OVERVIEW OF BUSINESS ACTIVITY
1st Quarter, 1998
Statewide gross income for 1st Quarter, 1998 was up less than 1 percent. Nominal growth in major sectors such as manufacturing, combined with outright declines in transportation, wholesale trade and communication and utilities offset gains in construction, retail trade and the finance and service industries. However, adjustments to gross income data were partly responsible for the low rate of gross income growth. On a directly comparable year-to-year basis, gross income was up 2.2 percent. Additionally, any apparent weakness in gross income for 1st Quarter, 1998 must be considered in light of the exceptionally strong growth of 1st Quarter, 1997.
Contract construction continued its strong-paced growth with a 9.6 percent increase. General building contractors reported a 10.3 percent gain and special trade contractors was up 11.7 percent. Heavy construction was down slightly with a 1.3 percent decline.
Income growth slowed in the manufacturing sector with outright declines in a number of key industries. Food products, lumber and wood products, paper and allied products, chemicals, petroleum refining, and fabricated metals all reported declines. However, a portion of the decline in some of these industries was due to outright product price declines within their respective industry. Several significant manufacturing industries posted gains. The largest manufacturing industry, transportation equipment, was up 10.9 percent, and machinery was up 14.9 percent.
The transportation and allied services sector declined 4.7 percent. Part of this decline was due to SIC code reclassifications in air transportation services and continued weakness in railroads. The largest industry within the transportation sector, motor freight and warehousing, was up 2.4 percent.
Communication and utilities was down slightly (0.5 percent). The large decline in gas companies was due entirely to ownership changes and SIC code reclassifications within the natural gas industry. Likewise, the increase in electric companies was due to these same changes.
Wholesale trade was down 7.7 percent with declines in both durable and nondurable goods. Durable goods was down 10.5 percent; however, most of this decline was because of an adjustment in the data for professional and commercial equipment and supplies. Without these adjustments the year-to-year change in that industry would be flat and would reduce the year-to-year decline for both durable goods and the overall wholesale sector by a considerable amount. The decline in nondurable goods was the result of declines for paper and paper products, farm product raw materials, and petroleum and petroleum products.
Retail trade was up 4.2 percent with building materials, hardware up 7.2 percent, furniture furnishings and equipment up 11.3 percent and miscellaneous retail stores up 6.7 percent. Automotive dealers and gas stations, the largest retail sector industry, was down 1.3 percent.
The finance, insurance and real estate sector was up 3.9 percent and the services and other business sector 6.9 percent. Within the service sector, business services was up 8.4 percent, and both medical and health and legal services were up 9 percent.
Indicated gross income was up only 0.7 percent on an unadjusted basis in comparison to a very strong 1st Quarter, 1997. The contract construction sector, retail trade, and service sectors posted good year-to-year increases. Declines in some manufacturing and wholesale industries were due in part to product price declines within those industries.