Title: California Mid-Year Report, 1999: Century Closing with a Strong Economy and Real Estate Market
Abstract: Research Report Fisher Center for Real Estate and Urban Economics University of California, Berkeley Fall 1999 California Mid-Year Report, 1999: Century Closing with a Strong Economy and Real Estate Market The California economy continues to boom, and so does real estate activity. Residential and nonresidential building activity is up for the fourth year in a row. Construction employment continues to rise as homebuilders expand developments at the fastest level since 1990, homeowner demand for remodeling grows, and commercial and industrial builders are pressed to meet the substantial demand reflected in low vacancy rates. At the same time, despite rapid job growth in aggregate, some key industries in the state are seeing slowing employment growth or declines in jobs. Silicon Valley, the state leader in job and export growth for half a decade, has experienced drops in both manufacturing jobs and exports. However, the continuing growth, now based on a mix of services jobs and construction activity, is still bringing demand for new real estate product. Statewide Employment Growth Remains Strong__________ California nonfarm employment expanded at an annual rate of 3.1% during the first half of 1999. With these gains, unemployment again dropped, reaching 5.2% in July 1999 (seasonally adjusted), still 0.9 points above the US level, but 4.5 points below the peak in winter The source of growth has shifted over the past two years. While manufacturing employment was a significant job producer for the state from 1995 through 1998, in 1999, the state has seen modest employment losses in manufacturing. Larger declines centering in high-tech sectors such as aerospace, electronics, computer manufacturing, and instruments have been partially offset by employment growth in construction- related durable sectors, and in nondurable sectors such as apparel, chemicals and food products. Growth is currently being driven by the construction and services sectors. Employment in construction grew by an annual rate of 10% in the first half of this year, adding 55,000 new jobs over the past year. The services sector as a whole added over 200,000 new jobs from a year ago, with the largest increases being in business services, engineering and management, health services and recreation related services. A number of smaller finance, insurance and real estate sectors also experienced strong growth in the first half of the year. Real estate employment grew by 3.5%, adding 6,000 jobs over the previous year. This shift to cyclical products as the basis for growth may contribute to a moderating of growth in the near future. Export Declines Do Little to Slow Momentum_________ Export declines continue in 1999, but with sectoral rather than general effects on the economy. In 1998. exports from California were down 4.2% statewide, with large declines in exports to the state's major Asian trading partners, but increases in sales to NAFTA and European trading partners. In the first quarter of 1999. exports picked up to some of the state's Asian trading partners, but sales dropped both to European countries and to Mexico. Weakening exports were spread broadly across industrial sectors. The state's major high-tech exporting sectors experienced drops in exports of between 5-10% in the first quarter of 1999, while food and kindred products — the state's fifth largest export sector — saw a 13% drop in export sales.
Publication Year: 1999
Publication Date: 1999-06-01
Language: en
Type: article
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