OVERVIEW OF BUSINESS ACTIVITY
2nd Quarter, 1998
(April, May and June 1998)
Quarterly gross income continued its growth during Second Quarter, 1998 but at a slower pace than the strong increases of last year. The retail trade sector recorded the strongest gross income growth for any sector with sales of large-ticket items such as trucks, cars, and home furnishings propelling retail sector growth.
Overall, gross income during the quarter was up 3.2 percent from a year ago; however, due to accounting adjustments to the 1997 data the actual gain was 4.8 percent on a year-to-year basis. Most major industry sectors reported increases, but two sectors reported decreases from last year; these were transportation and allied services, down 5.1 percent and wholesale trade, down 4.7 percent.
The contract construction sector was up 5.5 percent with individual industry gains of 7.8 percent for general building construction and 7.3 percent for special trade contractors. A decline of 7.5 percent in heavy construction was responsible for holding the overall construction sector gain to 5.5 percent.
Manufacturing was up 7.1 percent with major industry gains of 11.6 percent in apparel and textiles, 17 percent in machinery and a nearly 21 percent increase in transportation equipment. The gains in those industries offset declines in such industries as food products, lumber and wood products, chemicals, and petroleum refining. The 20.8 percent gain in transportation equipment, which comprised nearly 50 percent of manufacturing gross income for the quarter, kept this sector in the positive growth category.
Transportation and allied services was down 5.1 percent because of sharp declines in railroads and water transportation; miscellaneous transportation services was also down. Motor freight and warehousing was up 3.9 percent, and air transportation was up 4.5 percent.
Communication and utilities gross income was essentially flat from last year with a 0.1 percent increase. The communication industry itself was down 1.8 percent, electric utilities, up 3 percent, gas companies, up 9.7 percent, and water, up 10.9 percent.
Wholesale trade was down 4.7 percent; however, when the accounting adjustments for last years data are taken into account, wholesale trade on a year-to-year basis would be flat. These accounting changes primarily affected the wholesale durable goods sector and would change the indicated 6.7 percent decline for durable goods to a 3.8 percent increase, and the nearly 37 percent decline in professional and commercial equipment and supplies (SIC 504) would change to a 4.3 percent increase. The changes in the data for last year were the result of gross income reporting anomalies by a number of out-of-state firms. Other wholesale industries were not affected by this problem. Furniture and home furnishings was up 11.7 percent and electrical goods, up 24.4 percent. Wholesale nondurable goods was down 2.2 percent, mostly as a result of declines in paper products and farm-product raw materials.
The retail trade sector reported the strongest gross income growth with a 7.8 percent increase. Building materials and hardware was up 6.4 percent, food stores 5.2 percent, auto dealers 9.3 percent, furniture and furnishings 11.1 percent, and eating and drinking establishments 6.5 percent. Both gas stations and fuel dealers were down over 10 percent, but these declines can be attributed almost entirely to product price declines for gasoline and fuel oil products. Continued strong consumer demand for motor vehicles, home furnishings, and food services (eating and drinking establishments) were the primary factors in retail trade growth.
Finance, insurance and real estate was up 5.2 percent with financial activities up 2.5 percent, insurance 7 percent, and real estate (services and property management) up 21.2 percent. The service sector was up 5.8 percent with hotels/motels up 5.5 percent, and personal services 7.5 percent. Medical and health services was up 12 percent, legal services 5.3 percent, and business services was up less than 4 percent.
Retail trade was the engine behind gross income growth this quarter and out-performed all other business sectors. Strong consumer demand for motor vehicles, home furnishings and dining out (eating and drinking establishments) fueled the engine of gross income growth this quarter.