signs of economic weakness were evident in recent construction and export
activity. Construction activity
slowed again in July, principally in the San Francisco Bay area.
Exports of California-made goods grew modestly in the first quarter, then
declined from year-ago levels in the second quarter.
mixed results, California construction slowed across the board in July,
with both residential and nonresidential permit volumes down from
month-ago and year-ago levels. Residential
construction, measured in housing units, dropped 5.7 percent from June and
over 6 percent from July 2000. July’s
seasonally adjusted annual rate of 125.2 thousand units was the slowest
monthly rate in three years. Before
July’s lackluster performance, residential construction in 2001 was
running comfortably ahead of 2000. Through
the first seven months of 2001, however, residential construction is
besting the same period in 2000 by only 0.7 percent.
reductions in the San Francisco Bay area are the principal source of the
construction slowdown. Total
residential permits year-to-date in San Francisco, San Mateo, and Santa
Clara counties have dropped 42.6, 36.9, and 14.2 percent respectively from
the same period in 2000. Outside
of this region, home building has actually risen 3.8 percent so far this
construction was also slow in July, down 34 percent from June and 22 percent
from July 2000, as measured by building permit values.
Significant year-over-year drops occurred in all building categories
except the small service station sector.
Despite the July weakness, total nonresidential construction during
the first seven months of 2001 is essentially unchanged from the year-ago
estate market continued to show mixed results in July. The median single-family home price was essentially unchanged
from June, but sales volume dropped 4.5 percent. On a year-over-year basis both prices and sales were up from
July 2000. Given the drop in
sales, the inventory index of single family homes for sale climbed to 3.9
months from June’s
3.6 months. The index—the
number of months needed to exhaust the supply of homes on the market at the
current sales rate—stood at 3.2 months a year ago.
slowdown in home sales remains concentrated in the San Francisco Bay area. Sales in Santa Clara County—the Silicon Valley—fell 22
percent from a year ago and notably the median home price actually declined
in July by 3.4 percent. In
contrast, strong home sales and price gains continue in Southern California.
International economic weakness is now
noticeably affecting California exports.
Shipments of California-made goods to other countries in the second
quarter of 2001 fell 6.6 percent below the comparable 2000 figure.
For the first half of the year, California exports were still up 2.9
percent, a gain well below last year’s 20.7 percent jump.
Second quarter weakness was confined mostly to the computers
and electronics sector, where exports fell by 16 percent from the
year-earlier pace. Industrial
machinery, which excludes computers under the new North American Industry
Classification System (NAICS), was also down by 6 percent.
In contrast, both agriculture and food products and chemicals rose 17
to eight of the leading ten countries declined, led by a 34 percent drop in
South Korea, which was the fastest growing California market in 2000. Exports to Mainland China surged 38 percent and shipments to
the UK rose 3 percent.
Exports Slow from 2000
Monthly Cash Report
General Fund agency cash for August was $316 million below the 2001 Budget Act
forecast of $4.826 billion. Year-to-date,
revenues are $142 million below expectations.
Personal income tax revenues were $185
million below the month’s forecast of $2.388 billion.
Withholding receipts, which were 11.2 percent below the year-ago
level, were $189 million below the month’s estimate of $2.226 billion.
Other receipts were $15 million above the projected level of $313
million and refunds were $11 million above the estimate of $151 million.
Sales and use tax receipts were $4 million below the month’s forecast of
$2.017 billion. August cash
includes the remaining portion of the final payment for second quarter
sales, as well as the first prepayment for third quarter sales.
It appears that final payment receipts were somewhat lower than
expected, which was offset by a slight gain in the prepayment.
For July and August combined, the sales tax is $64 million above
Bank and corporation tax revenues were $79
million below the month’s forecast of $130 million.
Prepayments were $12 million below the forecast of $85 million and
miscellaneous payments were $43 million lower than the $129 million that was
expected. Refunds exceeded the
forecast of $84 million by $24 million.
September will be a significant month for this tax because the third
estimated payment for calendar year corporations is due September 15.
Revenues from the insurance, estate,
alcoholic beverage, and tobacco taxes came in $18 million below the $122
million that was expected. The
remaining revenues—pooled money interest income and “other”
revenues—were $30 million below the month’s estimate of $169 million.
General Fund Agency Cash
2001-02 Governor's Budget Forecast
2000-01 Comparison of Actual and 2001 Budget Act 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