The Bay Area’s economy staged a dramatic turnaround in May, regaining some of the huge losses it suffered the previous month during the peak of business shutdowns to stem the spread of coronavirus.
Bay Area employers added 41,700 jobs during May, a reversal from April when the region lost a staggering half a million jobs, according to seasonally adjusted figures released by the state’s Employment Development Department.
May’s increase was the largest one-month gain ever recorded in data stretching back three decades, an indication that the Bay Area has begun an economic recovery as more businesses reopened. But April’s losses were the Bay Area’s biggest drop in the same three-decade period, and the number of jobs involved dwarfed the May rebound.
“The Bay Area is in many ways most equipped to deal with this because of the kinds of industries there, such as tech,” said economist Christopher Thornberg, a founding partner with Beacon Economics. “Those industries are better able to adapt.”
The East Bay led the region’s employment surge, adding 16,100 positions during May, the EDD reported. Santa Clara County gained 11,000 jobs. The San Francisco-San Mateo metro area added 7,000 positions.
But some neighboring regions continued to shed jobs: Santa Cruz County lost 1,100 jobs and Monterey County shed 1,000.
Construction came roaring back in a huge way in the Bay Area. Construction companies added 8,400 jobs in Santa Clara County, where construction reopened May 4 with safety protocols, 8,200 positions in the San Francisco-San Mateo region, and 8,100 in the East Bay, according to seasonally adjusted figures that Beacon Economics and UC Riverside compiled from the EDD report.
Hotels and restaurants added 5,000 jobs in the South Bay, 4,000 in the San Francisco-San Mateo County area, and 2,900 in the East Bay, the Beacon and UC Riverside assessment showed.
The tech boom faltered in San Francisco, however. Tech companies shed 1,300 jobs in the San Francisco-San Mateo region. Tech employment was unchanged in the South Bay. But the East Bay added 600 tech jobs in May.
California’s job market gained 141,600 jobs during May, according to seasonally adjusted figures released by the EDD. That, too, was an all-time, single-month record job gain for the state.
Nevertheless, significant economic pain persists. In May, 3.02 million California workers were unemployed. That was only a tiny improvement from the 3.04 million unemployed statewide in April, the EDD reported. The state suffered a staggering loss of 2.4 million jobs in April, and the statewide unemployment rate still remains near its highest levels since the Great Depression.
“We are seeing record decreases in jobs, and then record increases,” said Jeffrey Michael, director of the Stockton-based Center for Business and Policy Research at the University of the Pacific. “It’s all unprecedented.”
California’s unemployment rate in May eased just barely from a historic high and improved to 16.3 percent, down from 16.4 percent in April, the state agency reported.
“There is definitely some significant improvement in the job market,” said Michael. “The labor market has definitely bottomed out.”
The improvements in the Bay Area amid counties easing some coronavirus-linked restrictions are part of a nationwide recovery. The United States economy in May added 2.5 million jobs, a figure that stunned prognosticators who had predicted a loss of 8 million jobs that month.
The May increases could indicate that the California job market, like the Bay Area and the nation, is beginning to recover from the economic fallout induced by the coronavirus.
“Some sectors are beginning to show gains, mainly those for which the lockdowns were lifted earlier,” said Michael Bernick, a Milken Institute fellow and a former director of the state EDD.
Originally, the state EDD had reported the statewide jobless rate in April was 15.5 percent, but for Friday’s report, the state agency revised that upward to 16.4 percent. The EDD also initially stated that California lost 2.34 million jobs but also revised the job losses in its latest estimate, citing “rapidly-evolving data.”
Despite signs of improvement, the Bay Area economy must climb out of a deep hole. It lost a total of 619,700 jobs in March and April. That means the Bay Area still must add 578,000 jobs to return to pre-pandemic levels.
“A business recovery is under way,” University of Pacific’s Michael said. “We are seeing improvements across a broad range of industries.”
In Thornberg’s view, that economic recovery is poised to materialize as a sharp rebound, what economists typically call a V-shaped recovery that’s characterized by a steep nose-dive followed swiftly by a steep upswing. Other economists have argued that the recovery will be more prolonged.
“The people who were predicting a U-shaped recovery believed the damage to the economy would be so profound that even after the coronavirus mandates were lifted, the economy would have trouble recovering,” Thornberg said. “What we see with the May report is that we are seeing a bounce in the job market even before the restrictions were largely lifted.”
Thornberg cautions, however, that more employment reports covering June and July will be needed before the pace of an economic rebound is fully understood. But he foresees further improvements.
“The economy has been able to adapt,” Thornberg said. “When all the mandates are lifted, presumably the post-lift numbers will look even better.”