State revenue collections roll in above June forecast; strong, positive signals for state and national economic growth

Today’s update from the Economic and Revenue Forecast Council shows revenues  beating the agency’s June projections.

Major General Fund-State (GF-S) revenue collections for the June 11 – July 10, 2018 collection period came in $41.4 million (2.4%) above the June forecast. Revenue Act collections were $39.3 million (3.0%) higher than forecasted and other collections were $2.1 million (0.5%) higher than forecasted.

Manufacturing looks particularly strong.

Payments from the manufacturing sector increased by 18.5% year over year. Last month payments increased 14.3% year over year. The month saw a large year-over-year increase in payments from the petroleum refining sector and a small increase in payments from the transportation equipment sector. Excluding the transportation and petroleum sectors, payments from the remaining manufacturing sectors increased by a strong 12.2% year over year.

The update reports,

The [national] economic expansion rolls on with another strong increase in employment, continued expansion in manufacturing activity and stronger auto sales. However, average hourly wage growth remains muted, layoff announcements increased and oil prices continue to rise.

The U.S. economy added 213,000 net new jobs in June. Employment data for April and May were revised up by 37,000 jobs. Sectors with notable employment gains in June included manufacturing (+36,000), health care (+25,000), professional and technical services (+25,000), accommodation and food services (+20,000), administrative and support services (+19,000), and educational services (+19,000). Industries with net employment declines in June included retail trade (-22,000), state government educa-tion (-4,000), and telecommunications (-3,000).

And in our state:

We have just one month of new Washington employment data since the June forecast was released. Total nonfarm payroll employment rose 6,400 (seasonally adjusted) in June, which was 600 less than expected in the forecast. As is usually the case, the majority of the employment increase was due to private, services-providing industries, which added 5,800 net new jobs in June. Manufacturing employment rose 700 due mainly to an in-crease of 500 in aerospace. Construction employment declined in June by 200 but government payrolls rose by 200.

Washington’s unemployment rate was unchanged at 4.7% in June. The 4.7% rate reached in May and June was the lowest since June 2007 when it was at an all-time low of 4.6%. A year ago, in June 2017, the Washington unemployment rate stood at 4.8%.

As usual, the report contains a lot of good information. We recommend it. 

The positive ERFC report comes after several days of upbeat national news.

Federal Reserve Chairman Jerome Powell gave lawmakers an upbeat assessment of the economy and expects to keep raising interest rates gradually. He said solid job gains and strong economic growth has enabled the Fed to dial back the “extra boost” it implemented during the financial crisis and recession.

Most U.S. business economists expect corporate sales to grow over the next three months and hiring and pay to rise with them.

The Federal Reserve reported that manufacturing production rebounded strongly in June after pulling back in May due to a fire at an auto supplier. Output in the sector increased 0.8 percent in June after falling 1.0 percent in May. So far in 2018, manufacturing production has seesawed from month to month, but up 1.0 percent over that time frame. Over the past 12 months, production in the sector has risen a respectable 1.9 percent, up from 1.7 percent in the previous release. My forecast for 2018 is for manufacturing production to increase 2.2 percent, which would indicate an uptick in output in the second half of this year. Similarly, manufacturing capacity utilization rose from 75.0 percent in May to 75.5 percent in June, which remains not far from April’s rate (75.8 percent), which was the best reading since August 2015.

Boeing unveiled its annual 20-year forecast for the airplane business at the Farnborough Air Show on Tuesday, reaffirming its very positive view in the ninth consecutive year of a soaring aviation market.

It projects that the world fleet of jet planes will double over the next two decades, from about 24,000 commercial airplanes flying last year to more than 48,500 in 2037.

While complacency is never a good idea, it is good to take notice of positive trends.