California’s
labor market wavered in December. Over 15,000 industry jobs were lost and the
state’s unemployment rate rose to 6.6 percent, breaking out of the 6.4 percent
– 6.5 percent range it had been in since March.
The
industry employment losses were spread across nearly all major
industry sectors. In apparent anticipation of a weak
holiday buying season, wholesale and retail trade firms did not
expand their payrolls as much as in the past.
On a seasonally adjusted basis, the trade sector lost 10,400
jobs, making it the largest job loser of the major industry
sectors in December.
Even
though manufacturing employment continued to decline,
December’s losses—2,100—were the mildest since July.
Between July and November, manufacturers reduced their payrolls
by an average of 7,500 each month, with high technology
continuing to be the chief source of this decline.
Despite
unusual weakness in several areas, the service sector posted a
modest job gain in December. Delayed seasonal hiring of
tax preparers led to a 4,000 job reduction in personal services.
Health services providers shed 1,400 jobs, the first
decline in 29 months. The strongest gain in the service
sector came in engineering and management, which added 2,400
positions.
California’s
unemployment rate rose to 6.6 percent in December, up from a
revised 6.5 percent rate in November.
The state’s unemployment rate had bounced between 6.4 percent
and 6.5 percent since March. The number of California
jobholders fell by 57,000, while the number of people unemployed
increased by 9,100.
December’s
industry employment losses brought the year-over-year drop to
25,800—a mere 0.2 percent. The continuing high
technology slump made high technology sectors the leading job
losers. Business service employment dropped by
34,800, or 2.7 percent, over the year. High technology
manufacturing—computers, electronic components, aircraft, and
instruments—shed about 20,000 jobs. Tourism in
California also suffered in 2002, which, coupled with airline
industry financial troubles, led to significant losses in air
transportation—6,700 jobs, or 5.1 percent. Over the
year, government was the principal job growth industry, and over
80 percent of those gains came at the local level—principally
in public education.
Throughout
most of 2002, robust home building was a positive counterbalance
to the lack of progress on the employment front.
Residential permitting, however, slowed noticeably in November
and December by 18 percent and 23 percent, respectively, on a
month-to-month basis. Homebuilding continued to be weakest
in the San Francisco Bay Area and strongest in Orange County and
the more moderately priced inland regions of San Bernardino,
Riverside, and Sacramento.
While commercial construction was noticeably weak throughout
most of 2002, it improved at year’s end. During the
first ten months of 2002, nonresidential construction, as
measured by the value of permits issued, fell by nearly 17 percent
from the comparable months of 2001.
Led principally by increased store construction, November and
December nonresidential permit issuances rose by 8.5
percent and 12.0 percent, respectively, from the same months of
2001.
The
slowdown in residential construction was apparently not a sign
of weak demand for homes. Sales of existing single-family
homes surged by almost 21 percent in December from the year-ago
rate. With this sustained demand and no corresponding
increase in building activity, the median price of existing
single-family homes sold in December rose to $338,110. The
median home price appreciated at a double digit year-over-year
pace during every month of 2002, rising on average nearly 21
percent overall.
Monthly Cash Report
Preliminary General Fund agency cash for January was $203 million below the 2003-04 Governor’s Budget forecast of $9.719 billion. The variance between January and year-to-date cash results from differences between actual and estimated December revenues.
Personal
income tax revenues were $150 million below the month’s
forecast of $5.027 billion. Estimated payments for the
fourth quarter of 2002, which were due in mid-January, accounted
for the bulk of the shortfall. These payments, which
represented a year-over-year decline of about 24 percent, were
$209 million below the forecast of $2.298 billion. The
loss in estimated payments was partially offset by withholding
receipts, which were $116 million above the expected level of
$2.654 billion. On a year-over-year basis, January’s
withholding was down 1.5 percent. Other receipts were $34
million below the forecast of $214 million and refunds were $23
million higher than the projected level of $139 million.
Year-to-date net cash receipts for this revenue source are $146
million below estimate.
Sales
and use tax receipts were $43 million below the month’s
forecast of $1.979 billion. January cash represents the
final payment for fourth quarter 2002 sales, which was due on
January 31. Some of the cash from this final payment
spills over into February. Year-to-date sales tax cash is
$21 million above estimate.
Corporation
tax revenues were $8 million below the month’s forecast of $10
million. Prepayments were $7 million above the estimate of
$140 million, while other payments were $57 million
below the $141 million estimate. Refunds were $42 million
below the projected level of $271 million.
Year-to-date corporation tax cash is $20 million above
estimate.
General Fund Agency Cash
2002-03 Budget Act Forecast
2002-03 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.
