January’s labor market report is the first that uses the new North American Industrial Classification System (NAICS).* Even though NAICS will ultimately provide a better picture of the economy, the transition makes it more difficult to glean current economic conditions. That said, the California economy in January continued along trends that were evident throughout 2002: labor markets remain weak, high tech manufacturing continuing to suffer large job losses. Homebuilding remains the economy’s bright spot.
With
the transition to NAICS, seasonally adjusted industry employment
data will be available only for major industry sectors for three
to five years. This greatly limits the analysis of
month-to-month changes. Additionally, the latest data also
incorporates the results of the annual benchmark revision.
With
these caveats in mind, overall industry employment increased by
28,500 from December to January despite losses in most major
industry sectors. Three sectors added jobs in January.
Trade, Transportation, and Utilities gained 29,500 jobs; Leisure
and Hospitality, 21,300; and Government, 9,200.
Eight
industry sectors reduced employment in January.
Manufacturing lost 8,200 jobs during the month; Professional and
Business Services, 5,100; Financial Activities, 4,700;
Information, 4,400; Educational and Health Services, 3,700;
Construction, 3,400; Other Services, 1,500; and Natural
Resources and Mining, 500.
From
January 2002 to January 2003, Federal, State and Local
Government posted the largest gain in employment—43,200 (1.8
percent), over three-fourths of which occurred at the local
level. Leisure and Hospitality added 38,800 (2.8 percent);
Education and Health Services employment, 30,800 (2.1 percent);
Trade, Transportation, and Utilities, 31,900 (1.2 percent);
Financial Activities, 20,300 (2.4 percent) and
Construction, 12,500 (1.6 percent).
Year-over-year
losses were led by Manufacturing, which shed 75,100 jobs (4.5
percent), over half of which came from high technology
electronics industries. The new Information sector dropped
36,600 jobs (7.2 percent), another sign of the overall weakness
in the high tech sector. Professional and Business Services
employment dropped by 3,300 (0.2 percent).
The
state's unemployment rate declined to 6.5 percent in January,
down from an upwardly revised 6.9 percent in December.
(The revision to 6.9 percent—from the previously reported 6.6
percent—was largely the result of revisions to the labor force
data series including the new benchmark data, updated census
information and seasonal adjustment factors.) A year ago,
unemployment in the state was 6.4 percent. In fact,
previous reports put the rate at either 6.4 percent or 6.5
percent for nearly every month of 2002. The number of
unemployed decreased by 63,000 from December to January, while
the labor force grew by 61,000. The national unemployment
rate was 5.7 in January 2003.
Home building enjoyed a strong burst of activity in January,
increasing nearly 21 percent from a year ago. This is a
turnaround from the slowdown seen during November and December.
Single-family home building was the source of this gain, as it
has been for the past year. Permits for single-family
homes totaled 162,000 units in January, on a seasonally
adjusted, annual rate basis, a 42.5 percent increase from the
January 2002 rate. The more volatile multi-family sector
slowed for the third consecutive month. Multi-family
permits were nearly 37 percent below the January 2002 pace.
Despite some signs of strength at the end of 2002, nonresidential construction slowed dramatically in January. Measured by the value of permits issued, total nonresidential construction dropped over 20 percent in January from December 2002’s pace. A slowdown occurred in all commercial building categories. Industrial construction permitting increased 4.3 percent in January.
*
For more information
on NAICS you can read “NAICS: A NEW DATA STRUCTURE” in the November-December
2002 California Economic Indicators at http://www.dof.ca.gov/HTML/FS_DATA/indicatr/2002/Nov-Dec_02.pdf
or see EDD’s information at http://www.calmis.cahwnet.gov/htmlfile/programs/naics.htm.
California Nonfarm Employment Under NAICS
Monthly Cash Report
Preliminary General Fund agency cash for February was $241 million below the 2003-04 Governor’s Budget forecast of $3.708 billion. Year-to-date, revenues are $362 million lower than the $43.995 billion that was expected.
Personal
income tax revenues were $241 million below the month’s
forecast of $1.283 billion. The shortfall was due to
higher than expected refunds. Refunds were $272 million
above the projected level of $956 million, but since February is
only the first of several significant months for 2002 tax year
refunds, it is not clear how much of this month’s increase may
be due to cash flow. Withholding was $73 million above the
estimate of $1.975 billion and other payments were $42 million
lower than the $264 million that was expected.
Year-to-date, personal income tax revenues are $384 million
below the forecast.
Sales
and use tax receipts were $44 million below the month’s
forecast of $2.096 billion. February cash includes the
remaining portion of the final payment for fourth quarter 2002
sales, which was due January 31. In addition, the first
prepayment for first quarter 2003 sales was due in February.
The slight loss in revenue is attributable to fourth quarter
sales; first quarter receipts are tracking well.
Year-to-date, sales and use tax revenues are only $23 million,
or 0.2 percent, below the forecast.
Corporation
tax revenues were $20 million above the month’s forecast of
$150 million. Prepayments were $6 million above the
estimate of $94 million and other payments were $23 million
below the forecast of $133 million. Refunds were $37
million below the projected level of $77 million.
Year-to-date, corporation tax revenues are $40 million above the
forecast. February is not a significant month for this
tax. March, however, is a critical collection month and
will provide a more meaningful measure since final payments for
calendar year corporations are due by mid-month.
Revenues from the insurance, estate, alcoholic beverage, and tobacco taxes came in $33 million above the $102 million that was expected. The remaining revenues—pooled money interest income and “other” revenues—were $9 million below the month’s estimate of $77 million.
General Fund Agency Cash
2003-04 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.
