June 10 – Economic activity in New Mexico continues to perform strongly, with matched taxable gross receipts (MGTR) at the second-highest level ever, according to a recent report from the state Economic Development Department.
The report, compiled by state economists Joel Salas and Daye Kwon, noted that New Mexico’s MTGR in the second quarter of fiscal year 2024, which included the months of October, November and December, was $24.9 billion. Matching taxable gross receipts links gross receipts amounts to tax return payments by industry – essentially representing the receipts of businesses within the state.
‘It’s a good way to monitor underlying economic activity as we see transactions taking place [the Taxation and Revenue Department] delivers at the municipal level,” Salas said in an interview. “It records, to some extent, all gross receipts retained within the state.”
Economists say the MTGR from October through December is down from $678 million between July and September, when the state saw a record high of $25.6 billion in matched taxable gross receipts. Despite the decline, economists say MTGR has maintained an upward trend over the past eight quarters.
MTGR is largely anchored in retail – as was the case in previous reports – but also shows the strength of the construction sector, which, according to the report, accounted for 14% of total matched taxable gross receipts for the second quarter of the fiscal year took. .
In raw numbers, the MTGR for the construction sector was almost $3.4 billion, an increase of $528.4 million from the previous year and almost $166 million from the first quarter of the fiscal year. According to reports, it is also the third consecutive quarter that the construction sector has performed second best in MTGR among state-owned industries.
Reilly White, an economist at the University of New Mexico’s Anderson School of Management, said the state’s “rising MTGR” is indicative of increased construction activity and associated higher costs.
“Certain sectors of construction have seen notable increases post-pandemic, such as multifamily and public infrastructure,” White wrote in an email. “However, New Mexico has been highlighted in recent years as experiencing sharp increases in construction costs, driven by labor shortages and a limited pool of available subcontractors.”
In Santa Fe County, total MTGR for the second quarter was $1.6 billion – a year-over-year increase of more than $91 million. According to the report, this was largely due to the retail sector at almost $463 million and the construction sector at more than $252 million.
The professional, scientific and technical services sector had a combined MTGR of nearly $160 million last quarter. White wrote that this is because the county has seen a “historically low unemployment rate of 2.8% and the fewest number of employed workers we have ever seen in the past decade.” But he said that looking at the data collected in these sectors, employment gains have been modest and close to pre-pandemic levels.
When asked whether the MTGR in these sectors has to do with its proximity to Los Alamos National Laboratory, White called the laboratory “a huge economic engine for the local economy,” adding: “LANL improves the economy by stimulating of scientific and technical services and indirectly benefits the Santa Fe economy through employee and contractor expenditures.
“Each year, LANL conducts hundreds of projects with local businesses and is estimated to create nearly 1,000 non-LANL small business jobs through spending,” he wrote.
Meanwhile, gross domestic product, or GDP, also grew in the second quarter. GDP, which measures the value of goods and services produced in the state, was $107.2 billion, according to the report. That represents an increase of $3.3 billion compared to the same period last year.
Taken together, Salas said, both taxable gross receipts and gross domestic product show the state is on an upward trajectory.
“We are seeing these increases, which I think just shows that the economy is in a state where we are growing as a state, and for lack of a better word, there is nothing to be afraid of,” he said. . “The numbers continue to be positive. … [a] A 3.2% year-on-year change in GDP across all sectors – that’s what you want to see.”
