Led by a hiring surge in the South Bay, the Bay Area powered to big job gains in May, banishing — at least for now — the ominous specter of a weak labor market and job losses that haunted the region earlier this year.
The nine-county region added 7,000 jobs in May, the most in a month since December 2023 when the area produced a gain of 11,200 positions, the state’s labor agency reported Friday.
The Bay Area’s upswing in hiring during May occurred despite massive job cuts in the region’s tech industry, primarily in the San Francisco metro area.
The South Bay muscled up to produce a gain of 3,300 jobs, nearly half of all the hiring in the Bay Area during May, according to the state Employment Development Department.
The East Bay added 2,100 jobs.The San Francisco-San Mateo region added 1,000 positions, the EDD reported.
California added 43,700 jobs in May and also reached a record-high number of nonfarm payroll jobs that topped 18 million.
Both the California and the Bay Area numbers were adjusted for seasonal volatility.
“The California and Bay Area labor market firmed in May following a string of disappointing job reports, rekindling expectations for a soft landing for the Bay Area economy following two years now of higher interest rates and rapid inflation,” said Scott Anderson, chief U.S. Economist for BMO Capital Markets.
The statewide unemployment rate was 5.2% in May, an improvement from 5.3% in April.
The improvement marked the first time in nearly two years that the statewide jobless rate decreased. In August 2022, the statewide unemployment rate reached a record-low level of 3.8%. Until the improvement in May, it had worsened steadily.
“The labor market performance was good enough to calm some nerves in Sacramento and raise the odds that the Bay Area expansion will continue to muddle through in the months ahead,” Anderson said.
Here is how some key industries fared in the Bay Area during May, according to seasonally adjusted numbers that Beacon Economics derived from the EDD official report:
— Tech companies slashed employment by a net 2,100 jobs. They cut 2,200 jobs in the San Francisco-San Mateo region and another 400 in the South Bay. The tech industry, however, added 600 jobs in the East Bay.
— Hotels and restaurants added 1,300 jobs in the Bay Area. Hotels and restaurants gained 800 jobs in San Francisco-San Mateo and 400 in the South Bay.
— Financial services firms added 1,700 jobs in the Bay Area, driven primarily by an increase of 1,000 in the San Francisco metro area and 600 in the East Bay. This sector includes banks and other financial firms, insurance companies and real estate firms.
— Health care firms increased employment by 1,200 positions in the Bay Area in May. The South Bay added 1,000 health care jobs last month, the Beacon estimate showed.
“In the Bay Area, the volatile tech and information sectors are still negative, with growth concentrated in hospitality, health care and government,” said Jeffrey Michael, executive director of the Stockton-based Center for Business and Policy Research at the University of the Pacific.
It’s become clear that the Bay Area’s post-coronavirus recovery has begun to lag behind California as a whole.
The state’s total of 18.03 million payroll jobs in May was 1.2% higher than the jobs it had in February 2020, the final month before government-mandated business lockdowns went into effect to combat the spread of the coronavirus.
Yet the Bay Area and its three major urban centers all remain below their pre-COVID job heights.
Here is what this news organization’s analysis of the EDD report shows regarding the Bay Area’s post-coronavirus employment recovery. The numbers compare the May 2024 numbers with February 2020 levels:
— The Bay Area is 1.3% below the February 2020 level, or a jobs deficit of 53,300.
— The South Bay is 0.2% beneath the pre-COVID figure, or a shortfall of 1,800 positions.
— The East Bay is 0.3% below, or a gap of 3,200 jobs.
— The San Francisco-San Mateo region is 3.7% under the pre-coronavirus total, which is a jaw-dropping deficit of 44,300 jobs.
Over the most recent 12 months that ended in May, the East Bay’s job totals have risen 0.9%, while the South Bay and the Bay Area are up 0.5%.
In sharp contrast, San Francisco-San Mateo’s job totals are down 0.5% during the one-year period.
The San Francisco-San Mateo metro area, Michael said, is “the only one of California’s 29 metro areas that has lost jobs over the past 12 months.”
Over the first five months of 2024, the San Francisco metro area lost 6,400 jobs. Until the gains in May, the San Francisco region had lost jobs every month this year.
The Bay Area’s hefty hiring in May of a net total of 7,000 workers provided a hopeful counterpoint to the dreary trends for the region during the first four months of the year.
From January through April, the Bay Area had lost 600 jobs. But May’s upswing means the Bay Area has gained 6,400 jobs over 2024’s first five months.
During that same five-month period, the East Bay gained 3,600 jobs.
The South Bay, however, is the primary driver of the Bay Area job market so far in 2024. During the first five months of the year, the South Bay added 7,500 jobs and lost jobs in only one month, February,
The various trends suggest the South Bay retains its top-notch status as a jobs engine, despite the tech sector’s well-known boom-and-bust cycles, according to Russell Hancock, president of Joint Venture Silicon Valley, a San Jose-based think tank.
“May’s job growth is in line with our longtime understanding of Silicon Valley,” Hancock said. “We’re an innovation-based ecosystem that churns out new products, new services, new business models and even new industries. There will always be cycles, and the bottom of the cycle involves painful adjustments.”
