Consumer
spending and real estate are the shining stars of the California economy.
Private sector employment growth in August was led by the retail trade
industry. Sustained home sales
continue to push home prices up at double-digit rates.
Home building also came on strong in July, spurred by low interest rates.
Rising office vacancy rates, though, are hampering commercial
construction.
California’s
industry employment grew by 11,700 in August.
The growth originally reported for July (7,500) was,
however, revised to an 11,000 loss, leaving a net gain over the
last two months of only 700 jobs.
In
August, government, wholesale and retail trade, and finance were
the only job-gaining major industries.
Government payrolls advanced for the eleventh consecutive
month with the addition of 16,400—mostly public school—jobs.
State Government dropped 400 over the month. The private sector
dropped 4,700 jobs. The
trade sector gains came from 3,000 new retail jobs, led by food
stores, and 600 new wholesale trade jobs.
Growth in insurance and real estate industries led the
finance sector in adding 400 jobs.
Losses
on both the durable and non-durable sides made manufacturing the
leading job loser in August.
By dropping 6,300 jobs—led by electronics and food
processing—manufacturing accounted for over 72 percent of the
state’s total nonfarm job losses in August.
On
a year-over-year basis, industry employment in California fell
by 61,400 (or 0.4 percent) in August.
Manufacturing continued to lead job losses by shedding
75,900 jobs over the year.
Weakness in air transportation, trucking and warehousing,
and telecommunications industries led the transportation and
public utilities sector to follow with a drop of 32,000 jobs.
Government was again the year-over-year job growth
leader, adding 51,200 jobs.
Public schools continue to dominate public sector growth.
California's
unemployment rate dropped to 6.2 percent in August from a
revised 6.4 percent in July.
The improvement resulted, however, from a large drop
(124,000) in estimated labor force participation.
Sparked
by historically low home mortgage interest rates, home sales
grew strongly in July. On
a year-over-year basis, sales of existing single-family detached
homes grew 7.5 percent to 540,800 units at a seasonally adjusted
annual rate. Despite
its strength, this rate is a slowdown from the record setting
pace recorded earlier in the year.
During the first five months of 2002, existing home sales
averaged more than 608,000 units per month.
The average for June and July was 537,000.
With
a limited supply of homes being offered for sale, home prices
have shown even more strength, increasing at a 20-plus percent
year-over-year rate for four consecutive months.
The median price of a single-family home reached $323,700
in July, a 21 percent increase from a year ago.
Homebuilding—which
has been languid since a burst of activity in February—was
resurgent in July. Residential
permitting activity averaged only 149,000 units (seasonally
adjusted, annual rate), from March to June—a scant 1.3 percent
above the same months in 2001.
July shifted gears as residential permitting jumped to
172,000 units—the strongest one-month performance since
January 2001. The
growth, though, was centered in the more affordable inland
regions of Sacramento and Riverside-San Bernardino.
In
contrast, nonresidential construction in July, as measured by
permit values, was off 3.7 percent from a year ago.
Industrial construction permitting fell over 36 percent
in July from one year ago.
While office construction was up slightly from a very
weak July 2001, the total for the first seven months of 2002 was
off by more than 53 percent for the same months of 2001.
Office Vacancy Rates Up Sharply in the Bay Area
Monthly Cash Report
Preliminary General Fund agency cash for August was $223 million below the 2002 Budget Act forecast of $4.531 billion. Year-to-date, revenues are $265 million below expectations.
Personal
income tax revenues were $117 million below the month’s
forecast of $2.077 billion.
Withholding receipts were $79 million below the
month’s estimate of $1.986 billion.
Other receipts were $31 million above the projected level
of $224 million and refunds were $69 million above the estimate
of $133 million.
Sales
and use tax receipts were $39 million below the month’s
forecast of $2.111 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, as were the prepayment receipts.
For July and August combined, the sales tax is $49
million above expectations.
Corporation tax revenues were $68 million below
the month’s forecast of $129 million.
Prepayments were $12 million below the forecast of $82
million and miscellaneous payments were $8 million lower than
the $119 million that was expected.
Refunds exceeded the forecast of $72 million by $48 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 $10 million below the $136
million that was expected.
The remaining revenues—pooled money interest income and
“other” revenues—were $11 million above the
month’s estimate of $78 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.
