What Does the Main Monthly Jobs Report Tell Us?
Sluggish 2026 Payroll Growth Continues to Mirror 2025. The state added 3,100 payroll jobs in May, and April was revised to flat. Over the past four months (February through May), California has averaged roughly 6,000 jobs per month—indistinguishable from the sluggish pace seen throughout 2025.
What Does the Alternative Household Survey Tell Us?
Household Survey Has Turned Negative. While the official business survey shows continued stagnation, the household survey of workers shows a clear deterioration since the start of 2026. The number of employed workers fell again in May, marking a decline of roughly 150k since January.
Apparent Improvement in State's Unemployment Rate Driven by Shrinking Labor Force. The state's unemployment rate fell from 5.5 percent in December to 5.3 percent in March and has remained at 5.3 percent through May. A declining unemployment rate usually reflects an improving labor market. In this case, however, the underlying data show a less rosy dynamic. Over the last six months, the labor force participation rate declined from 62.6 to an estimated 62.0 percent, meaning roughly 200k fewer people were working or looking for work. Of that amount, about three-quarters of the reduction came from workers who were employed and one-quarter came from workers who were unemployed. Overall, the unemployment rate fell because fewer Californians were actively in the labor force. Workers who leave the labor force because they cannot find a job (or for any other reason) are no longer counted as unemployed.