The first collections report since the June revenue forecast beat projections by $67.4 million, according to the Economic and Revenue Update for June 11 – July 10. The monthly report from the Economic and Revenue Forecast Council continues the string of good news about the state economy and revenues. Bullet points from the report:
- The U.S. economy added 287,000 net new jobs in June, the largest monthly increase since October 2015.
- The U.S. Purchasing Managers’ Index indicated a fourth consecutive month of manufacturing expansion, but industrial production remains below its yearago level.
- U.S. light motor vehicle sales declined by 4.5% in June.
- Washington’s unemployment rate has flattened due to strong labor force growth.
- Washington’s GDP growth is well above the national average thanks to electronic shopping.
- Major General Fund-State revenue collections for the June 11 – July 10, 2016 collection period came in $67.4 million (4.7%) above the June forecast.
- Large audit payments and refunds that were not included in the forecast added $27.3 million to collections. Without the net payment, collections would have been $40.1 million (2.8%) higher than forecasted.
The report explains an apparent inconsistency in Washington employment/unemployment numbers.
Washington’s unemployment rate held steady at 5.8% in May. The rate is up 0.2 percentage points since May 2015 unlike the U.S. unemployment rate, which has continued to decline (see figure). This is in spite of significantly stronger employment growth in Washington. The explanation for this apparent contradiction is that while employment growth in Washington has been strong at 2.5% over the year, labor force growth has been even stronger at 2.7%. Last May, Washington’s labor force grew only 1.6% over the year. The rapid labor force growth in the most recent year is due to a combination of migration into Washington State and rising labor force participation.
The National Federation of Independent Business also reports optimism among small business owners.
The National Federation of Independent Business (NFIB) said that sentiment among small business owners edged slightly higher in June. The Small Business Optimism Index increased from 93.8 in May to 94.5 in June, its highest level since December. It marked some continued improvement from March’s two-year low in optimism, even as small firms continue to be concerned about the overall economic outlook.
In all, a good month.