signs are emerging that California’s economy is stabilizing.
Job losses have moderated dramatically, and even though construction has
slowed, the demand for homes remains very strong.
losing 9,000 industry jobs in May, California has created 500
nonfarm jobs, on average, each month this year—a total of
2,500. In 2001, the state lost 2,200 jobs each month, on
May, services and government were the only two major industry
divisions that gained jobs. Government employment gains
(2,400) were made chiefly at the local level, with public
schools accounting for nearly half. The state’s service
industries reversed losses suffered in April by adding 7,200
jobs. Business services, which includes temporary service
and computer programming firms, followed a 200-job gain in April
with 1,800 new jobs in May. April’s growth was the first
for this sector since it started to slide in October 2000.
building activity made the construction industry the leading job
loser in May—dropping 9,600 jobs in its third consecutive
month-over-month loss. Manufacturing followed with a loss
of 5,000 jobs—principally in high technology. However,
these high-tech losses were the smallest since February 2001.
to a year ago, industry employment in California was down 51,000
in May. Falling high technology employment led the
manufacturing sector to shed 95,000 jobs over the year.
Transportation and public utilities lost almost 34,000 jobs,
over half of them coming from air transportation.
the 12th month in a row, government was the year-over-year job
growth leader. Since May 2001, the public sector has added
nearly 71,000 jobs, the vast majority of which were in local
San Francisco Bay Area continues to suffer the most from the
current slowdown with industry employment falling by over 90,000
over the past year. Santa Clara County’s unemployment
rate measured 7.1 percent in May, more than double the rate from
a year-ago. On the other hand, the Riverside-San
Bernardino metropolitan area has become the state’s fastest
growing region—adding jobs at a 3.2 percent year-over-year
unemployment rate dropped to 6.3 percent in May from a revised
6.5 percent in April. The improvement resulted from
reductions in both the labor force and the number of unemployed
persons. In contrast to the steady rise that took place
throughout 2001, the state’s unemployment rate appears more
stable—averaging 6.4 percent for the first five months of
Following a burst of activity early in the year, construction in
California has slowed significantly and still trails last
year’s pace. Residential construction, as measured by
permitting activity, reached a seasonally adjusted, annual rate
of 149,000 units in May, a 3 percent drop from a year ago.
For the first five months of 2002 as a whole, residential
construction was off slightly from the same months of 2001.
Regionally, home building has improved in only three of the
state’s major metropolitan areas—Orange County,
Riverside-San Bernardino, and Sacramento.
nonresidential construction in May, as measured by permit
values, was off almost 25 percent from a year ago. The
slowdown is being led by dramatic reductions in office building
and industrial construction.
Despite moderate building activity, strong consumer confidence and falling mortgage rates are sustaining strong housing demand. Statewide sales of single-family homes registered nearly a 23 percent year-over-year gain in May. This demand kept home prices at their historically high rates. The median price of single-family homes sold in May, $321,000, was 25.5 percent above where it stood a year ago.
Has The Labor Market Stabilized?
Monthly Cash Report
General Fund agency cash for June was $407 million below the 2002-03 May
Revision forecast of $7.112 billion. Year-to-date revenues are $650
million lower than the $65.193 billion that was expected.
income tax revenues were $219 million below the month’s
forecast of $3.376 billion. The shortfall was due to
withholding, which was $126 million below the month’s estimate
of $1.906 million, and refunds, which were $87 million above the
expected level of $139 million. Other receipts, which
included the second quarterly estimated payment for the 2002 tax
year, were $6 million below the $1.609 billion that was
projected. Year-to-date, personal income tax receipts are
$388 million below the May Revision forecast. Of this
shortfall, about $232 million is attributed to final payments,
miscellaneous payments, and refunds, which largely represent
2001 activity, and thus can be considered a real loss from
and use tax receipts were $122 million below the month’s
forecast of $2.242 billion. June represents the second
prepayment for second quarter sales and both prepayments have
been below expectations. A more complete picture of second
quarter sales will be available in mid-August, when all of the
second quarter receipts have been processed. Year-to-date,
sales tax receipts are $214 million less than anticipated.
tax revenues were $25 million above the month’s estimate of
$954 million. June receipts primarily reflect the second
prepayment for calendar year corporations, which were $30 million
above the forecast of $892 million. Other payments matched
the forecast of $129 million and refunds exceeded the $66
million expected by $6 million. Cumulatively through June,
corporation tax revenues are $28 million above expectations.
from the insurance, estate, alcoholic beverage, and tobacco
taxes came in $102 million below the $464 million that was
expected. The majority of this shortfall was due to
higher-than-expected insurance tax refunds. The remaining
revenues—pooled money interest income and “other”
revenues—were $11 million above the month’s estimate of $76
General Fund Agency Cash
2002-03 May Revision 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.
Return to the Department of Finance Home Page