The economic recovery of Californias Central Coast is continuing and San Luis Obispo is at the forefront of that growth.
The labor market in San Luis Obispo County soared to new highs during 2013. Total nonfarm payrolls grew by 4.1 percent from July 2012 to July 2013 an addition of about 4,500 jobs and far outpacing growth in every other major metropolitan area in the state. Compared with the rest of the Central Coast, which grew by 2.9 percent, the countys growth was robust.
Currently, total nonfarm payrolls in SLO County stand at 106,700 jobs. This represents about 1,600 more jobs than the prerecession peak in April 2007. The strong growth in nonfarm employment has also driven the unemployment rate down to a seasonally adjusted 6.5 percent, more than 2 percentage points below the statewide average.
The industries that have continued to drive job gains include logistics, construction and tourism, while public sector employment has remained a drag on otherwise robust private-sector growth. Even manufacturing, a sector that has not fared as well in the rest of California, was up nearly 3 percent over last year in San Luis Obispo County, although that translated into fewer than 500 new jobs.
Growth in leisure and hospitality payrolls is expected to continue as new hotels are built in the area and established hotels expand. La Quinta Inn and Suites recently announced an expansion at its Paso Robles location; the plan calls for 37 new rooms. In addition, hotel occupancy and room rates are up at the regions existing hotels, helping to bolster business for the countys restaurants, wine tasting rooms and beaches.
It is also important to note that employment is a lagging indicator. More contemporaneous measures of economic activity, such as taxable sales, show that growth continues in San Luis Obispo County. Although taxable sales in the region dipped slightly during the first quarter of 2013, much of the pullback can be attributed to continued volatility in business-to-business spending that is occurring because of the solar projects underway at Topaz Solar Farm and California Valley Solar Ranch.
However, overall, business spending looks solid relative to last year.
According to HdL Companies, business and industry tax receipts grew by 44.8 percent from the first quarter of 2012 to the first quarter of 2013, despite the pullback from the previous quarter.
Consumer spending is also up in San Luis Obispo County, with consumer tax receipts up a solid 8.4 percent year over year outpacing the state overall. Given that the local labor markets are in better shape relative to the state or to neighboring regions, its not surprising that local consumers are spending more.
The countys residential real estate market also continued to support growth in the region during the first half of 2013. The median price of an existing single-family home increased by 13.4 percent from one year ago, to more than $415,000 in the second quarter of 2013. This marks a 19.7 percent increase since it hit bottom in the third quarter of 2011.
Compared with surrounding areas, San Luis Obispo County experienced less home price growth in the 12 months since July 2012. The median price for an existing single-family home in Monterey County grew by 36.2 percent and in Santa Barbara County by 38.3 percent during the same period. However, prices in San Luis Obispo County had not fallen as far as they had in other areas, so in some ways the more modest price growth is to be expected, as the region has less ground to make up.
Beacon Economics continues to expect double-digit growth in home prices in San Luis Obispo County this year before things settle back down to more historic growth levels.
San Luis Obispo County is one of the few regions in the state where employment has exceeded its prerecession peak. Business and consumer spending continue to grow overall, and the residential real estate market has contributed solidly to growth in the local economy. Although the area continues to deal with some after-effects of the Great Recession, overall, the countys economy is moving briskly in the right direction.
Jordan G. Levine is an economist and director of economic research at Beacon Economics LLC, an independent economic research and consulting firm. Learn more at www.BeaconEcon.com. Beacon Economics has a long-standing relationship with the Central Coast Economic Forecast and provides CCEF with comprehensive data and analysis on the Central Coast region. CCEF is an independent organization dedicated to understanding and supporting the San Luis Obispo County economy. CCEF publishes a detailed quarterly analysis of the local economy and produces an annual economic forecast event. For information about the event or to access additional economic data or forecasts, please visit www.centralcoasteconomicforecast.com.