There were some hopeful
signs for the California economy in July and August. Despite significant
losses nationally, industry employment in the state essentially held steady in
August. The state’s unemployment rate improved for the second
consecutive month. Additionally, both home building and home sales
improved in July.
Industry
employment fell by a small 1,900 in August, and July’s losses
were revised down to 10,000 from the initially reported 22,000.
California lost far less than its share of the 93,000 jobs
dropped from the nation’s payrolls as a whole. From
August 2002 to August 2003, California nonfarm employment fell
by 33,700.
Five
major industry sectors added jobs in California in August.
Professional and Business Services added 7,600 jobs; Educational
and Health Services, 4,900; Leisure and Hospitality, 3,300;
Financial Activities, 500; and Natural Resources and Mining,
400.
Six
major industry sectors lost jobs. Government lost 7,000
jobs; Information, 4,300; Manufacturing, 3,700; Trade,
Transportation and Utilities, 1,500; Construction, 1,100; and
Other Services, 1,000.
On
a year-over-year basis, five industry sectors added jobs, while
six declined. From August 2002 to August 2003, employment
rose by 35,900 in Leisure and Hospitality, 26,000 in Educational
and Health Services, 13,300 in Construction, 12,000 in Financial
Activities, and 1,100 in Natural Resources and Mining.
Over the year, employment fell by 55,900 in Manufacturing,
26,600 in Information, 17,700 in Government, 12,000 in Trade,
Transportation and Utilities, 7,800 in Professional and Business
Services, and 6,000 in Other Services.
California’s
unemployment rate dropped to 6.6 percent in August, down from an
upwardly revised 6.7 percent in July (originally reported at 6.6
percent). Both civilian employment and unemployment fell
in August, by 60,000 and 32,000 respectively. (The
national unemployment also dropped one-tenth of a percent in
August to 6.1 percent). A year ago, California’s
unemployment rate was 6.7 percent.
Homebuilding
accelerated in July due to an increase in the volatile
multifamily sector. Total residential construction, as
measured by permit issuances, rose from June to a seasonally
adjusted, annual rate of 193,000 units in July, an 8.1 percent
increase. For the first seven months of the year as a
whole, residential construction averaged 36 percent more than
the same months of 2002. On a percentage basis,
multi-family residential construction achieved the greatest
gain, rising 59 percent above its 2002 rate for the first seven
months.
A
strong increase in store construction boosted nonresidential
construction in July. Total nonresidential construction,
as measured by the value of permits issued, rose nearly 17
percent from June and over 6 percent from July 2002. In
addition to stores, parking garage and service station
construction also advanced in July. This counter balanced
slowing office, hotel/motel and amusement and recreation
building. Overall, the pace of commercial construction
during the first six months of 2003 was off 3.4 percent from the
same months of last year.
Existing
home sales rose over 10 percent in July from the rate registered
a year ago. The sale of 596,000 units on a seasonally
adjusted-annual rate basis was a 4 percent increase over
June’s pace. Home sales during the first seven months of
2003 were off only 1.8 percent from the record-setting pace
achieved during the same months of 2002 and are comparable to
the rates seen during the extraordinarily robust real estate
market of the late 1980s.
Existing home prices also continued to advance steadily. The median price of existing single-family homes sold in July rose to $383,320, up over 19 percent from July 2002.
Monthly Cash Report
Preliminary General Fund agency cash for August was $66 million below the 2003 Budget Act forecast of $4.698 billion. Year-to-date, revenues are $105 million above expectations.
Personal
income tax revenues were $86 million above the month’s
forecast of $2.148 billion. Withholding receipts were $60 million
below the month’s estimate of $2.045 billion, but grew 4.1
percent over the prior year. Other receipts were $51
million above the projected level of $312 million and refunds
were $95 million below the estimate of $209 million.
For July and August combined, personal income tax revenues are
$202 million above expectations.
Sales
and use tax receipts were $36 million below the month’s
forecast of $2.176 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 close to
expectations, while the first prepayment receipts were below
forecast. For July and August combined, the sales tax is
$29 million above expectations.
Corporation
tax revenues were $39 million below the month’s forecast of
$140 million. Prepayments were $21 million below the
forecast of $95 million and miscellaneous payments were $59
million lower than the $149 million that was expected.
Refunds were $41 million below the forecast of $104 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 $29 million below the $125 million that was expected, due to lower-than-expected estate tax revenues. The remaining revenues—pooled money interest income and “other” revenues—were $48 million below the month’s estimate of $109 million, primarily due to lower-than-expected “other” revenues.
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.
