GDP, housing sales move up; manufacturing, employment, state taxes show weakness
The Data DIGest
Vol. 3, No. 39
September 22-26, 2003
Gross domestic product grew even more strongly in the second quarter than was previously estimated-3.3% instead of 3.1% at a seasonally adjusted annual rate in real (net of inflation) terms, the Bureau of Economic Analysis reported this morning. However, investment in nonresidential buildings, including farm, grew by only $0.9 billion, half the initially estimated growth.
Housing sales surged again in August, according to two reports yesterday. Sales of existing single-family homes rose 5.5% from July's upwardly revised level; both were records, the National Assn. of Realtors reported. The seasonally adjusted annual rate of 6,470,000 was 22% higher than in August 2002. The median selling price was up 10% from a year ago. Because the number of houses for sale at the end of August rose less (4.2%) than the growth in sales, the inventory-sales ratio dipped to a slim 4.6 months at current rates. The government reported that new single-family home sales rose 3.4% from a revised July number to the second-highest level ever, 1,150,000, 12% above the August 2002 rate. The median new-home sales price was up 3% over that span. The number of new homes for sale was just 3.7 times the number sold, implying that homebuilding should also remain strong.
“After several quarters of deteriorating market conditions, the number of multifamily developers who are optimistic that demand for apartments will improve over the next six months surged,” according to results of the National Association of Home Builders' Multifamily Market Index, released this afternoon. Current conditions remain weak for rental units but stronger for condos, the association said.
Several signs of continuing weakness in manufacturing and jobs appeared this week. Durable-goods orders fell a seasonally adjusted 0.9% in August, the Census Bureau reported yesterday, following an upwardly revised 1.5% gain in July and 2.5% jump in June. The January-August total is 0.4% below the same period of 2002. Levi Strauss said yesterday it would shut its remaining North American manufacturing plants and cut nearly 2000 jobs. DaimlerChrysler announced this week it would not build an expected new assembly plant near Savannah but will invest about $600 million by late 2004 and add jobs to expand its plant near Tuscaloosa.
A sign that the job market remains weak came from a report yesterday from the Bureau of Labor Statistics (BLS) that mass layoff events (involving 50 or more workers at one site) totaled 1,258 in August, affecting 134,000 employees. Those numbers were down substantially from July but up 1% and 4% respectively from a year ago. There were 114 mass layoff events in construction, up from 88 in July and 98 in August 2002. These affected 7900 employees in August, 6000 in July, and 8200 in August 2000. Also yesterday, the Conference Board said its index of help-wanted ads fell again in August and remained below depressed year-ago levels.
Seasonally adjusted nonfarm payroll employment by state changed little from July to August, BLS reported Monday, with half the states adding employees and half shedding them. Over the 12 months to August 2003, 28 states and DC lost employment, led by Michigan (-2.2%) and South Carolina (-2.1%); 22 states added jobs, led by Hawaii (+2.4%) and Nevada (+2.1%). Construction fared better than overall employment for both the month and the year, as 27 states added construction jobs since August 2002 (led by Georgia, +8%), while 20 states and DC shed jobs (led by Wisconsin, -7%). (Two states were unchanged and there was no report from Hawaii.)
Yesterday the Rockefeller Institute of Government (www.rockinst.org) issued preliminary state-by-state estimates of the change in state personal, corporate and sales tax receipts for fiscal 2002 compared to 2001 (actually, the previous July to June, which is the fiscal year for 46 states). The national average was +2.3%, “largely the result of enacted tax increases”, though 10 states had decreases. “State tax revenue in the April-June 2003 quarter increased by 3.1% compared to the same period in 2002. After adjusting for tax law changes and inflation, however, real underlying state tax revenue declined by 1.8%, continuing the adjusted decline for an eighth straight quarter.” Given the balanced-budget requirement in every state except Vermont, the figures suggest many states will have to trim more spending in the current year. These receipts don't include fuel or property taxes, the principal funding source in many states for highway and school construction.
Census reported September 18 that “Florida, with the highest proportion of 65-and-over people in the nation, also led all states with the largest numerical increase [147,000] between 2000 and 2002 of school-age children ages 5-17”, followed by California (145,000) and Texas (122,000)….Seven of the 10 states with the largest numerical growth in school-age populations were located in the 'Sun Belt',” Census said. School-age populations increased in only 15 states, while declining in 35 states and DC. These figures have implications for demand for school construction.
The Data DIGest is a weekly summary of economic news; items most relevant to construction are in italics.