Center for Strategic Economic Research (CSER)

The Sacramento Region Business Forecast highlights the results of econometric models that analyze the relationship between indicators of economic performance, job growth, and unemployment rates in the six-county Sacramento Region (El Dorado, Placer, Sacramento, Sutter, Yolo, and Yuba Counties). Job growth, or the year-over-year growth rate in Nonfarm employment, is one of the best and most closely monitored measures of regional economic performance. Total Nonfarm employment is made up of 11 major industry sectors that group the Region’s establishments together based on similarity in business processes used to produce goods or services. The unemployment rate measures the extent to which residents are able to find employment opportunities, specifically capturing those individuals who are part of the labor force and are not working, but are able, available, and actively looking for work. A forecast of job growth, major sector performance, and unemployment rates provides the business and economic development communities an outlook for the Region’s economy 12 months into the future.

The Center for Strategic Economic Research (CSER) developed the forecast to serve as a forward-looking resource for the Sacramento Region’s business and economic development communities. It is currently the only locally-produced regional economic forecast for the six-county Sacramento Region.

FIRST QUARTER 2013 UPDATE

The first quarter 2013 update to the Sacramento Region Business Forecast anticipates only a minimal improvement in annual job growth within the six-county Sacramento Region over the next 12 months. On average, over the April 2013 to March 2014 forecast period, the Region will experience 1.9 percent annual job growth, equating to a gain of about 16,000 jobs on payrolls. By comparison, in the past 12 months, the Region posted 1.8 percent average job growth adding a little over 15,000 jobs. The pattern of job growth over the forecast period shows a moderate dip in the second quarter of 2013 with job growth falling to 1.2 percent in June before moving up steadily to 2.4 percent in September. After that point, the forecast shows job growth dropping off again and floating in the 2.2 percent range for the first quarter of 2014.

Sacramento Region Annual Job Growth Outlook
April 2013 to March 2014 Forecast

Data Sources: Historical from CA Employment Development Department; Forecast from CSER Business Forecast model

Major Sector Annual Average Job Growth Outlook
Q2-13 to Q1-14 Forecast, Sorted by Sector Size

Data Sources: Historical from CA Employment Development Department; Forecast from CSER Business Forecast model

Eight of the Sacramento Region’s eleven major sectors are expected to see positive job growth, on average, over the next twelve months according to the first quarter update to the Sacramento Region Business Forecast. This reflects a slight improvement over the past 12 months where 7 of the major sectors added jobs on an annual average basis. Two of the major sectors are forecast to post stronger job growth over the next 12 months including Leisure & Hospitality and Manufacturing while the small Mining & Logging sector is expected to shift from negative to positive job growth. The outlook shows stable positive job growth for both the Trade, Transportation, & Utilities and Construction sectors, seeing similar rates over the next 12 months as in the past year. Positive job growth is expected to slow moderately in three other major sectors—Educational & Health Services; Professional & Business Services; and Financial Activities. The three sectors that are forecast to shed jobs over the next 12 months are all anticipated to drop at a faster pace than in the previous year. This includes the large Government sector along with the relatively small Other Services and Information sectors. The forecast shows the slowest growth across the board in the second quarter of 2013 followed by the quarter with the strongest growth expectations in most sectors. With a net gain of roughly 15,000 jobs in the next 12 months, total Nonfarm employment in the Region will reach nearly 884,000, which is closer to year 2003 employment levels than the current year 2002 equivalent. This would also be only 70,000 jobs below the 2007 peak rather than the deficit of almost 120,000 jobs seen at the bottom of the cycle.