California’s economic condition, while still hobbled by weak business investment, is better than the nation’s as a whole. Homebuilding again made impressive gains in March. And, although the state lost jobs again in March, the percentage loss was considerably less than that in the nation. The state’s unemployment rate retreated slightly while the national rate was unchanged. The state’s struggling high-tech sector continues to hold down job growth and commercial construction.
California’s unemployment rate was 6.6 percent, down from an upwardly revised 6.7 percent in February (originally reported at 6.6 percent). The number of unemployed decreased by 20,000 in March, while the labor force increased by 6,000. A year ago, the state’s unemployment rate was 6.6 percent. The national unemployment rate was 5.8 percent in March, unchanged from February.
Nonfarm payroll employment fell by 4,100 in March, which, like last month, was much less than the state's propor-tionate share of the total number of jobs lost in the nation. (Job losses totaled 108,000 in the nation in March.) From March 2002 to March 2003, nonfarm employment grew by 9,300 in California while falling by 293,000 in the nation.
Employment growth was led in March by Construction—unsurprising given the pace of home construction—and Education and Health Services. Construction employment grew by 8,400 jobs; Education and health industries added 5,700 jobs. Other gains included Financial Activity, 3,000, and Information, 1,700.
Seven industry sectors lost jobs in March. Professional and Business Services firms dropped 9,300 jobs; Trade, Transportation, and Utilities, 5,600; Federal, State and Local Government, 4,100; Manufacturing, 2,200; Other Services, 1,000; Leisure and Hospitality 400; Natural Resources and Mining, 300. This was the second consecutive month-over-month drop in Government. The losses appear to originate from reduced noneducation employment at the state and county levels.
From March 2002 to March 2003, Leisure and Hospitality made the greatest gains—43,700 jobs (2.5 percent). Education and Health Services added a comparable 34,400 (2.3 percent); Government, 24,300 (1.0 percent); Construction, 18,900 (2.4 percent); Financial Activities, 16,500 (2.4 percent); and Trade, Transportation, and Utilities, 16,000 (0.6 percent).
Year-over-year losses were concentrated in the state’s high technology industries. Losses in Manufacturing, 64,600 jobs (3.9 percent), were still led by the high technology electronics sectors including Computer & Electronic Products. The new Information sector—also a high tech specialty—dropped 47,800 jobs (9.2 percent). Professional and Business Services employment dropped by 17,200 (0.8 percent).
Home building again made strong gains in February, improving on January’s impressive surge. Residential construction, measured by permits issued, grew over 50 percent in February to an annual rate of 261,000 units. This pace was largely fueled by a 136 percent jump in the volatile multifamily sector.
Nonresidential construction, in contrast, continued to struggle. Total nonresidential construction, measured by the value of permits issued, dropped more than 14 percent in February. Moreover, February’s annual rate of $975 million was the slowest pace recorded since February 1998. While reduced office construction continued to account for a significant share of the slowdown, there was a slowdown in all commercial sectors, with the exception of parking garages. The pace of office construction is off 87 percent from its peak in September 2000.
Monthly Cash Report
Preliminary General Fund agency cash for March was $166 million above the 2003-04 Governor’s Budget forecast of $4.031 billion. Year-to-date, revenues are $203 million lower than the $48.026 billion that was expected.
Personal income tax revenues were $130 million above the month’s forecast of $857 million. Withholding was $53 million above the estimate of $2.026 billion and other payments were $17 million lower than the $418 million that was expected. Refunds were $94 million below above the projected level of $1.587 billion. April receipts will be critical for this tax as final returns for the 2002 tax year are filed. Year-to-date, personal income tax revenues are $254 million below the forecast.
Sales and use tax receipts were $37 million above the month’s forecast of $1.542 billion. March represents the second prepayment for first quarter sales and use tax liabilities. Year-to-date, sales and use tax revenues are $14 million higher than expected.
Corporation tax revenues were $81 million below the month’s forecast of $1.222 billion. March is a significant month for this revenue because the final payments for 2002 calendar year corporations were due. Prepayments were $172 million below the estimate of $485 million and refunds were $32 million above the projected level of $74 million. Partially offsetting this shortfall, however, were other payments, which include final payments and miscellaneous payments. These receipts were $123 million above the forecast of $811 million. April will be another important month for this tax since the first prepayment for 2003 calendar year corporations is due mid-month. Year-to-date, corporation tax revenues are $41 million below the forecast.
Revenues from the insurance, estate, alcoholic beverage, and tobacco taxes came in $84 million above the $332 million that was expected; the bulk of the gain was from the estate tax. The remaining revenues—pooled money interest income and “other” revenues—were $4 million below the month’s estimate of $78 million.
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.
