all-time high of $3.25 per sq. ft. and employees still interested in remote work, office tenants are reducing their footprint as leases come due.
  2. JOBS: San Diego leads employment growth in California. With 3.3 percent job growth compared to a year ago, San Diego outpaced California peers and stands amongst fast-growing metros in the country. San Diego adds 50,300 more jobs compared to Q1 2022. The strongest growth locally came from Government and Leisure and Hospitality, adding 3,000 and 2,600 jobs respectively. Meanwhile, Trade, Transportation and Utilities shed 7,000 jobs.
  3. HOUSING: Home prices cool from last year’s highs. San Diego’s median home price reached $915,000 in Q1, which experienced an expected seasonal increase. However, prices are down 3.7 percent compared to a year ago. The Housing Affordability Index (HAI) in San Diego has remained at 15 percent for the past three quarters, making San Diego one of the most unaffordable counties in California.

Check out our most recent Economic Snapshot below

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San Diego’s Economic Snapshot: Q4 2022

By EDC Research Bureau,

Every quarter, San Diego Regional EDC analyzes key economic indicators that are important to understanding the regional economy and the region’s standing relative to the 25 most populous metropolitan areas in the U.S.

EDC explains San Diego’s Q4 2022 economic data:

Key findings from Q4 2022:

  1. EMPLOYMENT: San Diego wraps Q4 with unemployment below pre-pandemic levels, at 2.9 percent.Even with a decreasing unemployment rate, San Diego continues to face a talent shortage and struggles to fill jobs in top industries like Life Sciences and Tech. For instance, the Communication Technologies and Manufacturing employment sectors are 800 and 3,700 jobs away from pre-pandemic levels, respectively.
  2. HOUSING: Median home price continues to drop through Q4, reaching $850,000. However, San Diego still ranks second most expensive among the most populous metro areas. On the housing supply side, a total of 9,443 housing construction permits were granted in 2022, which has remained relatively unchanged for the past three years. The housing affordability crisis has driven employers to take on the challenge directly. UCSD purchased an apartment building in Downtown’s East Village to provide housing for in a location near the MTS Blue Line Trolley to connect both the La Jolla campus and Hillcrest Medical Center.
  3. COMMERCIAL REAL ESTATE: Vacancy grows in office and industrial space in Q4. Trends show a negative net absorption for both office and industrial space for the past two quarters, indicating a decline in demand for commercial real estate space. This could be happening because of the continuing shift towards remote work and the lack of affordable commercial space. In Q4, asking rent prices reached an all-time high of $3.23 per square foot, potentially turning remote work into a more attractive option for employers.

Check out our most recent Economic Snapshot below

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San Diego’s Economic Snapshot: Q3 2022

By EDC Research Bureau,

Every quarter, San Diego Regional EDC analyzes key economic indicators that are important to understanding the regional economy and the region’s standing relative to the 25 most populous metropolitan areas in the U.S.

EDC explains San Diego’s Q3 2022 economic data:

Key findings from Q3 2022:

  1. EMPLOYMENT: San Diego has recovered pandemic-related job losses overall, but some industries still lag. Manufacturing employment remains 6,200 jobs below pre-pandemic level, yet growth in manufacturing jobs far outpaces that of California and the U.S. The region’s unemployment rate dropped 0.1 percent from last quarter to 3.1 percent. Persistent talent shortages have resulted in large sums of public funding for workforce training; as an example, the San Diego Workforce Partnership was recently granted $10 million for training in emergency and healthcare services.
  2. VENTURE CAPITAL: Funding into San Diego cooled off. The region pulled in $1.08 billion in VC funding in Q3, with half ($549 million) going to Life Sciences. The region’s Life Sciences firms lead in VC funding and increasingly turn to artificial intelligence and machine learning to accelerate scientific advancement. RayzeBio was the largest recipient with $160 million to advance cancer radiopharmaceuticals. On the technology side, Hone, a local startup that provides an online training platform with live instruction aimed at boosting worker retention, raised $29.3 million.
  3. COMMERCIAL REAL ESTATE: Q3 experienced higher vacancy and lease rates for both office and industrial space. Net absorption of industrial space was negative for the first time since the beginning of the pandemic. However, San Diego is also experiencing strong demand for industrial space—driving up asking rent prices as construction continues to slow. While office space also saw an increase in vacancies, asking rent prices reached a record high of $3.24 per square foot. Higher costs may be the deciding factor for companies considering adopting permanent remote or hybrid work arrangements that reduce their need for office space.

