The Bay Area lost hundreds of jobs in September while California's overall employment gains slowed to a crawl, a state report released on Friday showed, an ominous yellow flag for the once-booming economies in the region and statewide.

The unsettling employment report suggests that this region's job markets have begun to wobble in the face of soaring interest rates that federal officials imposed to cool off skyrocketing consumer prices — and the economy.

The Bay Area lost 700 jobs in September, with nearly every metro center in the region reporting flat employment or job losses, the state reported Friday.

"A bullet-proof Bay Area economy and labor market are no longer a given," said Scott Anderson, chief economist with Bank of the West. "It looks like a recession will settle over the Bay Area well before the rest of the country."

Santa Clara County was the primary bright spot in the Bay Area job market last month, with a modest gain of 600 jobs.

The East Bay's job totals were unchanged in September, the Employment Development Department determined.

The San Francisco-San Mateo region, reeling from a corporate exodus and crime woes, lost 700 jobs.

As a whole, California managed to eke out a gain of 6,500 jobs in September, a relatively puny increase in a state that has 17.67 million non-farm payroll jobs. All of the EDD-released job numbers were adjusted for seasonal volatility.

The statewide unemployment rate improved to 3.9% in September, down from 4.1% in August.

Chart showing the five-year job trend in the Bay Area. Alos showing the niumber of jobs gained or lost by region. The Bay Area losta bout 700 jobs overall in the month of September."We have entered a period of slow growth probably leading to a temporary downturn next year," said Stephen Levy, director of the Palo Alto-based Center for Continuing Study of the California Economy.

Sonoma and Solano counties each lost 300 jobs, and Marin County lost 100. Napa County gained 100 positions. Santa Cruz County added 300 jobs, and Monterey County gained 100.

The Bay Area's employment losses marked the first time since January 2021 — 19 months — that the region lost jobs.

The paltry job gains in California were the smallest increase in a year. In September 2021, amid ongoing pandemic woes, the state lost 12,900 jobs.

"There might be folks ready to say the sky is falling, and that's certainly one possible interpretation," said Russell Hancock, president of Joint Venture Silicon Valley, a San Jose-based public-private partnership focused on civic issues. "But you could also look at this as a good-news story. Here we are, the heart of Silicon Valley, still growth-positive despite everything."

Still, both the Bay Area and California must confront a grim economic reality: They have failed to achieve what is now a literal years-long quest to regain the mammoth number of jobs they lost during the first two months of government-imposed business shutdowns to combat the coronavirus.

Here's how the post-pandemic jobs recovery scorecard looks statewide and in the Bay Area, according to this news organization's analysis of the EDD reports.

— California has now regained 99.1% of the 2.76 million jobs the state lost in March and April of 2020, which equates to a shortfall of 24,700 jobs.

— The Bay Area has recovered 88.5% of the 650,600 jobs it lost, a shortfall of 74,700 jobs.

— Santa Clara County has recouped 99.7% of the 161,100 lost jobs. That leaves the South Bay a tantalizing 500 jobs short of regaining its lost employment.

— The East Bay has regained 88.8% of the 198,300 jobs it lost in those two months, a 22,200 shortfall.

— The San Francisco-San Mateo region has recovered 87.9% of its 186,800 lost jobs, leaving a deficit of 22,600.

The United States, in stark contrast, has gained 514,000 more jobs than the 22.99 million it lost in March 2020 and April 2020.

Despite the Bay Area's overall hiring struggles, the tech sector gained jobs.

Tech companies added 4,200 jobs in the Bay Area in September, propelled primarily by an increase of 1,800 tech jobs in Santa Clara County and 1,900 in the San Francisco-San Mateo region. These are seasonally adjusted numbers that Beacon Economics and UC Riverside derived from the state numbers.

The Bay Area's biggest job cuts in September came in hotels, restaurants, drinking establishments, arts, entertainment and retail, the Beacon-UC Riverside assessment determined.

Hotels, restaurants, drinking establishments and entertainment employers chopped 5,000 Bay Area jobs. These industries jettisoned a combined 2,100 jobs in Santa Clara County and another 1,300 jobs in the San Francisco-San Mateo region.

Retailers cut 1,400 Bay Area jobs, Beacon estimated.

The prolonged bout of inflation appears to have chewed up the pocketbooks of budget-strapped consumers in the Bay Area, experts have warned. This squeeze may have helped to trigger the job losses in hotels, restaurants, drinking establishments and other leisure-related industries, Anderson suggested.

"Bay Area consumers are cutting back sharply in discretionary spending as near double-digit inflation hits food, housing and medical services," Anderson said. "Something has to give in household budgets."

At some point, the region could be facing an economic contraction and future job losses, warned Patrick Kallerman, vice president of research for the Bay Area Council Economic Institute.

"The numbers represent the first month-over-month job losses the Bay Area has experienced since very early 2021 and are probably a harbinger of things to come," Kallerman said.