There is still no sign of an upturn in California’s economic condition. Employment continues to be lackluster, with industry job losses for four consecutive months. In addition to continuing problems in the manufacturing sector, weakness is now appearing in the state’s service sectors. While housing and real estate markets remain strong, home building has cooled from the phenomenal pace that 2003 started with.
Nonfarm
payroll employment fell by 21,500 in May, which was more than
the state's proportionate share of the nation’s job
losses. From May 2002 to May 2003, nonfarm employment fell
by 74,600 in California while falling by 344,000 in the nation.
Employment
expanded in five sectors in May and contracted in six. The
growth sectors were led by Other Services (5,200), followed by
Leisure and Hospitality (1,600), Financial Activities (1,600),
Education and Health Services (800), and Natural Resources and
Mining (600).
Six
industry sectors lost jobs in May. The largest drop
occurred in Professional and Business Services (11,100) followed
by Government (9,300), Manufacturing (4,000), Trade,
Transportation, and Utilities (3,200), and Information
(2,300). Manufacturing has now lost jobs on a
month-to-month basis for 13 consecutive months and in 28 of the
last 29 months. This was the fourth consecutive
month-over-month drop in Government employment, led by losses
among local governments.
Looking
at year-over-year performance, four industry sectors added jobs
between May 2002 and May 2003 while seven lost jobs. The
job gainers were led by Education and Health Services, which
added 30,000 jobs. Other growth sectors include
Construction (15,000), Financial Activities (13,400), and
Leisure and Hospitality (12,200). Losses were led by the
Manufacturing sector (70,300), followed by Information (39,300),
Professional and Business Services (20,400), Trade,
Transportation, and Utilities (5,400), Other Services (5,000),
Government (4,000), and Natural Resources and Mining
(800).
The
state's unemployment rate dropped in May due to an
extraordinarily large withdrawal of people (particularly
teenagers) from the labor market. California’s
unemployment rate fell 0.2 percentage points in May to 6.6
percent—the same rate it was a year ago. A 39,000 person
drop in the number unemployed coupled with a 37,000 drop in
civilian employment meant that the civilian labor force
contracted by 76,000 persons—the largest one month drop since
January 2000. The contraction of the labor force is most
likely attributable to the diminished job opportunities
presented by the weak economy.
After
an impressive surge during the first quarter of 2003,
residential construction moderated in April, but still
maintained a substantial lead over last year’s pace.
April’s rate of residential permitting, 179,000 units on a
seasonally adjusted, annual rate basis, was 12 percent greater
than during the same month in 2002.
While
commercial construction was still well below last year’s pace,
April marked the third consecutive month-over-month improvement,
measured by the value of permits issued. April’s annual
rate of $1,138 million was 7.5 percent below the April 2002
pace, but was a nearly 10 percent improvement on March 2003.
Existing
home sales accelerated again in April, growing 2.8 percent from
March’s pace. Even though April’s seasonally adjusted,
annual sales rate of 583,000 units was significantly slower than
at the same time a year ago, April 2002 set a new record for
California home sales.
The rise in the prices of existing homes closely matched the rise in sales. The median price of existing single-family homes sold in April rose 3.2 percent, to $363,930. This price is also nearly 15 percent higher than the median price reached in April 2002.
California and National Unemployment Rates
Converge
Monthly Cash Report
Preliminary General Fund agency cash for May was $148 million above the 2003-04 May Revision forecast of $3.592 billion. Including adjustments for actual April receipts that were not known when the May Revision forecast was prepared, year-to-date revenues are $147 million higher than the $60.822 billion that was expected.
Personal
income tax revenues were $237 million above the month’s
forecast of $1.029 billion. The gain was attributable to
2002 tax year refunds, which were $256 million below the
projected level of $1.437 billion. Although
withholding was $32 million below the estimate of $2.022
billion, it was 2.6 percent above the year-ago level.
Withholding has posted year-over-year increases since February,
which is a good indication that wages have strengthened so far
in 2003. Other payments, which include final payments for
the 2002 tax year, were $13 million above the $444 million that
was expected. The second estimated payment for the 2003
tax year is due in mid-June.
Sales
and use tax receipts were $94 million below the month’s
forecast of $2.152 billion. May represents the balance of
the final payments for first quarter taxable sales as well as
the first prepayment for second quarter sales. It appears
that both the final payments and the prepayments were modestly
lower than anticipated.
Corporation
tax revenues were $6 million above the month’s forecast of
$211 million. May is not a significant month for this
revenue. June will provide a more meaningful measure of
how well the estimate is tracking because the second prepayment
for calendar year corporations is due mid-month.
Revenues from the insurance, estate, alcoholic beverage, and tobacco taxes came in $12 million below the $112 million that was expected. The remaining revenues—pooled money interest income and “other” revenues—were $11 million above the month’s estimate of $88 million.
General Fund Agency Cash
2003-04 Governor's 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.