Check out our most recent Economic Snapshot below

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San Diego’s Economic Snapshot: Q2 2022

By EDC Research Bureau,

Every quarter, San Diego Regional EDC analyzes key economic indicators that are important to understanding the regional economy and the region’s standing relative to the 25 most populous metropolitan areas in the U.S.

Key findings from Q2 2022:

  1. VENTURE CAPITAL: VC picked up speed in Q2, nearly doubling Q1 totals. The most significant increase was in San Diego’s Life Sciences sector, which jumped from $627 million to $1 billion. La Jolla-based National Resilience’s $625 million raise for biomanufacturing medicines was the largest among all sectors in Q2. Tech companies drew $593 million while Consumer companies pulled $211 million in funding.
  2. HOUSING: San Diego housing is the second most expensive among major metros. However, the median home price remained unchanged compared to the end of last quarter, at $950,000. Q2 closed off with a total of 5,773 issued housing permits. 2021 totals reached 9,358 permits, which means 2022 permit activity is on track compared to previous years. However, issued permits might have to pass previous years totals in order to meet the housing demand in the San Diego region*.
  3. EMPLOYMENT: Unemployment in San Diego has dropped below the national rate, at 3.2 percent. San Diego unemployment continues to approximate pre-pandemic levels (3.0 percent) and has already dropped below national pre-pandemic levels (3.4 percent). More specifically, nonfarm employment increased by 17,700 during Q2, and by 79,700 compared to a year ago. Leisure and Hospitality employment continues to increase for the fifth consecutive month, and currently represents around 10 percent of the sector in California (EDD).

*Data correction: Please note that the initially published Key Takeaways from Q2 2022 erroneously stated the number of housing permits for 2021 and 2022 YTD. The written summary has been updated with the correct values.

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San Diego’s Economic Snapshot: Q1 2022

By EDC Research Bureau,

Every quarter San Diego Regional EDC analyzes key economic indicators that are important to understanding the regional economy and the region’s standing relative to the 25 most populous metropolitan areas in the U.S.

EDC explains San Diego’s Q1 2022 economic data:

Key Findings from Q1 2022:

  1. VENTURE CAPITAL: Strong VC funding in Life Sciences continues despite uncertainty surrounding inflation. Although high inflation and rising interest rates have been a concern recently, investments in Life Sciences companies only fell by about $10 million to $632 million from Q4, while investments in Tech companies returned to average levels. Total investment into the region exceeded $1 billion in Q1, an increase of more than $250 million compared to the quarterly average for 2019.
  2. COMMERCIAL REAL ESTATE: Demand for lab space has a greater impact on CRE market than remote work arrangements. As businesses embrace hybrid and remote work, there is uncertainty surrounding the impact to the commercial real estate market. Data show that businesses are not completely abandoning the office, with many adopting hybrid work schedules that will only lead to a one to two percent reduction in office space requirements nationally. In San Diego, demand from the Life Sciences industry is even stronger, resulting in a seven percent increase in asking rates for lab space from Q4. According to CBRE, 6.5 million square feet of planned conversions and construction are expected to become available in the next three years.
  3. HOUSING: Home prices continue to soar despite fewer sales. The median home price in San Diego continues to climb, reaching $950,000 in March. This translates to an 18.8 percent increase in the median home price compared to March 2021. In fact, the year-ago increase in home prices has hovered consistently around 15 percent since August 2021, almost double the rate of inflation we have seen over the past 12 months. While rising mortgage rates have the potential to temper the housing market, the median home price continues to rise at a faster rate than the national average.

