The latest release from the Employment Development Department shows that the San Luis Obispo labor market continues to decelerate. After expanding by a 2% pace for most of 2016, job growth in SLO continues to downshift. Overall, the county posted just a 0.97% improvement in September 2017 compared with last year.
Don’t worry, it’s still not time to panic. With the unemployment rate coming in at just 3.6%, the local economy is still relatively healthy. In addition, it is natural for job growth to slow down in a region as it nears full employment, and SLO is at historic levels of employment.
That said, there are a few red flags. First and foremost is the reduction in Professional and Business Services. These tend to be both high-skill and high-wage jobs that can generate demand for a whole host of other goods and services in a region. It has also been one of the faster growing components of the local labor market for several years. In addition, outside of Professional/Business Services, much of the growth was concentrated in consumer-driven sectors like Tourism and Retail.
The concern is that without strong growth from external sectors, like Professional/Business Services, these consumer-led sectors may begin to falter as well. The good news is that both mining/extraction, and nondurable goods manufacturing are both adding jobs. The manufacturing numbers in particular show that our wine region is still alive and well, as most of those businesses are engaged in the production and packaging of beverages for sale across the U.S.
It was a decent month all in all. Job growth was positive on an annual basis, unemployment is low, and some of our key sectors continue to add new positions. However, the recent job losses in high-skilled jobs bears paying close attention to in the coming months.
It isn’t time to panic yet, but we do have our first red flags.