California’s Unemployment Rate Hits 5.5%, Highest in the Nation

California faces rising unemployment alongside job market growth.

News Summary

California’s unemployment rate has risen to 5.5% in July, making it the highest in the U.S. Despite adding 15,000 nonfarm jobs, concerns grow due to previous job losses and significant cuts in the tech sector. The Bay Area saw mixed results with some jobs added but substantial losses in technology, highlighting ongoing economic vulnerabilities.

California has reported an increase in its unemployment rate, reaching 5.5% in July, making it the highest rate in the nation. This figure marks a 0.1% rise from June’s rate of 5.4%. Despite this upward trend in unemployment, California added 15,000 nonfarm jobs during the same month, according to the state’s Employment Development Department (EDD).

The 15,000 jobs gained in July accounted for 20.5% of the total 73,000 jobs gained across the United States. However, these gains come on the back of a revised loss of 9,500 jobs in June, raising concerns among economists about the stability of the state’s job market. Year-over-year, California has seen a net increase of 83,800 jobs, primarily in sectors such as private education, health services, and government.

In total, six of the eleven industry sectors in California reported job gains in July. However, not all sectors experienced growth. The professional and business services sector saw job losses that have become a pattern throughout 2025. Additionally, the information sector, which heavily relies on technology, lost 1,000 jobs from June to July, contributing to a cumulative loss of 12,400 jobs year-over-year when compared to July 2024.

As of the end of July, there were 1,088,600 unemployed individuals in California, reflecting an increase of 18,200 from June, and up by 31,800 when compared to July of the previous year. Reasons for the rising unemployment can also be traced to significant layoffs within California’s technology industry, which has seen over 10,000 job cuts in 2025 alone, primarily due to the adjustments necessitated by the pandemic and the scaling back for artificial intelligence initiatives.

Regional Employment Insights

In the Bay Area, the job market added 2,800 jobs in July, recovering from a loss of 1,700 jobs in June. However, the Bay Area has experienced a net loss of 17,400 jobs for the year-to-date in 2025. Regionally, the East Bay gained 900 jobs, while the South Bay and the San Francisco-San Mateo region each added 800 jobs in July. Though these gains seem promising, the region faced significant losses in the tech sector, which accounted for 6,700 job losses statewide; the Bay Area alone was responsible for 2,500 of these reductions.

The healthcare sector in the Bay Area reported robust performance, adding 4,800 jobs in July, with gains distributed across various regions: 2,100 jobs in the East Bay, 1,600 jobs in the South Bay, and 1,000 jobs in the San Francisco-San Mateo region. However, other industries in the Bay Area faced less favorable conditions, with manufacturing, retail, and construction losing 1,100, 800, and 100 jobs respectively.

Outlook and Economic Concerns

Economists have expressed growing concerns regarding the overall job market outlook in the Bay Area, which continues to rely heavily on the technology sector amid persistent housing supply issues. With the regional labor market described as being “on shaky ground,” these job gains in July might not indicate continued stability. The reliance on tech jobs makes the employment landscape more vulnerable to fluctuations, especially during uncertain economic times.

Authorities and policymakers are closely monitoring these developments as they assess strategies to boost employment and bolster economic health across the state. With the mixed signals coming from various sectors, the emphasis on recovery and resilience in California’s job market remains a pressing concern.