Check out our most recent Economic Snapshot below

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San Diego’s Data Bites: April 2022

By Jesse Nasland,

Presented by Meyers Nave, this edition of San Diego’s Data Bites covers March 2022, with data on employment and more insights about the region’s economy at this moment in time. Check out EDC’s Research Bureau for even more data and stats about San Diego.

KEY TAKEAWAYS

  1. San Diego employers added 8,000 nonfarm payroll positions between February and March, lowering the unemployment rate to 3.4 percent from a revised 4.0 percent from one month ago.
  1. Compared to March 2021, total nonfarm employment increased by 103,600, or 7.4 percent. 49,900 additional jobs in Leisure and Hospitality led year-ago employment gains, with Professional and Business services adding 20,600 positions.
  1. Employment in San Diego lags pre-pandemic levels by only 14,000 jobs, with Leisure and Hospitality accounting for 9,000 missing payroll positions. However, industries in San Diego’s innovation economy are well ahead of where they were before COVID-19.

Unemployment rate drops below four percent in March 2022

The March employment report showed that San Diego establishments added 8,000 nonfarm payroll positions compared to February, with 5,000 of these jobs in Leisure and Hospitality. State and Local Government was the next-closest industry experiencing employment gains, with 2,000 additional jobs. These additions to San Diego’s economy drove the unemployment rate lower by 0.6 percentage points, from a revised 4.0 percent in February to 3.4 percent in March.

Health Care and Social Assistance lost the most jobs between February and March, dropping 1,300 payroll positions. Although Ambulatory Health Care Services accounted for 1,100 of the lost jobs, the industry employed more people in March 2022 compared to pre-pandemic levels in February 2020. These lost jobs could be the result of lower transmission and infection rates of COVID, requiring fewer employees to manage workloads.

Leisure and Hospitality continues to lead year-ago employment gains

Overall, San Diego employers added 103,600 nonfarm payroll positions from March 2021 to March 2022. Leisure and Hospitality accounted for 49,900 of these jobs, which is not surprising considering that companies in this industry cluster were the hardest hit by the pandemic. The fact that businesses engaged in Accommodation and Food Services are adding more jobs with each new jobs report is a sign that San Diego is recovering well from the troughs of the pandemic.
Furthermore, not a single one of the industry clusters that the EDD tracks (e.g. Leisure and Hospitality and Professional and Business Services) showed year-ago jobs losses, providing further evidence of the steady recovery of San Diego’s economy back to pre-pandemic levels. Professional and Business Services added 20,600 positions to San Diego’s economy, a 7.9 percent increase over last year’s levels. As part of San Diego’s innovation economy, industries such as Scientific Research and Development Services tend to be comprised of quality jobs, those that offer economic security by paying a wage that keeps up with the cost of living and providing employer-sponsored health benefits. Some sub-industries, however, did shed jobs compared to a year ago, such as Nursing and Residential Care Facilities (down 2,300 jobs) and Durable Goods manufacturing (down 2,000 jobs).

Employment in San Diego lags pre-pandemic levels by only 14,000 jobs

San Diego’s total nonfarm employment ended March 2022 at 1,501,100 jobs, which is 14,000 shy of pre-pandemic levels in February 2020. Although employment in Leisure and Hospitality is still 9,000 jobs lower than before COVID-19, this industry cluster has consistently led the pack in each monthly jobs report, meaning that pre-pandemic levels are just within reach. This is a strong indicator of the region’s economic recovery and health, as Accommodation and Food Services companies were the hardest hit by the pandemic.

