California continues to show signs of improvement. While nonfarm payroll employment fell slightly in April, the average monthly gain so far in 2002 is an improvement over the average monthly loss of 2001. Real estate activity and consumer spending remain the strong points of the state’s economy.
Following a 7,400-job gain in
March, nonfarm payroll employment fell 5,300 in April, for a two-month net
gain of 1,900. So far in 2002, total
nonfarm employment has increased by 10,500, or an average of 2,600 jobs per
month. This compares to an average monthly drop of 2,200 jobs during 2001.
Wholesale and retail trade
added 6,200 jobs in April—3,600 in wholesale and 2,600 in retail.
Government followed, adding 4,900 jobs, mainly in local education
(public schools).
Manufacturing continued to
shed jobs. April’s losses reached
6,500 with high tech electronics and food processing responsible for over
three-fourths of the losses. Following
recent building trends, construction employment enjoyed a surge in February
that was followed by subsequent losses.
Construction employment fell 6,200 in April, but is still up from the
end of 2001. Even though services as
a whole dropped 3,600 jobs in April, business services struck an encouraging
note with a small loss of only 600 jobs—the smallest decline in 12 months.
On a year-over-year basis,
total industry employment in California fell by 54,000.
Manufacturing lost 103,400 jobs, principally in high technology
electronics. Services lost 19,800
jobs, led by losses in business services and motion pictures.
Transportation and public utilities lost over 33,900 jobs.
Government added 74,900 jobs. Wholesale
and retail trade followed with 25,400 jobs. The
finance sector added 8,400 jobs, principally in banking and real estate.
California's unemployment rate
was 6.4 percent in April 2002, down from a revised 6.5 percent in March and
up from 5.0 percent in April 2001. The
number of unemployed fell by 14,000 in April, while
civilian employment increased by 21,000 persons and the labor force
increased by 7,000.
Following an unusually strong
February, construction activity has moderated and is not keeping pace with
last year. Residential
construction, as measured by permitting activity, reached a seasonally
adjusted, annual rate of 186,000 units in February and then averaged 158,000
units during March and April. Regionally,
home building has slowed significantly in three of the state’s largest
metropolitan areas—Los Angeles, San Francisco, and San Jose.
Following a similar pattern,
nonresidential construction, as measured by permit values, dropped 34
percent in March from a year ago and in April was off nearly 16 percent.
The slowdown is being led by dramatic reductions in office building
and industrial construction.
In contrast, a combination of
buoyant consumer confidence and low mortgage rates is fueling strong demand
for homes. Existing
single-family home sales in the San Francisco Bay Area exploded in April,
putting them 73 percent above a year ago.
Statewide sales rose nearly 30 percent on a year-over-year basis.
In the face of modest construction activity and a limited offering of homes for sale, home prices are not only rising, but are rising faster than last year. California’s median single-family detached home price passed the $300,000 mark for the first time in March. April’s median, $321,950, is 26 percent above where it stood a year ago.
Monthly
Cash Report
Preliminary General Fund agency cash for May was $250 million below the 2002-03 May Revision forecast of $3.712 billion. Including adjustments for actual April receipts that were not known when the May Revision forecast was prepared, year-to-date revenues are $246 million lower than the $58.081 billion that was expected. Although May is a significant revenue month, June is far more important. As the second-largest month of the year, $7.1 billion is expected during June.
Personal income tax
revenues were $168 million below the month’s forecast of $1.145 billion.
The shortfall in May’s collections was primarily due to lower than
expected final and miscellaneous payments,
and to refunds, which exceeded the month’s estimate.
Final and miscellaneous payments were $147 million below the estimate
of $484 million, and refunds were $33 million above the projected level of
$1.342 billion. Since these
payments and refunds are attributable to final returns for the 2001 tax
year, the shortfall of $168 million from these components is largely
considered to be a real loss from forecast, although there could be some
cash flow effect into June.
Withholding was $12 million
above the estimate of $1.928 billion and estimated payments were $3 million
higher than the $75 million that was expected.
These two components reflect 2002 tax year activity.
May is not a significant month for estimated payments.
The second estimated payment for the 2002 tax year, which is due June
17, will be an indicator of how well the projection for the 2002 tax year is
tracking.
Sales and use tax receipts
were $95 million below the month’s forecast of $2.212 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 about one-third of this month’s loss was attributable to
first quarter sales, while the balance is attributable to the second quarter
prepayment.
Corporation
tax revenues were $3 million above the month’s forecast of $162 million.
May is not a significant month for this tax. June, however, will
provide a more meaningful measure, since the second prepayment for calendar
year corporations is due in mid-June.
Revenues from the insurance, estate, alcoholic beverage, and tobacco taxes came in $15 million above the $117 million that was expected. The remaining revenues—pooled money interest income and “other” revenues—were $5 million below the month’s estimate of $76 million.
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.
