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Mar 10

Sales Tax Distribution Report & Advice

Posted on March 10, 2016 at 2:09 PM by Paige Worsham


March 2, 2016 Report

North Carolina sales tax collections, distributed this month, show a marked increase over the previous month. Collections were $285,817,130.37, which is a whopping increase of 22.23% over December.

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These changes are dramatic, but are reflective both of normal holiday sales increases and a national uptick in core capital goods (i.e. non-defense) spending. According to the Atlanta Federal Reserve “In January, new orders … rose 3.9 percent month over month. The January increase in new orders was the largest monthly increase since June 2014.” This upward momentum was also seen in the Richmond Federal Reserve’s survey of our region’s service sector retail respondents. Unfortunately, that same survey suggests that at least some of this rate of increase will dissipate when we see February collections.

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To the extent we see continued growth, the February numbers will likely reflect fewer big-ticket item sales, but stronger general consumer purchasing.

On the industrial side, manufacturing continues to decline at a slow pace. In our region, both manufacturing shipments and orders declined. As you will recall from previous updates, this was expected because of the continued strengthening of the U.S. dollar. (Blue lines on the graph below show the weekly value of the US dollar, while the green line shows the general trend, over a two-year period).

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Interestingly, going forward, business is generally optimistic about the next six months and expects wages and work-weeks to increase as domestic demand slows but steady expansion continues.

One final area of interest this month is housing. Traditionally construction has been a strong driver of the North Carolina economy. Nationally, new single-family home sales fell 5.2 percent from last year’s level, and existing single-family home sales increased 11.2 percent during the same period. This factor, combined with the current number of months a home stays on the market for each type, suggests that US consumers are increasingly shifting to purchasing existing homes. Combined U.S. house prices increased between five and six percent in December on a year-over-year basis (see graph below).

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