Employment in other industry clusters, including those that drive San Diego’s innovation economy, has already surpassed pre-pandemic levels. Professional and Business Services has added almost 20,000 positions to the region’s economy from February 2020, with 7,300 of these jobs belonging to Scientific Research and Development Services. Jobs in these industries often have a high concentration of high paying quality jobs. The record year that San Diego experienced with respect to venture capital—especially in Tech and Life Sciences companies—should result in even more hiring by these companies throughout 2022.

However, the economic stimulus over the course of the pandemic has resulted in the highest inflation seen for quite some time, with the 12-month inflation rate reaching 8.5 percent in March. This led the Federal Reserve to hike interest rates by 25 basis points, with expectations of more to come. These expectations have translated into a decreased appetite for borrowing and investment, slowing the record pace at which San Diego is attracting venture capital dollars.

In fact, investment in Series A, seed, angel, and growth stages totaled just over $1 billion in Q1 2022, a far cry from the $2.7 billion in Q1 last year. Though the rate at which money is flowing into San Diego Tech and Life Sciences companies is slowing, the region will feel the ripple effects of the record-setting year in 2021 for some time to come. For example, the current demand for lab space in San Diego County is triple the amount of new deliveries that are expected in the next 12 months. As these Life Sciences companies move into new commercial space in the region, they will need to hire for newly created positions, many of which are high-paying quality jobs.

However, San Diego companies across all industries are engaged in a bitter competition for talent. Not only do high levels of inflation make San Diego a more expensive place to live, but a white-hot housing market has sent home prices through the roof, with the median home price reaching $950,000 in March, a 19 percent increase from one year ago. This high cost of living in San Diego is a tax that deters talent from staying in or relocating to the region. By addressing San Diego’s affordability crisis and building San Diego’s talent pipeline, employers can do their part to bolster the region’s resiliency and global competitiveness.

Interested in more? You may also like to read:

Public, private leaders announce commitment to Inclusive Growth

By EDC Research Bureau,

County, City, academic, and private sector leaders announce commitment to inclusive economic growth

Today at its Report to the Community event, San Diego Regional EDC shared progress against the 2030 inclusive growth goals outlined pre-pandemic in 2018. With new data and bold objectives set around increasing the number of skilled talent, quality jobs, and thriving households critical to the region’s competitiveness, County and City of San Diego officials as well as leaders in the private sector, education, and philanthropy offered their shared commitments to economic inclusion.

“EDC’s recent analysis underscores the significant impact of the pandemic on San Diego’s under-resourced communities and small businesses,” said Julian Parra, Business Banking Region Executive at Bank of America and EDC Board Chair. “To drive meaningful economic change, a diverse set of stakeholders must step up or the issues facing our economy—talent shortages, skills gaps, and a soaring cost of living—will further challenge San Diego’s economic competitiveness.”

The innovation economy has made San Diego more prosperous than many of its peers—leading the region out of the COVID-spurred economic recession as it has in past downturns—but remains inaccessible to the fastest-growing segment of the region’s population. At no surprise, the goalposts EDC outlined four years ago are now farther from reach in the wake of the pandemic.

With nearly 200 members, EDC represents just a small fraction of the region’s employers. It is only with and through a broader group of stakeholders that more quality jobs, skilled talent, and thriving households in San Diego is possible. As such, EDC has enlisted the endorsement of key regional partners and employers that have committed to using the Inclusive Growth framework to inform their priorities, tactics, and resource allocation.

Hear some of those commitments:

 

“The County shares a deep commitment to the framework outlined by EDC. In order to help regionalize these Inclusive Growth goals, the County has created the Office of Economic Prosperity and Community Development that will prioritize significant investments in our communities as well as uplift our local businesses,” said Vice Chair Nora Vargas, San Diego County Board of Supervisors. “Our inclusive work is centered on achieving an equitable economic recovery that ensures prosperity for all San Diegans.”

