The end of summer brought mixed news for California. The unemployment rate
dropped precipitously in August, but job growth was not as dramatic. Building
activity slowed during July and August but still maintained a commendable lead
over last year's pace. Meanwhile, strong home sales continued and home prices
are much higher than at this time last year.
- Nonfarm payroll employment rose by 3,100 in August.
(July's loss was also revised down to a loss of 9,300 from the 17,300 originally
reported). Six of 11 major industry sectors gained jobs last month. Information
added 5,400 jobs; Construction, 3,700; Professional and Business Services,
2,900; Financial Activities, 2,700; Leisure and Hospitality, 800; and Other
Services, 500. Job gains in Motion Picture and Sound Recording prompted the
Information sector gains and reversed two months of losses.
- Among the losing industries, Government lost 4,300
jobs; Educational and Health Services, 3,700 jobs; Manufacturing, 3,400; Trade
Transportation and Utilities, 1,200; and Natural Resources and Mining, 300.
This is the first loss in Manufacturing since March. Despite the loss in Manufacturing
as a whole, Computer and Electronics Manufacturing-a California specialty-turned
in its first year-over-year gain since May 2001.
- The state's unemployment rate made a substantial 0.4-percentage
point drop, falling to 5.8 percent from a revised 6.2 percent in July. (A
year ago, the state's unemployment rate was 6.8 percent.) This large drop
was principally due to an unusually large fall in the number of unemployed-76,000
fewer than in July. Household survey estimates of employment and unemployment
have been notably volatile this year. The large August drop in unemployment
may have been caused by some earlier-than-usual start of public school and
college academic years.
- Home building moderated in July to its slowest pace
yet this year. Based on reductions in both single and multi-family construction,
total residential construction authorized by permits fell nearly 12 percent
from a very strong pace in June. Permit issuances fell to 194,000 units from
June's 220,000-unit rate on a seasonally adjusted annual rate basis.
- An unusual amount of volatility has shown up in California
home building in 2004. While permits issued for new home construction during
the first seven months of 2004 are up 3.0 percent from the same months of
last year, it has followed a seesaw pattern on a month-to-month basis. Three
of the seven months saw reduced activity from the month before-two by double-digit
percentages. There were only four such month-to-month drops during all of
- Nonresidential building also slowed in July from an
exceptionally strong pace in June, so it was still a commendable level of
activity. June was the strongest building pace recorded since August 2001.
Total nonresidential construction in July maintained a seasonally adjusted-annual
rate of $16.2 billion, as measured by the value of permits issued. The slowdown
was broad-based, just as June's boom was on the positive side.
- The strong home buying pace that first surged in mid-2003
continued into July. Sales of existing single-family homes totaled 639,910
units on a seasonally adjusted-annual rate basis, a full 1.0 percent improvement
on the June pace and 7.4 percent greater than one year ago.
- Despite improved sales, home prices took a breather
in July. The median price of existing single-family homes sold in July fell
1.1 percent from the month before to $463,540. This price is, however, over
21 percent higher than the July 2003 median.
Unemployment Drops in August
Monthly Cash Report
PrePreliminary General Fund agency cash for August was $122 million above the
2004 Budget Act forecast of $5.333 billion. Year-to-date, revenues are $232
million above expectations. September will be a significant month for both the
personal income and corporation taxes because the third estimated payment for
calendar year filers will be due in mid-September.
- Personal income tax revenues were $24 million above the month's forecast
of $2.448 billion. Withholding receipts, which came in $24 million above the
month's estimate of $2.155 billion, were 9.8 percent above the prior-year
level. Other receipts were $65 million above the projected level of $413 million
and refunds were $65 million more than the estimate of $120 million. Year-to-date,
personal income tax revenues are $32 million above expectations.
- Sales and use tax receipts were $16 million below the month's forecast of
$2.559 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. Year-to-date, the
sales tax cash is $8 million below expectations.
- Corporation tax revenues were $51 million above the month's forecast of
$139 million. Prepayments were $7 million below the forecast of $114 million
and miscellaneous payments were $14 million less than the $152 million that
was expected. Refunds were $72 million less than the forecast of $127 million.
Year-to-date, corporation tax receipts are $111 million above estimate.
- Revenues from the insurance, estate, alcoholic beverage,
and tobacco taxes came in $9 million below the $109 million that was expected.
The remaining revenues-pooled money interest income and "other"
revenues-were $72 million above the month's estimate of $78 million, primarily
due to higher-than-expected "other" revenues.
General Fund Agency Cash
2004-05 Budget Act Forecast
2004-05 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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