Finance Bulletin: November 2007
The ongoing housing slowdown continues to hamper the California economy. Construction
and finance have been notable weak spots in recent employment reports. Home
building and home sales slowed significantly in September, while home
- Nonfarm payroll employment grew by 9,300 in September,
and the August job gain was revised up by 900 to 21,900. The
average monthly gain for these months, 15,600, compares favorably to
the 5,700 average monthly gain made during the first seven months of
the year. In
2006, the state added an average of 21,700 jobs each month.
- Eight of
the 11 major industry sectors posted job gains in September. The
largest was in information, 7,900, based on a sizable gain in motion
picture employment. Other significant gains included private
educational and health services with a 3,300 increase; leisure and
hospitality, 2,600; and other services, 2,100. Real estate troubles
continued to account for the largest share of the state's job losses
in September. Construction lost 5,000
jobs; financial activities, 2,800; and professional and business services,
- Over the 12 months ending with September 2007, California
nonfarm payroll employment grew 162,000, or 1.1 percent, while national
nonfarm payrolls grew by 1.2 percent. Employment
rose 53,400 in government; 48,500 in educational and health services;
42,800 in leisure and hospitality; 29,800 in professional and business
services; 15,400 in trade, transportation, and utilities; 9,300 in
other services; and 7,200 in information. Employment fell
28,600 in construction, 11,200 in financial activities, 4,500 in manufacturing;
and 100 in natural resources and mining.
The housing slowdown continued to be the chief cause of the labor market
in construction, retail trade, and financial activities declined 0.1
percent during the first nine months of 2007 compared to the same months
of the previous year. During the same months of 2005 and 2006,
these sectors grew 3.4 percent and 2.4 percent respectively. Employment
growth in other industries actually accelerated slightly during the
first nine months of 2007.
- California's unemployment rate rose
for the third consecutive month in September, climbing to 5.6 percent,
based on exceptionally large increases in both the number employed
and unemployed. Despite
the underlying volatility, the unemployment rate has been trending
up since March when it was 4.8 percent.
- After making small improvements
in July and August, residential permitting fell significantly in September. The
volatile multi-family sector slowed nearly 45 percent from August—down
to 40,000 units on a seasonally adjusted annual rate basis. Single-family
permitting fell 30 percent—to 43,000 units. Total permitting
during September was the weakest month since October 1998. Residential
construction permitting during the first nine months of 2007 was off
over 30 percent from the same months of 2006.
declines in nearly every building category led to a significant slowdown
in overall nonresidential construction in September. The total
value of nonresidential construction permits issued dropped 14 percent
from August. Only two building
categories, office and industrial, improved in September. During
the first nine months of 2007 permitting was up 6.3 percent from the
same period of 2006.
- Sales of existing single-family homes
in September dropped nearly 15 percent from August, and were down nearly
39 percent from one
year earlier, according to the California Association of Realtors. This
was the most severe year-over-year slowdown in sales since June 1982. The
pace of sales slowed to 271,590 units on a seasonally adjusted annual
rate basis, the first time sales has dipped below 300,000 units since
with severe sales weakness, home prices fell dramatically. The
median price of existing single-family homes sold in September dropped
nearly 10 percent from August—the steepest one-month decline
on record. September's median price, $530,830, was down 4.7 percent
from a year earlier—the first year-over-year drop in home prices
since the beginning of 1997.
Monthly Cash Report
Preliminary General Fund agency cash for October was
$324 million below the 2007-08 Budget Act forecast of $6.537 billion. Year-to-date
revenues are $1.1 billion below the $29.205 billion that was expected.
income tax revenues to the General Fund were $159 million below the
forecast of $3.379 billion. Withholding was $9 million below
the estimate of $2.802 billion and other receipts were $67 million
below the projected level of $1.058 billion. Refunds were $87
million higher than the month's estimate of $420 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 October was $3 million below the estimate of $61 million. Year-to-date
General Fund income tax revenues are $525 million below estimate.
and use tax receipts were $159 million below the month’s forecast
of $2.576 billion. The final payment for third-quarter taxable
sales was due at the end of October. Taxpayers in certain counties
who could not meet the October 31 filing deadline due to the wildfires
in Southern California were eligible to receive a one-month extension
on filing their tax returns. At the time
this bulletin was prepared, it was not known how many taxpayers took
advantage of this extension and if the impact on October sales tax
revenues was material. Year-to-date,
the sales tax cash is $435 million below forecast.
tax revenues were $2 million below the month’s estimate of
$378 million. Prepayments were $65 million lower than the forecast
of $314 million and other payments were $8 million above the $234 million
that was expected. Refunds were $55 million below the projected level
of $170 million. Year-to-date
revenues are $60 million below estimate.
from the insurance, estate, alcoholic beverage, and tobacco taxes were
$3 million below the month's estimate of $58 million. The remaining
revenues—pooled money interest income and “other” revenues—were
$1 million lower than the month's estimate of $146 million.
For more information, please contact the California Department of Finance,
Room 1145, State Capitol, Sacramento, CA or call (916) 323–0648.