OVERVIEW OF BUSINESS ACTIVITY
Calendar year 1997 gross income was up 10 percent over calendar 1996 and showed the continuing effects of a strong Washington State economy. The calendar year 1997 increase easily surpassed last year's increase of 7.7 percent. The major components behind this growth were the manufacturing and contract construction sectors with a 15.1 percent and a 14.8 percent increase respectively.
Contract construction reported a strong increase in 1997 as the sector's 14.8 growth rate compares to only a 5.6 percent increase in 1996. General building construction was up 16.4 percent, heavy construction 18.5 percent and special trade contractors 12.2 percent.
The overall 15.1 percent increase in the manufacturing sector was primarily due to a 36.1 percent increase in the transportation equipment sector. The transportation equipment sector alone reported close to $31 billion in gross income for the year and accounted for nearly 41 percent of all manufacturing income reported to the Department of Revenue. What held the overall manufacturing sector increase to 15.1 percent was weakness in other manufacturing industries. Food products and lumber and wood products, the two largest manufacturing industries behind transportation equipment, were both down a small amount from last year, and paper and allied products was down by 1.9 percent. However, many smaller, but still significant, manufacturing industries reported increases; apparel and textiles was up 6.5 percent, furniture and fixtures 5.7 percent, and chemicals and allied products 9.9 percent. The 27.9 percent increase in petroleum refining was mainly due to some reclassification changes. The primary metal industry was up 6.6 percent, and fabricated metal products was up 10.6 percent.
Transportation and allied services was up 4.5 percent with a 21.2 percent increase in railroads and an 8.1 percent increase for motor freight and warehousing, off-setting declines in local and suburban transit and air transportation services. The 27 percent decline in air transportation services was due in large part to an SIC reclassification.
The communication and utilities sector was up 5.3 percent. Individually, communication was up 7.6 percent, and water companies 7.3 percent. The 11.5 percent increase for electric companies, and the nearly 45 percent decline for gas companies, was due to reporting changes and industry reclassifications for a number of companies. Overall, combined gas and electric company gross income was up 2.6 percent.
Wholesale trade was up 7.6 percent. Wholesale durable goods carried the entire sector with an increase of 14.3 percent, and nondurable goods was up a mere 0.2 percent. However, the weakness in nondurable goods was really centered in three industries--paper products, down 6 percent, farm product raw materials, down 11.1 percent, and petroleum and petroleum products, down 6.7 percent.
Retail trade did somewhat better than the wholesale trade sector with an 8.2 percent increase. The strongest retail industries were: apparel and accessories, up 12.9 percent; furniture, furnishings and equipment, up 17.4 percent; and miscellaneous retail stores, up 13.3 percent. Significant in terms of the economy was eating and drinking places, up 6.6 percent. All major retail industries reported increases; the largest retail industry, automotive dealers and gas stations, was up 5.2 percent.
Finance, insurance and real estate had a strong year with a 10.9 percent increase. Finance was up 10.5 percent, insurance up 16.5 percent, and real estate up 15.6 percent.
The services and other business sector was up a solid 10 percent. Both business services and automotive repair and services were up over 12 percent. Within business services, computer services was up 10.8 percent. Second only to business services in gross income within this sector, medical and health services was up 8.4 percent.
Gross income reported to the Department of Revenue continued its near record pace with the largest year-to-year gain since calendar 1990. Major industry sectors such as construction, manufacturing, and business services had strong increases. Some wholesale and retail industries showed weakness, but within these sectors there were significant increases in key retail industries such as furniture and furnishings, apparel and accessories, and eating and drinking establishments.