OVERVIEW OF BUSINESS ACTIVITY
2nd Quarter, 1999
(April, May, June 1999)
Second Quarter, 1999 gross income was up 6.9 percent, only slightly below the 8.3 percent increase in 1st Quarter, 1999. Strong gains were reported in construction, manufacturing, and retailing.
The contract construction sector reported a 10.5 percent increase, outperforming 1st Quarter’s 9.6 percent gain. Heavy construction (primarily highways) was up 8.6 percent after a slight decrease in 1st Quarter. General building contractors was up 10.3 percent and special trade contractors was up 11.3 percent.
Manufacturing posted the strongest year-to-year increase of the ten major industry sectors. Manufacturing was up 11.8 percent, led by a 22.7 percent increase in paper and allied products and the transportation equipment industry with an 18.8 percent gain. On the other hand, food products was down 1.2 percent after a 4.9 percent increase in 1st Quarter. Petroleum refining indicated a 66.4 percent increase, but this was primarily due to ownership and reporting changes in that industry.
Transportation and allied services was up 6.9 percent with railroads leading this increase with a 23.7 percent gain; water transportation was up 16.4 percent, and air transportation services was up 9.1 percent. Motor freight and warehousing, the largest industry in this sector, was up 2.9 percent.
Communication and utilities was up 8.9 percent with the communication industry leading this increase with a 15.4 percent gain. Electric companies (which includes most natural gas sales) was up 9.5 percent.
Wholesale trade was up only 1.2 percent with durable goods up 2 percent and nondurable goods up 0.3 percent. Within wholesale durable goods, motor vehicles and auto equipment reported a substantial 13 percent increase, but this increase was largely offset by a 12.5 percent decline in machinery and equipment. Nondurable wholesale goods continued to be heavily impacted by decreases in income reported in farm-product raw materials.
Retail trade was second only to manufacturing in gross income growth with an 11.3 percent increase. Automotive dealers and gas stations reported a 17 percent increase, followed closely by furniture, furnishings and equipment, up 14.2 percent. Apparel and accessories was also strong with a 12.4 percent gain, and eating and drinking establishments continued strong growth for that industry with a 6.6 percent increase. The 4.4 percent decline in food stores was due mainly to a reclassification of some grocery stores (SIC 541) which caused the 7.1 percent decline in that industry. Non-store retailers (SIC 596) was up 75 percent and represents retailers selling through mail order and on the Internet.
Finance, insurance and real estate was up 5.5 percent with the largest industry in this sector, finance, up 3.2 percent. The insurance industry was up 12.1 percent.
Services and other business was up 1.1 percent with gross income of nearly $14.3 billion. The nominal overall growth rate in the service sector was largely due to a 27.9 percent decline in computer services. Hotels and motels reported a small decline from last year, and the personal services industry reported slow growth with a 3 percent increase.
Overall, 2nd Quarter represented a continuation of higher gross income growth seen in 1st Quarter, 1999, after low gross income gains throughout Calendar 1998. Strong gross income growth in construction, manufacturing, and retailing offset weakness in the wholesale and service sectors.