“Employing more than 1,200 San Diegans, we understand the criticality of large employers fostering a robust talent pipeline who can afford to live and thrive here,” said Jennie Brooks, Senior Vice President at Booz Allen Hamilton and EDC Vice Chair. “We are committed to advancing these goals by mentoring the next generation of women leaders through partnerships with local organizations like Girl Scouts San Diego; creating opportunities through our Mil/Tech Workforce Initiative to help military veterans build on their experiences and upskill into quality tech careers; and providing the flexibility that employees need in today’s dynamic work-life environment.”

The pandemic’s impact to progress: Jobs, talent, households

In its new analysis, available at progress.inclusivesd.org, EDC quantifies the COVID-19 pandemic’s devastating impact on the regional economy and reports progress toward the 2030 goals. Takeaways include:

  1. QUALITY JOBS:
    While the region saw an overall increase in the number of quality jobs* since 2017, the disparity between quality jobs in small and large firms grew. The jobs losses of 2020 were principally concentrated in lower paying jobs at small businesses, especially those held by people of color. Meanwhile, larger firms added quality jobs in haste. In order to compete on talent, small businesses need new, reliable customers. San Diego’s large buyers can support quality job growth and ensure supply chain resilience by spending more with small, local businesses.
  1. SKILLED TALENT:
    Since 2016, all job growth has been in positions that require some form of degree or credential acquired through post-secondary education (PSE). Looking forward, it is projected that 84 percent of new jobs created between now and 2030 will also require PSE. Hispanics represent one-third of San Diego’s total population but only 15 percent of degree holders. Further, nearly half of middle school students are Hispanic but are statistically the least prepared for the jobs of the future. To address employers’ hiring challenges long-term, the region must invest in college readiness for more San Diego students.
  1. THRIVING HOUSEHOLDS:
    Rapidly rising home prices—up more than 30 percent in the last two years alone—coupled with jobs losses have resulted in almost 11,000 fewer thriving households** in 2020 than in 2017. Further, the region lost 3,200 licensed childcare facilities due to business closures amid the pandemic. Rising costs and access to childcare, transportation, and broadband—disproportionately felt by people of color—will leave businesses unable to retain or recruit talent from outside of the region.

While the innovation cluster has more than rebounded from the pandemic, the talent challenges employers face will only worsen and threaten their growth across San Diego. A concerted commitment to Inclusive Growth must be made; the region’s competitiveness depends on it.

The initiative is sponsored by Bank of America, HomeFed Corporation, San Diego Gas & Electric, Southwest Airlines, The San Diego Foundation, University of San Diego School of Business, City of San Diego, and County of San Diego.

Read the full report at progress.inclusiveSD.org.

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*Quality job = $44K wages + healthcare benefits.

**Thriving household = total income covers cost of living for renter- or owner-occupied households, at $79.6K and $122K respectively.

San Diego’s Data Bites: March 2022

By Jesse Nasland,

Presented by Meyers Nave, this edition of San Diego’s Data Bites covers January and February 2022, as well as an additional update on annual benchmark revisions, with data on employment and more insights about the region’s economy at this moment in time. Check out EDC’s Research Bureau for even more data and stats about San Diego.

KEY TAKEAWAYS

  1. San Diego’s unemployment rate dropped by 0.7 percentage points–from a revised 4.7 percent in January to 4 percent in February–with nonfarm employment increasing by 16,500 payroll positions.
  1. Employers in the region added more than 104,000 payroll positions since February 2021–with Service Providing industries accounting for 102,600 of the added jobs–lowering the unemployment rate by 3.7 percentage points.
  1. Annual benchmark revisions to employment data show that the region’s economy was recovering more rapidly than initially believed. Specifically, revisions to nonfarm employment for December 2021 improved the jobs count by more than 40,000 workers.

