(September 21, 2012) Economic recovery is spreading to the California interior and it is possible that all major California regions will end up in the positive growth column by the end of 2012, the California Chamber of Commerce Economic Advisory Council (EAC) indicated in its latest report.
California saw a small spurt in job growth, which started in May 2012. As a result, California job growth outpaced the nation this summer, adding 25, 200 jobs, which placed it ahead of Michigan, Virginia, and Texas.
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Employment
California also registered the largest yearly increase with 365,000 payrolls added between July 2011 and July 2012. This was followed by Texas (222,500) and New York (113,300). However, the California unemployment rate was 10.7%, the third highest in the nation.
The improved job picture was broad-based in terms of industries and regions. Ten major industry sectors added jobs on a year-over-year basis in July 2012. Manufacturing was the only sector still losing jobs on an annual basis. The California economic recovery continued to broaden also on a regional basis.
Looking forward, the CalChamber’s economic advisers continue to be concerned about California’s high unemployment rate. They agreed on a forecast in the low to mid-teens by November 2012. The state’s overall job growth will continue to plug along, aided by relatively good income and taxable sales growth, both of which have picked up lately.
Housing Recovery
California housing recovered this spring. New housing production was up on an annual running basis (adding up the last 12 months) by 10.7%. This was driven by a sharp rise in multi-family construction, which grew 23.8% during the same time period.
Multi-family construction growth will continue to lead the state’s housing market this year as more and more public builders have re-discovered the urban infill market.
The state’s home resale market is growing again with heightened activity in the Bay Area. The new trend is that with economic growth, higher resale activity is spreading to all corners of the state.
A major positive is historically high ownership housing affordability plus surprisingly low inventory-to-sales ratios in the state’s multiple listings systems, which suggests that the worst of the California housing crisis is over. In some urban areas, we already see good home price appreciation and the emergence of a housing shortage, particularly in rental markets.
Tourism
California tourism continues to recover and is doing well. The year-to-date hotel occupancy increased by 4.1%, the average daily room rate by 5.8%. Regionally, the Bay Area daily room rates are on fire, followed by a good performance in Los Angeles County. Travel numbers are also up year-over-year, 4.8% in domestic travel and 4.7% in international travel. California welcome centers saw a 12.55% increase over the same time period.
Trade
Despite doubts about the health of its trading partners, California exports continued to be good in 2012. In June 2012 California businesses shipped goods valued at $15.18 billion to foreign countries. The June 2012 number was up nearly 10% from June 2011.
Year-to-date, California exports were running 5% ahead of the previous peak year in 2008 after adjusting the numbers for inflation. Demand for the state’s high-tech manufacturing goods remained strong.
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