There are definite signs that the California economy is turning a corner. Recently revised employment data indicate that the state’s performance is picking up. Despite a slight loss in February, California has created 21,000 nonfarm jobs since November 2001.
A surge in residential building added 8,500 new construction jobs in February, allowing construction to replace the public sector as the leading job-creating industry. Strong consumer spending, which has been sustaining the national economy, led to the third consecutive month of expanding retail trade employment. Together, wholesale and retail trade employment added 5,900 jobs in February. Government employment expanded by 5,800 jobs, mostly in education. The state’s service industries—primarily business services—continued their volatile performance by cutting 17,600 jobs in February after adding jobs in both December and January.
The industries most dramatically affected by the events of September 11—air travel, hospitality, and amusement—appear to be on the road to recovery. After losing jobs from September through December of 2001, both lodging and amusement and recreation industries expanded in January and February. Amusement and recreation industries have recovered all but 600 jobs lost since August 2001. The rate of job loss in the air transportation industry—the hardest hit sector—has slowed dramatically since November 2001.
On a year-over-year basis, total nonfarm employment in California fell by 51,200. Manufacturing lost 125,000 jobs, principally in high technology electronics. Services lost nearly 25,000 jobs, led by losses in business services and motion pictures. Transportation and public utilities lost over 24,500 jobs. Government added 82,600 jobs. Wholesale and retail trade followed with 15,500 jobs. The finance sector added 15,300 jobs, nearly all in banking and real estate.
California's unemployment rate dropped three-tenths of a percentage point in February to 6.1 percent. The number of people unemployed fell by 43,500 while the labor force expanded by 40,600. The spike in the unemployment rate in January to 6.4 percent may have been attributable to revised unemployment insurance benefit rules that became effective at the beginning of the year. The civilian labor force sprang up by 70,900 in January, while employment expanded by only 24,000. In February those proportions were nearly reversed, with employment gains outstripping labor force gains by more than 2 to 1. The unemployment rate was 4.7 percent a year ago. The national jobless rate, which peaked at 5.8 percent in December, stood at 5.5 percent in February.
Construction continued on its own seesaw pattern by slowing in January and then recovering lost ground in February. Residential construction, measured by permitted units, jumped up 18 percent from January. Both single and multifamily construction made significant gains. Nonresidential construction, as measured by permit values, expanded by 17.8 percent, with shopping, hotel/motel, and amusement construction leading the way.
Home sales grew for the second consecutive month in February, albeit at a much milder rate than in January. Sales of single-family detached homes rose only 4.5 percent in February on a seasonally adjusted annual rate basis. On a year-over-year basis, February home sales were 25.5 percent above the year-earlier level.
With a shortage of homes on the market, strong demand for housing continues to drive up prices. The median price of single-family homes sold in February—$289,550—was up an astounding 19.8 percent from February 2001, the greatest year-over-year increase since May 1985.
Monthly
Cash Report
Preliminary General Fund agency cash for March was $186 million below the 2002-03 Governor’s Budget forecast of $3.704 billion. Year-to-date, revenues are $1.14 billion lower than the $46.252 billion that was expected.
Personal income tax revenues were $178 million below the month’s forecast of $935 million. Withholding was $91 million below the estimate of $2.069 billion and other payments were $25 million lower than the $350 million that was expected. Refunds were $62 million above the projected level of $1.484 billion. We note that approximately $30 million of the withholding shortfall appears to be due to cash flow factors. April receipts will be critical for this tax, as final returns for the 2001 tax year are filed.
General Fund Agency Cash
2002-03 Governor's Budget Forecast
2001-02 Comparison of Actual and Forecast
Agency General Fund Revenues
For more information, please contact the California Department of Finance,
Room 1145, State Capitol, Sacramento, CA or call (916) 323-0648.
