Finance Bulletin: December 2007
Labor markets cooled in October, weighed down by continued housing woes. Nonfarm
employment fell and the year-over-year pace of growth dipped below one
percent for the first time since June 2004. Real estate markets
weakened again in October.
- Nonfarm payroll employment fell by 15,800 in October. Meanwhile,
the September gain was revised up to 12,100 from the 9,300 originally
reported. The average monthly gain for the first 10 months
of 2007 was 5,800. The average gain for the same months of
2006 was 20,900.
- Only two major industry sectors gained jobs in October. Professional
and business services added 2,700 jobs; and educational and health
- There were job losses in October in the other nine major industry
sectors. Information lost 6,300 jobs; construction, 4,200;
trade, transportation, and utilities, 2,100; leisure and hospitality,
1,800; manufacturing, 1,500; financial activities, 1,500; other
services, 1,300; government, 300; and natural resources and mining,
- The housing slump was the principal source of October's weakness. Employment
losses in construction, retail trade, and financial activities
accounted for nearly half of the overall drop. These sectors account
for about a quarter of total employment.
- Over the 12 months ending
with October 2007, California nonfarm payroll employment grew 109,000,
or 0.7 percent, while national nonfarm payrolls grew 1.2 percent. Employment rose 50,700
in educational and health services; 44,500 in government; 26,600
in leisure and hospitality; 23,400 in professional and business
services; 12,300 in trade, transportation, and utilities; 5,700
in other services; and 2,100 in information.
- Over the
year, employment fell by 31,000 in Construction; 12,900 in Financial
Activities; 11,900 in Manufacturing; and 500 in Natural Resources
and Mining.California's unemployment rate held steady at 5.6 percent
in October. A drop in the number of persons unemployed was counterbalanced
by a drop in employment. The unemployment rate was 4.8 percent
in October 2006.
- After stumbling severely in September, the pace of
home building improved modestly in October, but was still subdued. Both
single and multi-family sectors improved slightly. Residential
permitting in October reached 94,000 units on a seasonally adjusted
annual rate basis. This pace is off 65 percent from the peak
reached in September 2005. Residential construction permitting
during the first ten months of 2007 was down over 30 percent
from the same months of 2006.
- Nonresidential construction permitting
slowed slightly in October, down 3 percent from September. During the first ten months
of 2007 permitting was up 4.2 percent from the same period of 2006. Nonresidential
construction has been on a gradual slowing trend since early
the steep drop in September, home sales slowed again in October,
for the eighth consecutive month-over-month decline. Sales
of existing single-family homes slid to 265,000 units on a seasonally
adjusted annual rate basis, down over 40 percent from a year
earlier, according to the California Association of Realtors.
sales put further downward pressure on home prices in October. The
median price of existing single-family homes sold in October dropped
6.4 percent from September. The price, $497,100, was almost 10
percent lower than a year earlier, making October the second consecutive
month with a year-over-year decline. Some of this decline was
likely due to credit constrictions in the jumbo loan market, which
could have depressed sales of homes with mortgages exceeding the conforming
loan limit of $417,000
Monthly Cash Report
Preliminary General Fund agency cash for November was $534 million
above the 2007-08 Budget Act forecast of $5.179 billion. Year-to-date
revenues are $665 million below the $34.384 billion that was expected.
Personal income tax revenues to the General Fund were $93 million
above the month’s forecast of $2.526 billion. Withholding
receipts were $108 million above the estimate of $2.785 billion. Other
receipts were $75 million below the projected level of $434 million
but this loss was partially offset by refunds which came in $62 million
lower than the anticipated $648 million. Proposition 63 requires
that 1.76 percent of total monthly personal income tax collections
be transferred to the Mental Health Services Fund (MHSF). The
amount transferred to the MHSF in November was $2 million above
the estimate of $45 million. Year-to-date General Fund income
tax revenues are $432 million below estimate.
Sales and use tax receipts
were $25 million above the month’s
forecast of $2.532 billion. November cash includes includes the
final payments for third quarter sales, as well as the first prepayment
for fourth quarter sales. Year-to-date, the sales tax cash is
$509 million below forecast.
tax revenues were $18 million above the month’s estimate of -$74
million. Prepayments were $78 million lower than the forecast of
$185 million and other payments were $71 million above the $80 million
that was expected. Refunds were $25 million below the projected
level of $339 million. Year-to-date revenues are $42 million
from the insurance, estate, alcoholic beverage, and tobacco taxes were
$353 million above the month's forecast of $61 million. Receipts
from the insurance tax were $351 million above the $23 million expected
for the month. The gain is attributed to an acceleration of receipts
into November that were due on December 1. It is expected
this gain will be offset by lower insurance receipts in December. Of
the remaining revenues, pooled money interest income was $8 million
below the forecast of $51 million and "other" revenues were
$53 million higher than the November estimate of $83 million.
For more information, please contact the California Department of Finance,
Room 1145, State Capitol, Sacramento, CA or call (916) 323–0648.