Silicon Valley Jobs Report: No recession in the Valley, but job growth falls to lowest point in three years

posted by Louise Auerhahn

Wednesday, June 25, 2008, at

Quote of the week from the City of San Jose's chief development officer Paul Krutko: "So far, we [San Jose] don't seem to be impacted by the recession."

It's true that the capital of Silicon Valley has yet to experience the severe job losses plaguing some regions of the country. But "not impacted by the recession"? Try telling that to the 5,000+ households facing foreclosure, or the construction workers who've watched 1,300 jobs slip away in the last year, or pretty much everyone who's seeing their real wages eaten up by inflation in gas and food prices. Earlier this month, Mercury News columnist Mike Cassidy talked to a few of these folks and got an earful about the impacts of the "Big Squeeze of '08." (Continued...)

Friday's employment report for the San Jose area underscored this squeeze, with annual job growth for May dropping to just 0.7% -- the lowest level since June of 2005. Unemployment took a leap from 5.2% last month to 5.6% this month, well above the May 2007 rate of 4.4%.

The good news (so to speak) is that we're not doing as badly as much of the rest of the state. While the San Jose region has higher unemployment that neighboring areas San Mateo and San Francisco, our unemployment is considerably less than the statewide rate, which in May reached 6.5%. And even though the state as a whole lost jobs last month, the San Jose region added 4,200 nonfarm positions in May. (Some of this, though, may be an adjustment from last month's data, which showed the region losing 100 jobs in April.)

Part of the reason why the Valley is not losing jobs may be that we've already lost them. Most of the jobs that vanished in the wake of the 2001 crash have yet to return.

Highlights of the local jobs report:
  • Compared to the previous month, the San Jose metro area added 4,200 non-farm jobs in May. These included 1,400 jobs in leisure and hospitality, predominantly at restaurants; 900 jobs in professional and business services; 700 jobs in educational and health services; and 500 jobs in construction. Remaining sectors showed little or no change.

  • Over the year, the San Jose metro area added 6,700 non-farm jobs, a 0.7% increase from May 2007.

    • The biggest year-over-year gains were in manufacturing (+2,700 jobs), private educational & health services (+2,200 jobs), professional and business services (+1,600 jobs), information (+1,300 jobs), trade, transportation & utilities, which includes retail (+1,100 jobs), and government (+300 jobs).

    • The construction and financial activities sectors continued to lose jobs due to the housing market crash and credit crunch. The construction industry saw a decrease of 1,300 jobs over the year, and financial activities lost 1,100 jobs. The region also lost 600 jobs over the year in leisure & hospitality.

  • For May 2008, the unemployment rate stood at 5.6%, up 0.4 percentage points from April and up 1.2 points over the year. That translates to 11,800 more unemployed residents (by official measures) than in May 2007.

  • Seven years after the tech crash, Silicon Valley holds 124,400 fewer jobs than it did in May 2001.

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