The
California economy is on a flat trajectory at present.
Employment levels have been stable, experiencing only minor
month-to-month gains and losses.
Real estate prices continue to climb, but have spurred only a small
acceleration in overall home building.
California's
unemployment picture improved in September with the rate of
unemployment dropping to 6.3 percent from an upwardly revised
6.4 percent rate in August. The number of unemployed fell
by 8,000.
Nonfarm
employment in California fell by 15,800 in September. Part
of this drop, however, was the result of a 3,100 upward revision
to the August payroll count. The revision pushed
August’s job gain up to 14,800. Thus, over the past two
months California’s industry employment has been essentially
static—with a net loss of only 1,000 jobs. September
continued 2002’s saw tooth pattern of alternating monthly
gains and losses, with none of the changes exceeding 0.1 percent
(and averaging only 0.01 percent overall).
Employment
expanded in services, construction, and finance in September.
The 5,500 job growth in the service sector was led by gains in
health services (2,400), motion pictures (2,200), and business
services (2,000).
Local
government reductions (14,500) led the public sector to drop
16,000 jobs in September. An unusual drop in local
education employment was most likely due to difficulty in
seasonally adjusting local education employment estimates in the
back-to-school months of August and September. Looking at
both months together, government employment has risen by 5,300
since July.
On
a year-over-year basis, industry employment in California fell
by 53,600 (or 0.4 percent) in September.
Manufacturing lost the most jobs—19,400. Weakness in
high-tech manufacturing has been joined by softness in
construction-related industries (lumber, wood, furniture, and
metal products) and weakness in consumer-oriented nondurable
industries (food processing, textiles, printing, and rubber
products). Outside of manufacturing, the transportation
and public utilities sector followed with a drop of 37,700 jobs.
Government continues to lead year‑over‑year job
growth by adding 55,000 jobs. Local Government, primarily
education, accounted for most of the growth, up 52,700.
Persistently
low home mortgage interest rates drove sales of existing
single-family detached homes up to 562,780 units in August, at a
seasonally adjusted annual rate. This improvement still
lags behind the pace of sales set earlier in the year when home
sales averaged over 608,000 units. The average for June,
July, and August was 545,800 units.
The
momentum of the upward spiral of California home prices barely
slowed in August. After four consecutive months of 20-plus
percent year-over-year price appreciation, the state’s median
single-family home price stood at $334,100—18.3 percent above
the August 2001 median.
Following
July’s surge, homebuilding slowed in August to a seasonally
adjusted annual rate of 149,700 single and multi-family
units—3.8 percent less than one year earlier.
Residential construction has also followed a seesaw pattern of
gains and losses throughout 2002. During the first eight
months of 2002, residential permitting totaled only about 3
percent more than during the same months of 2001.
Nonresidential construction, on the other hand, sped up in August, but is still much slower than last year. Steep drop-offs in office and store construction were the main contributors to a 25 percent year-over-year reduction in nonresidential construction in August.
Month-to-Month Nonfarm Job Growth in 2002
Monthly Cash Report
Preliminary General Fund agency cash for September was $199 million above the 2002 Budget Act forecast of $6.795 billion. Year-to-date, revenues are $66 million below expectations.
Personal
income tax revenues were $16 million below the month’s
forecast of $3.41 billion. Quarterly estimated
payments were $76 million above the forecast of $1.505 billion,
although the $1.581 billion received was 14.7 percent below the
year-ago level. Other receipts were $30 million above the
estimate of $105 million. Withholding fell short of
expectations, being $90 million below the projected level of
$1.889 billion. Although withholding was below estimate,
the $1.799 billion received was 1 percent above the year-ago
level. Refunds were $32 million greater than the expected
level of $89 million. For July through September, this tax
is $196 million under forecast.
Sales
and use tax receipts were $62 million above the month’s
forecast of $1.742 billion. September represents the
second prepayment for third quarter taxable sales. Final
payments for this quarter will be received in late October and
early November, providing a more complete picture of third
quarter activity. So far this year, the sales tax is $111 million
above expectations.
Corporation
tax revenues were $59 million above the month’s forecast of
$1.052 billion. Prepayments were $134 million above the
forecast of $945 million and miscellaneous payments were $10
million lower than the $170 million that was expected.
The third prepayment for calendar year corporations, as well as
estimated payments for fiscal year corporations, was due in
September. Refunds were $65 million more than the forecast
of $63 million. Year-to-date, this tax is down $57 million
from forecast.
Revenues from the insurance, estate, alcoholic beverage, and tobacco taxes came in $31 million below the $515 million that was expected. The remaining revenues—pooled money interest income and “other” revenues—were $125 million above the month’s estimate of $76 million, primarily due to a gain in “other” revenues.
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.
