Department of Finance
915 L Street
Sacramento, CA 95814

Search

My CA

Finance Bulletin: November 2005

Economic Update

Nonfarm payroll employment fell for the first time this year in September as government and information sector employment declined.  However, the state's unemployment rate improved, as did the pace of residential and nonresidential construction.

• According to the official employment statistics, California lost 23,700 nonfarm payroll jobs in September following a large gain of 39,800 jobs in August.  This large swing resulted primarily from a change in seasonal employment patterns in the government sector.  The loss in September was largely due to a loss of 17,000 jobs in the government sector and 9,800 jobs in the information sector.  The government sector was also instrumental in the big gain in August, contributing 23,500 jobs.  This highly unlikely pattern of government employment changes, coming at a time of year when new school years are getting underway, reflects a growing trend among public school districts of starting their years earlier.  This year, a significant share of the back-to-school employment gains came in August, rather than September.  Adjusting this year's government employment using seasonal adjustment factors that still reflect the old pattern of most school years starting in September, goes a long way toward explaining the big gain in nonfarm payroll employment in August and the subsequent sizable drop in September.  The bottom line is that the gain in August was not as good as reported, and the loss in September was not as bad as it appeared.
• Six of the 11 major industry sectors gained jobs in September.  Construction added 3,300, Educational and Health Services, 1,200, Other Services, 800, Financial Activities, 400, Professional and Business Services, 400, and Natural Resources and Mining contributed 200.
• Five sectors saw employment fall in September.  In addition to the losses in Government and Information, 1,900 jobs were lost in Manufacturing; 700 in Leisure and Hospitality; and 600 in Trade, Transportation and Utilities.
• From September 2004 to September 2005, nonfarm payroll employment grew by 226,300, or 1.6 percent, matching the nation's gain over the same period.
• For the first time since March 2001, all major industry sectors posted year-over-year gains.  From September 2004 to September 2005, employment rose by 58,600 in Construction; 41,100 in Professional and Business Services; 36,200 in Leisure and Hospitality; 21,600 in Educational and Health Services; 21,100 in Trade, Transportation and Utilities; 17,600 in Government; 14,700 in Financial Activities; 7,300 in Information; 5,300 in Other Services; 2,700 in Manufacturing; and 100 in Natural Resources and Mining.
• The state's unemployment rate—estimated from a different survey—was 5.1 percent in September, down from an unrevised 5.2 percent in August.  In September 2004, California's unemployment rate was 6.1 percent.  Hurricane-related employment disruptions bumped up the national unemployment rate 0.2 percentage point to 5.1 percent in September.  This is the first time since April 1990 that California's unemployment rate was not greater than the nation's.  Aside from hurricane effects, the state's unemployment situation has been improving at a faster pace than the nation's for the last two years. 
• California homebuilding came back strongly in September after slowing noticeably in August.  Residential building permits were issued at a seasonally adjusted annual rate of 267,000 units in September, beating the August performance by more than 30 percent.  Residential building permit issuances averaged 219,000 units during the first nine months of 2005, a 3.6 percent improvement on the same months of 2004.
• The value of nonresidential building permits issued also improved in September and was up 12.5 percent from a year earlier.  For the first nine months of 2005 as a whole, nonresidential construction increased 12.1 percent from the same months of 2004.
• California home prices dipped in September, as they typically do at this time of year.  The median price of existing single-family homes sold in September was $543,980, a 4.4 percent drop from August.  This is still 17.3 percent above the median price of $463,630 a year ago. 
• The pace of home sales quickened in September to 650,780 units on a seasonally adjusted annual rate basis, Home sales were fairly stable during the first nine months of 2005, averaging 641,000 units.

Monthly Cash Report

Preliminary General Fund agency cash for October was $478 million above the 2005-06 Budget Act forecast of $5.064 billion.  Year-to-date revenues are $1.696 billion above the $24.536 billion that was expected.

• Personal income tax revenues to the General Fund were $249 million above the month’s forecast of $2.554 billion.  Other receipts, which include final payments from 2004 tax year extension filers, were $307 million above the projected level of $563 million, and refunds were $86 million lower than anticipated level of $396 million.  Withholding was $140 million below the month’s estimate of $2.433 billion.  In November 2004, the voters passed Proposition 63, which imposed a 1 percent surcharge on taxpayers' taxable income above $1 million to fund mental health service programs.  Pursuant to the Proposition, the cash amount transferred to the Mental Health Services Fund (MHSF) during fiscal year 2005-06 is 1.76 percent of total monthly personal income tax collections.  The special fund amount transferred to the MHSF was $4 million above the forecast of $46 million.  Year-to-date General Fund tax revenues are $911 million above estimate.
• Sales and use tax receipts were $86 million above the month’s forecast of $2.066 billion.  The final payment for third-quarter taxable sales was due at the end of October and a portion of this payment is received in early November.  At the time this bulletin was prepared, early November receipts were not yet complete; a clearer picture of third-quarter sales will be available by late November.  Year-to-date, the sales tax cash is $280 million above forecast. 
• Corporation tax revenues were $319 million, $37 million lower than the month’s estimate of $356 million.  Prepayments were $87 million above the forecast of $220 million.  Other payments were $119 million lower than the forecast of $257 million.  Refunds were $5 million above the projected level of $121 million.
• Revenues from the insurance, estate, alcoholic beverage, and tobacco taxes came in $11 million above the $55 million that was expected.  The remaining revenues—pooled money interest income and “other” revenues—were $169 million above the month’s estimate of $33 million, but $16 million below year-to-date estimates.  This suggests that the October increase represents the difficulty of predicting the cash flow of these revenues.

For more information, please contact the California Department of Finance, Room 1145, State Capitol, Sacramento, CA or call (916) 323–0648.

• Conditions of Use
• Privacy Policy
• e-Mail Webmaster