Service Providing industries lead month-ago and year-ago changes

February’s jobs report painted a positive picture for the San Diego regional economy. With respect to changes from January to February, nonfarm employment increased by 16,500, driving the unemployment rate lower to 4 percent from a revised 4.7 percent in January. Service Providing industries led the pack in employment gains, as Professional and Business Services added 6,100 jobs, Educational and Health Services added 4,800 jobs, and Leisure and Hospitality added 4,200 jobs. Trade, Transportation, and Utilities dropped 2,700 jobs, however, with employers in Retail Trade shedding 2,300 payroll positions. Manufacturing industries also had a down month, with losses of 1,000 jobs in Durable Goods production.

Service Providing industries were also the leaders in year-ago employment gains from February 2021, adding more than 104,000 jobs to the region. The slow and steady employment gains over the last year have resulted in the unemployment rate dropping by almost four percentage points from a revised 7.9 percent in February 2021 to 4 percent in February 2022. Within the Service Providing sector, Leisure and Hospitality added 52,700 positions, which is a good sign of recovery as these companies were the hardest hit during the pandemic. Employers in Professional and Business services also added 21,100 payroll positions, 9,300 of which were in Professional, Scientific, and Technical Services. These gains were not felt across all industries, however, as Durable Goods manufacturing lost 1,900 jobs from February 2021.

February employment inches closer to pre-pandemic levels

Looking at changes from February 2020 to February 2022 shows that the region is getting ever closer to pre-pandemic levels, a good sign for the recovery of San Diego’s economy. Total nonfarm employment is only about 25,000 (1.64 percent) lower than before the pandemic. Over half of these missing jobs are in Leisure and Hospitality, as the industry shows 14,000 fewer jobs in February 2022 than the same month in 2020, a gap of around 7 percent. Durable goods manufacturing is also exhibiting signs of a slower recovery with 6,200 fewer payroll positions than before the pandemic, or about 7 percent lower.

Despite some industries still playing catch-up, many have surpassed pre-pandemic employment levels. Professional and Business Services employers have added 19,300 payroll positions since February 2020, an increase of 7.4 percent. Notably, Administrative and Support and Waste Services have added 11,000 jobs (up 12.4 percent) while Professional, Scientific, and Technical Services have increased employment by 8,900 (up 6.05 percent). Speaking to San Diego’s position as a leader in Innovation and Life Sciences, companies in Scientific Research and Development Services have added 7,300 jobs since the start of the pandemic, an increase of more than 20 percent. With a hiring frenzy in innovation-related industries in full force, it is imperative for our region’s competitiveness that we continue to bolster the supply of the skilled labor that San Diego companies demand.

This means building a strong local talent pipeline of home-grown talent. It also means addressing the region’s affordability crisis so that it remains attractive to both businesses and workers. More at inclusiveSD.org.

Annual revisions show employment was greater during 2021 than first believed

Every March, the California Employment Development Division works with the Bureau of Labor Statistics to revise employment data, a process called benchmarking. Depending on the year and the difficulties in gathering accurate employment data, these revisions might be significant. For reasons that should be unsurprising by now, 2021 was one such year.

What is striking about these revisions is the increasing underestimation of employment throughout 2021. Although January’s revised employment count was only about 500 greater than original estimates, the number had grown to 40,600 by December 2021. Put another way, original estimates were about 3 percent lower than the revised numbers. While this may seem like a trivial distinction, it does indicate that San Diego’s economic recovery was even stronger than originally believed. In fact, the industries that were most impacted by the pandemic reported some of largest upward revisions.

Leisure and Hospitality had 14,600 more jobs in December 2021 with the revised numbers (an upward revision of 8.7 percent), being driven by 8,500 jobs in Accommodation and Food Services (an upward revision of 5.8 percent). Revisions increased the employment count in Professional and Business Services by 12,100 (an upward revision of 4.5 percent), largely attributable to changes in Administrative and Support Services (an upward revision of 7,400, or 8.7 percent). All industries did not show an increase due to the annual revisions, however. Employment in Construction was lowered by 2,900 jobs (a downward revision of 3.4 percent) while the jobs count in Retail Trade was decreased by 2,100 jobs (a downward revision of 1.4 percent).

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