State economy and revenue collections continue steady growth

The February Economic and Revenue Update shows continued steady growth in the state economy, which fuels state revenues. The report, from the Economic and Revenue Forecast Council, also contains some good news about manufacturing.

We have two months of new Washington employment data since the November forecast was released. Total nonfarm payroll employment rose 8,500 (seasonally adjusted) in No- vember and December, which was just 800 more than the 7,700 expected in the forecast. While the total job growth was on track, the composition of net new jobs was quite different from the forecast.

The manufacturing sector added 200 jobs in the last two months; the forecast had expected a reduction of 3,600 manufacturing jobs. The variance in manufacturing job growth was mainly due to the aerospace sector, which was expected to shed 4,000 jobs but instead lost only 1,300. Construction employment increased 1,700 compared to a forecasted decline of 400 jobs. On the other hand, private, service-providing sectors added only 4,500 jobs in November and December compared to a forecasted increase of 10,100 jobs. Government payrolls expanded by 2,200 jobs in the two-month period, ex- ceeding the forecast of 1,500 net new jobs.

For state revenues, the report suggests we will see an upward revision in next month’s official revenue forecast.

Major General Fund-State revenue collections for the January 11 – February 10, 2017 col- lection period came in $27.1 million (1.7%) above the November forecast. Cumulatively, collections are now $110.5 million (2.4%) higher than forecasted. Adjusted for net large one-time payments since the November forecast and an expected refund which has been delayed, cumulative collections are $93.4 million (1.9%) higher than forecasted.

In all, a solid performance that should provide a little assistance to state budget writers. On a related note, we’re glad to see reports of stronger growth in the Spokane economy.