San Diego’s unemployment rate rose sharply in June to 5.1 percent, but the spike was driven mostly by an an unusually large number of people entering the work force in search of jobs, state officials reported Friday.

And that’s a good thing, say local economists, because it signals a sense of renewed optimism about the prospects of finding work. It also comes at a time of continued healthy job growth locally, with June being no exception.

The jobless rate just a month earlier was 4.2 percent and in June of last year, 5.2 percent, suggesting little improvement in the employment landscape. But the jump in the county’s total labor force last month -- 16,600 more people than in May -- was the largest May-to-June increase in at least 20 years, said San Diego economist Lynn Reaser.

“To the extent you have more people looking for work, that is an encouraging factor because people believe they have an opportunity to find a job,” said Reaser, chief economist of the Fermanian Business and Economic Institute at Point Loma Nazarene University. “One of the facets of the recent job market has been the lackluster participation in the labor force as people have been discouraged and reluctant to look for a job.


“Typically in June, there are a lot of students coming into the market looking for work but this is a very big jump.”

Job growth also remains healthy -- an increase of nearly 38,000 between June of this year and 2015, according to the California Economic Development Department. Last month alone, San Diego County employers added 8,000 jobs. The growth, though, may not be robust enough to absorb the sudden increase in the work force, say analysts.

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“Employment growth did not keep pace with the growth in the labor force but it’s still pretty solid, good, year-over-year numbers,” said Alan Gin, an economist at the University of San Diego. “We shouldn’t be alarmed by the rate. Part of it is good news because people are encouraged about the labor market and are coming back in, and also, June is typically the third worst month of the year in terms of the unemployment rate.”


Adjusted for seasonal variations, the increase in San Diego’s unemployment rate wasn’t quite as dramatic, rising from an adusted 4.6 percent in May to 5 percent, Reaser calculated.

Not surprisingly, the region’s hospitality sector recorded the largest month-over gain, with 5,400 new jobs added at the start of the summer season. Lodging and food services accounted for nearly two-thirds of that sector’s job growth. Food and drinking establishments, which are expected to be among the businesses most impacted by coming increases in the minimum wage, added 2,400 jobs to their payrolls.

Los Angeles-based Beacon Economics noted that the leisure and hospitality industry continues to be a significant source of new jobs in California. Not only is the pace of growth higher than a year ago, the sector has been responsible for 17.8 percent of all new jobs added in the state over the year, the economic research and consulting firm said Friday.

Other areas that saw employment growth in San Diego County were government and trade and transportation and utilities. The construction sector, which was decimated during the recession, continues to show growth, with 400 jobs added in June and 2,000 over the last 12 months.


“Year over year, you’ve got construction coming back with a 2.9 percent increase. It continues its rebound,” Gin said. “We lost a ton of jobs during the recession and gained back about 40 percent of the jobs.”

In California, the unemployment rate also rose. Adjusted for seasonal variation, it was 5.4 percent in June, up slightly from May’s 5.2 percent but considerably lower than a year ago when the June rate was 6.2 percent, the state reported. Non-farm jobs last month grew by a healthy 40,300.

The national unemployment rate ticked up in June, rising to 4.9 percent, from 4.7 percent in May.

× U.S. job growth surges in June


“California job growth was faster than the U.S. performance for the 52nd consecutive month, so California is clearly outperforming the nation,” Reaser said. “California, San Diego and the U.S. all showed good job gains but all saw an increase unemployment.”

lori.weisberg@sduniontribune.com (619) 293-2251 Twitter: @loriweisberg