The Bay Area economy, staggered by a widening slump in the tech sector, lost thousands of jobs during March, a disquieting jolt that hints at a regional slowdown.
The loss of 5,600 jobs in the Bay Area, reported Friday by the state Employment Development Department, concludes a remarkable streak of employment gains in the nine-county region that had extended 25 consecutive months.
The last time the Bay Area tallied a net loss in jobs was in January 2021, according to this news organization’s analysis of releases from the state employment department.
“A Bay Area jobs recession may already be underway,” said Scott Anderson, chief economist with Bank of the West. “I have been predicting a recession would arrive this year and hit the Bay Area and California economies somewhat harder than the nation as a whole.”
The East Bay shed 6,400 jobs in March, while the San Francisco-San Mateo region — hit hard by employment cutbacks in the tech sector — lost 1,400 jobs last month, the state labor agency reported.
The South Bay was the main bright spot during an otherwise sour month for the region’s job market. Santa Clara County added 2,200 jobs in March, the primary reason why the employment setbacks in the Bay Area weren’t worse.
“The Bay Area’s economy remains incredibly resilient, despite the economic headwinds that are impacting industries across the country,” said Ahmad Thomas, chief executive officer with Silicon Valley Leadership Group, a San Jose-based business advocacy organization.
With the increase during March, the South Bay has now gained jobs for 26 consecutive months. All of the numbers were adjusted for seasonal variations.
The near future is unpredictable, said Russell Hancock, president of Joint Venture Silicon Valley, a San Jose-based think tank.
“We’re entering a difficult period where our driving industries are recalibrating and thinking about their next move,” Hancock said. “At the same time, the combination of tech’s lethargy and our new remote work patterns are dramatically altering the demand for the retail and service sectors. It spells a slowdown across the board while we figure things out.”
California’s job growth crawled to a near halt in March, according to the EDD report. California added a puny 8,700 jobs last month, a tiny gain for a state that has 17.97 million non-farm payroll jobs.
“The main storyline for California this month is the sharp slowdown in job growth,” said Michael Bernick, an employment attorney with law firm Duane Morris and a former director of the state EDD. “For the calendar year 2022, California averaged job gains of over 51,000 per month.”
But after a big jump in job gains in January, California added just 21,800 jobs in February and 8,700 in March.
California’s unemployment rate remained unchanged at 4.4%. The statewide jobless rate, however, is noticeably higher than the record-low figure of 3.8% unemployment that California posted in July and August of 2022.
Tech companies continued to chop jobs on a net basis, as the effects of months of layoff announcements began to materialize in the official unemployment reports for the Bay Area. The tech job numbers were derived from seasonally adjusted industry figures that Beacon Economics derived from the official EDD report.
During March, the tech industry shed a net total of 2,900 jobs in the Bay Area. That setback was primarily driven by cutbacks in the San Francisco-San Mateo region, which lost 3,000 tech jobs last month, the Beacon assessment determined.
The East Bay lost 100 tech jobs, while Santa Clara County added a scant 100 tech positions.
After roughly two-and-a-half years of steady and robust hiring gains in the Bay Area, the tech industry so far in 2023 has tumbled into a pronounced bout of job losses. Over the first three months of the year, tech companies chopped a net total of 16,300 jobs, the Beacon assessment shows.
“Big picture, Silicon Valley has a dynamic economy and innovation infrastructure, and we are positioned well to deal with the current economic disruption,” Thomas said.
The San Francisco-San Mateo region accounted for 7,700, or 47%, of all the tech jobs lost in the Bay Area during the first three months of this year. Over the three months, East Bay lost 4,300 tech jobs, while Santa Clara County shed 4,000 tech positions.
It’s possible the brutal weather for part of March could have dampened the performance of some industries.
Construction companies chopped 2,600 jobs during March in the Bay Area, Beacon Economics reported. The East Bay lost 1,200 construction jobs, while the South Bay shed 1,000 construction positions.
The hotel, restaurant and drinking establishment industry enjoyed a robust month in most of the Bay Area.
During March, hotels and restaurants added 2,300 jobs in the Bay Area. Hotels and restaurants added 2,800 jobs in the San Francisco-San Mateo metro region and 1,500 positions in Santa Clara County last month. The East Bay, however, lost 2,000 hotel and restaurant jobs, according to the Beacon estimates.
“A key factor in the region’s future employment trajectory will be whether or not those who lost jobs drop out of the labor force temporarily or quickly find new work,” said Jeff Bellisario, executive director of the Bay Area Council’s Economic Institute. “In a third, worst-case scenario, hiring continues to slow across the economy and our unemployment rates rise here.”
Despite the current tough times that have morphed into outright job losses, some local leaders and experts remain confident in the Bay Area’s longer-term prospects — although the short-term outlook is foreboding.
“Silicon Valley companies have real products and real customers,” Hancock said. “They’re just in a funny in-between place. We might be here for a while.”
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