San Francisco and Santa Clara County’s unemployment rates both fell to 2% in December as the local economy showed strength despite a wave of tech layoffs that continues to swell, according to state data released Friday.
Jobs in the San Francisco and San Mateo County metropolitan area rose by 4,400 in December compared to the previous month. The information sector, an area heavily comprised of tech workers, lost 1,400 jobs, but other major sectors saw gains. Professional and business services saw the biggest growth, adding 1,700 jobs. Trade, transportation and utilities gained 1,300 jobs; private educational and health services gained 1,200 jobs; and financial services rose by 800 jobs.
San Francisco’s unemployment rate fell from 2.3% in November. San Mateo County’s rate was down to 1.9% in December, the lowest in the state, from 2.2% in November.
The San Jose-Sunnyvale-Santa Clara metropolitan area, which includes San Benito County, gained 300 jobs. The region saw a gain of 2,200 information jobs, despite major cuts at Silicon Valley titans like Meta and Cisco in the fall. Google, Amazon and Microsoft have also announced layoffs this month. Santa Clara County’s rate fell from 2.4% in November.
The jobs data is not seasonally adjusted and is revised month to month.
Unemployment rates in the rest of the Bay Area were also low: Marin County had a 2.2% rate; Sonoma had a 2.5% rate; Alameda County had a 2.7% rate; Contra Costa County had a 2.9% rate; Napa County had a 3% rate; and Solano County had a 3.8% rate.
California’s unemployment rate was flat at 4.1%, with 16,200 non-farm payroll jobs gained in December, down from 26,800 jobs added in November. Statewide, the information sector had a loss of 6,100 jobs in the month, but that was dwarfed by a 11,100 jobs lost in trade, transportation and utilities.
The state unemployment rate lags the national rate of 3.5%.
“We’re likely to continue to see this more modest job growth in 2023,” said Michael Bernick, a San Francisco-based special counsel at law firm Duane Morris, who focuses on labor law. “There is still hiring going on. We are seeing a slowdown.”
Tech layoffs are also expected to continue, said Bernick, a former director of the California Employment Development Department, the state agency that issues the unemployment data.
“Over the past half century in California we’ve seen several realignments of the tech industry. This is a case of realignment, rather than fundamental changes, accelerated in part by the overhiring during the pandemic and general slowdown in the economy,” Bernick said.
Another reason for the state’s relatively low unemployment rate is a reduction in labor force. In December, it fell by 26,800 people, indicating many residents are choosing not to work, Bernick said. Some are also leaving the state.
The worker shortage, particularly for retail and in-person service jobs, is the most severe that Bernick has seen since his career began in 1979, he said.
There aren’t signs of a recession, but a continued slowdown means that workers on the sidelines may soon see fewer opportunities. “The job market will become more difficult,” he said.
Roland Li is a San Francisco Chronicle staff writer. Email: [email protected] Twitter: @rolandlisf