•Key Takeaway: San Diego’s unemployment rate fell to a record low for the month of March, but the cause of the drop is the bigger story. More job seekers exited than entered the San Diego labor force after 54 months of consecutive year-over-year net growth. This coincides with major job losses in industries with relatively low barriers to entry, such as retail, food service and warehousing.

•Unemployment rate sends mixed signals: The unemployment rate had fallen year over year for eight straight years until the beginning of 2019, where it increased for the first three months. The recent rise was mostly due to strong increases in the number of people seeking jobs and not job losses. In April, the unemployment rate fell 10 bps year over year to 3.0%, but was largely due to a 4,900 person net drop in the labor force, meaning many unemployed job seekers stopped looking entirely.

•Job growth inches upward: San Diego employers added 20,400 new jobs year over year in April, a 1.4% increase. This was 40 bps below the national job growth rate.

•Office growth steady: Office users added 7,300 jobs year over year (+2.1%), which is outpacing the overall market, but still sits below the 2018 average of 12,800 (+3.8%). Finance, insurance and real estate growth was negative and legal services grew by 0.8%, which slowed the overall office growth rate.

•Technical services lead office growth: Most of the net new office jobs were in professional, scientific and technical (PST) services, which includes the tech sector. PST services added 5,500 jobs, a 4.0% growth rate. Record-high tech VC investment and major company announcements in Q1 likely fueled growth in the sector.

•Industrial/lab growth picks up: Overall, industrial and lab users added 4,200 jobs (+1.3%), the most so far in 2019. Manufacturers added 3,100 jobs (+2.8%), mostly from computer/electronic and transportation equipment manufacturers. Construction jobs increased by only 500 and transportation and warehouse employers shed 400 jobs, holding back overall growth.

•Food service and drinking places flip a trend: After 109-straight months of year-over-year job growth, the food service sector lost 100 jobs in April. Brick and mortar retailers shed -2,400 jobs. The slowdown in these sectors was likely related to or even a cause of the labor force drop, as retail/food service occupations are a common entry point for job seekers.

•Tourism and medical lead the way: The hospitality/recreation sector added 1,500 jobs (+2.5%), ahead of the 2018 average of 1.7%. The medical sector added 4,500 jobs (+2.5%) and has not posted any sustained period of job loss in the past decade, including during the recession.