San Diego’s unemployment rate surged by nearly a percentage point, to 4.9%, in June, a rare occurrence that suggests signs of a weakening labor force and economy.

Between May and June, the county saw 900 fewer jobs, with the biggest losses occurring in the high-paying professional and business services sector, as well as in private education and health, and government, which includes public school employment, according to figures released Friday by the state Employment Development Department.

Not only was the June jobless rate higher than May’s 4%, but it’s also up from the June rate of 4.4% a year earlier.

While unemployment tends to spike from May to June — a seasonal trend reflective of the summer recess when schools aren’t in session — the size of the jump last month is atypical and may by symptomatic of an overhang from the current economic uncertainty fueled by tariffs, immigration raids and persistent inflation, say economists.

“Yes, June is typically our worst month, and in the previous 10 years of June data the median increase in unemployment (from May to June) is 0.6%,” said Daniel Enemark, chief economist at the San Diego Regional Policy & Innovation Center. “But this is the largest June increase on record, from 1990 to the present. That’s a cause for concern.”

Even when adjusting for seasonality, the unemployment rate rose, from 4.6% in May to 4.7% in June, which is not a good sign, says Enemark.

“When the seasonally adjusted rate goes up, that’s a weakening of the labor market, and we’ve had three consecutive months of increasing seasonally adjusted unemployment rates,” Enemark said.

The latest numbers come as little surprise to Phil Blair, whose staffing firm Manpower in San Diego is seeing the same pattern play out day to day in the workforce as employers take a wait-and-see approach to hiring amid the changing economic news coming out of Washington, D.C.

“Companies are very hesitant to hire in the areas of manufacturing and professional services right now,” said Blair. “They’re not laying off, but I’d call it frozen. And turnover is low because no one is quitting their jobs. So management is saying, don’t make any huge purchases like we would normally because we’re not sure about tariffs, what crypto is going to do.

“Let’s hunker down like we’re in a foxhole and maintain things like they are for a while.”

Of concern to economists, as well as Blair, are the types of jobs San Diego is losing, both from May to June, as well as year over year. In general, the losses tend to be in higher-paying jobs like professional and business services, which can include legal services as well as research and development jobs.

The state’s latest jobs report identifies four sectors that it says contributed to a slowdown in the overall year-over-year growth in jobs. Manufacturing fell by 4,500 jobs, while professional and business services lost 3,600. Financial activities and information, which includes publishing, also saw heavier losses, the report said.

“The area of concern to me is the industries where we had job losses this June compared to last year — in manufacturing and professional services,” said Alan Gin, an economist with the University of San Diego. “We had a loss of 2,000 jobs alone in research and development. And that’s concerning because those are good-paying jobs, too.

“And the losses in the professional and business services were in the higher end of that category. I think some of this could be due to concerns over the impact of tariffs and the immigration crackdowns, which could be making things feel more uncertain and therefore making it difficult for businesses to make hiring plans.”

Labor market researcher Haden Dover with the state Employment Development Department seemed less struck by the change in the unemployment rate than what he said are continued job losses.

“Looking at the change in total nonfarm employment in San Diego County between May and June since 2013 (excluding 2020), this is the only time we have lost jobs month-over-month,” he said. “That said, job growth has been trending downward during this timeframe since 2018.”

While the biggest job losses between May and June were within professional and business services, which had 2,800 fewer jobs, the government category fell by 1,100 jobs, with local government accounting for the majority of the losses. Much of that can be attributed to the summer recess.

The good news in the June report, said Enemark, were the job gains in leisure and hospitality, which saw the largest increase — 2,300 — and construction, which saw a rise of 1,400 jobs.

“Us gaining in construction is a bright spot, and also in leisure and hospitality, but we measure productivity in the economy by the amount of money you generate, and that productivity is much lower in leisure and hospitality,” Enemark said. “So our economy shrinks more when we lose jobs in professional and technical services than when we lose jobs in hospitality.”

San Diego’s jump in the jobless rate was pretty consistent with other Southern California counties, which saw similar increases.

Across the state, the unemployment rate was 5.9% in Los Angeles County, 4.5% in Orange County, 4.2% in San Francisco County, 4.6% in Santa Clara County, 6% in Santa Cruz County and 6% in Riverside County. The unadjusted unemployment rate was 5.7% for California and 4.4% for the nation during the same period.

Originally Published: July 18, 2025 at 6:26 PM PDT