After avoiding the national employment slowdown for several months, California’s labor market took a turn for the worse in November as a sharp drop in employment pushed the unemployment rate up. Construction and real estate activity in October, though, appeared to be shrugging off the immediate effects of the September 11 attacks.
California’s industry employment fell by 53,400 in November. The loss was broad-based, affecting the service, trade, manufacturing, and transportation sectors. Within the private sector, only the finance, insurance, and real estate industries grew in November.
Manufacturing employment dropped 9,200 in November with losses in all durable goods industries—both electronics and construction-related. Nondurable manufacturing made a slight gain, led by food processing. Nationally, manufacturing dropped 163,000 jobs.
Service sector employment fell by 15,900 in November. Business services dropped 9,000 jobs, for the seventh consecutive month-over-month reduction and the largest one-month loss on record. Motion picture employment fell by 4,400 and amusement and recreation lost 2,400 jobs—much of it related to the September 11 attacks.
Government was again the state’s leading growth industry in November, based on continued growth in education. Most of this growth was due to the opening of the new California State University Channel Islands campus.
On a year-over-year basis, total industry employment grew by a modest 11,900 or 0.1 percent. Government added the most jobs, 66,000. Wholesale and retail trade followed by adding 22,000 jobs. Manufacturing has shed the most jobs, with employment falling by 88,300 since November 2000.
California's unemployment rate rose for the fourth consecutive month in November, to 6.0 percent. This is 0.2 percent above October’s revised rate of 5.8 percent. The number of persons unemployed rose by 30,000. The unemployment roles have grown by 267,000 over the last nine months. Nationally, the jobless rate jumped 0.3 percent to 5.7 percent.
Construction has been on a roller coaster ride for several months. Both residential and nonresidential construction slumped in June and July but recovered in August. The attacks in September caused a sharp slowdown, but better news and lower interest rates sparked another upturn in October.
Residential construction, measured by permitted units, grew by almost 8 percent in August and then fell over 16 percent in September, to the lowest rate since February 1998, before recovering over 15 percent in October. Nonresidential construction followed a similar but even more volatile path.
Home sales followed a similar roller coaster pattern. A strong August was followed by a serious slowdown in September—the slowest month for home sales in California since the end of 1995—and then a modest recovery in October. Sales of existing single-family homes were still down 9.7 percent from October 2000. The state’s median single-family home price in October, $272,570, was down slightly from September, but was still 8.5 percent above the year ago reading.
Another sign of the times came in the form of tepid retail sales growth at the kick-off of the winter holiday season. The TeleCheck Retail Index—a year-over-year, same-store comparison of the dollar volume of checks written by consumers at retail establishments—rose a modest 1.8 percent in California on the day after Thanksgiving. The index rose 4.7 percent at this time last year and 5.6 percent in 1999.
Same-Store Retail Sales Rise Modestly
Monthly Cash Report
Preliminary General Fund agency cash for November was $104 million below the 2001 Budget Act forecast of $4.4 billion. Year-to-date, revenues are $931 million below expectations.
Personal income tax revenues were $129 million below the month’s forecast of $2.065 billion. Withholding was $141 million below the estimate of $2.155 billion—7.3 percent below the year-ago level. Other receipts were $1 million lower than the forecast of $202 million, and refunds were $13 million lower than the projected level of $292 million. For the year to date, this tax is $827 million under forecast.
Sales and use tax receipts were $65 million below the month’s forecast of $2.07 billion. November cash includes the final portion of the final payment for third quarter sales, as well as the first prepayment for fourth quarter sales. Most of this loss appears to be attributable to third quarter sales, which were weaker than forecast and below last year’s level. Through November, the sales tax is $54 million below expectations.
Bank and corporation tax revenues were $11 million below the month’s forecast of a loss of $109 million. Prepayments were $5 million below the estimate of $93 million and other payments fell $2 million short of the $79 million estimate. Refunds were $4 million above the projected level of $281 million. To date, this tax is down $325 million from forecast.
Revenues from the insurance, estate, alcoholic beverage, and tobacco taxes came in $11 million above the $122 million that was expected. The remaining revenues—pooled money interest income and “other” revenues—were $90 million above than the month’s estimate of $252 million.
General Fund Agency Cash
2001-02 Budget Act Forecast
2000-01 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.
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