Job Growth to Be Sluggish in 2006

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When it comes to job growth in L.A. County, 2006 should be a replay of 2005.


That’s the word from the Los Angeles County Economic Development Corp. in its annual forecast released Wednesday. According to the LAEDC forecast, employers in L.A. County will add about 38,000 jobs to their payrolls in 2006, led by growth in aerospace, high technology, international trade and tourism.


While that’s marginally better than the 28,000 non-farm payroll jobs added in 2005, it still represents a sluggish job growth rate of under 1 percent. Continuing weakness in the manufacturing sector, coupled with a slowdown in the red-hot residential real estate market and continuing challenges in the entertainment industry are expected to offset most of the job gains in other sectors.


“Much of the challenges for Hollywood are due to changing business models, fractious unions and runaway production,” said Jack Kyser, chief economist for the LAEDC.


In a broader measure of the county’s job market, civilian employment is expected to record a hefty 2.8 percent gain in 2006, following a 3.4 percent gain in 2005. That represents an addition of about 132,000 jobs, which should help push the unemployment rate down to an average 5.3 percent from 5.4 percent in 2005. The state civilian employment survey includes independent contractors and self-employed workers who are not recorded in payroll data.


In other economic measures, the LAEDC predicts personal income will rise 6 percent in 2006, following a 6.1 percent gain in 2005. That will help offset what the forecast calls a “disturbing” trend toward higher inflation, which reached 4.5 percent in 2005 and is projected to be 4.3 percent in 2006.


Taxable retail sales will jump a healthy 8.5 percent in 2006 to $103 billion, thanks to what the LAEDC projects to be another record year for the local tourism industry.


But Kyser warned that changing trends in the national retail scene as well as an oversaturation of retail in many parts of L.A. could lead to a slowdown in retail sales in future years. That in turn could hurt coffers of cities throughout the region.


While the forecast does not look at which direction home prices will go, it does note that a slowdown in the sector is expected to translate into 5 percent fewer new homes built in 2006 than in 2005. But non-residential construction is expected to leap 21 percent, due to declining vacancy rates.

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Howard Fine
Howard Fine is a 23-year veteran of the Los Angeles Business Journal. He covers stories pertaining to healthcare, biomedicine, energy, engineering, construction, and infrastructure. He has won several awards, including Best Body of Work for a single reporter from the Alliance of Area Business Publishers and Distinguished Journalist of the Year from the Society of Professional Journalists.

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