The Economic Data Global Express (e-EDGE)

v.4 n.29       Released July 17, 2000
Produced by the Los Angeles County Economic Development Corporation as a public service to the global community.

UNEMPLOYMENT UP AGAIN IN JUNE

     California's unemployment rate edged up to 5.2% in June from 5.1% in May and a decades low of 4.8% in April (these figures are adjusted for normal seasonal variation).  June's rate was unchanged from June 1999.
     The unemployment rate for the 5-county Los Angeles metro area rose to 4.9% in June from 4.6% in May but was down by 0.2 percentage points compared to June 1999 (local area figures are not seasonally adjusted).  The jobless rate declined in Los Angeles County month-to-month but increased in the other four counties.   Los Angeles, with a jobless rate of 5.3%, was the only county to register a lower unemployment rate year-over-year, down 0.5 percentage points compared to June 1999.  June's unemployment rates in Orange and Ventura Counties, at 2.8% and 4.4% respectively, were unchanged from June 1999.  On the other hand, jobless rates increased year-over-year in the Inland Empire.  San Bernardino County's joblessness, at 5.5%, was up by 0.1 percentage points, while Riverside County registered 5.8% unemployment, up by 0.5 percentage points.  San Diego's unemployment rate was 3.3% in June, up from 2.8% in May but unchanged from June 1999.
     Unemployment also increased month-to-month up north but declined on a year-to-year basis.  The jobless rate in the 8-county Bay Area averaged 2.8% in June, up from 2.4% in May.  At 2.2%, San Jose led the region, while the San Francisco metro area's unemployment rate came in at 2.4%.  Compared to last year, San Francisco's unemployment rate was down by 0.2 points while San Jose's rate plunged by 1.1 percentage points.  No wonder Bay Area firms report difficulties hiring enough workers!  On the other hand, double-digit unemployment rates are common in most of California's Central Valley.  The Sacramento area is the notable exception.  Metropolitan Sacramento's jobless rate was up month-to-month, but registered only 4.4% in June.  (Nancy D. Sidhu)
PR: http://www.edd.ca.gov/nwsrel07.htm
 

JUNE EMPLOYMENT TREND STILL HEALTHY

     California's economy continued to churn out new jobs during June, despite the winding down of some Census jobs.  Total nonfarm employment moved up by 3.1% or 428,200 jobs over the year.  By sector, the largest absolute gains over the year came in services, government, construction and retailing.  The state's manufacturing sector continued to shed jobs, down by 4,600.  However, the aerospace sector seems to have leveled off, while electronics employment is moving back into a growth mode.
     In Southern California, the June employment data also made for generally good reading.  Los Angeles County posted a 2.2% or 87,900 gain over 1999, in line with recent results.   The largest absolute job gains were in services and government.  Manufacturing continued to sink, with a loss of 12,700 jobs over the year.  Aerospace dropped 10,000, while apparel lost 3,100 jobs.  The motion picture production employment numbers continue to mystify.  The industry's job count has moved up since April, despite the SAG strike.  The June job number was above the year-ago level by 10,600.  Yet, the industry trade papers talk of tough times for supplier firms due to the strike.
     Nonfarm employment in Orange County moved ahead by 2.8% or by 37,600 in June, the slowest growth so far this year.  The largest job gains were in services and construction.  The County's manufacturing sector continues to post modest growth, with the aerospace sector moving essentially sideways.  Layoffs recently announced by Boeing have yet to take place.  The Riverside-San Bernardino area continued to set the local growth pace, with a 4.5% or 41,700 increase in jobs in June.  Again, the pace of growth eased.  The big gainers were services, government and construction.  The area's manufacturing sector also continued to record solid job gains.
     San Diego County saw nonfarm job growth moderate in June, with only a 2.2% or 25,300 job increase.  This was the slowest rate of increase so far in 2000.  The growth leaders were retailing, services and government.  And the County's manufacturing sector continued in a modest growth mode.  Ventura County also saw job growth ease in June, up 2.5% or 6,500 jobs.  Again, this was the slowest pace of any month this year.  Ventura's manufacturing sector also continued to eke out some growth.
     In Northern California, the San Francisco metropolitan area saw nonfarm employment advance by 2.6% or 31,700 jobs.  In San Jose, the pace was more moderate, a gain of 1.8% or 17,100 jobs.  (Jack Kyser)
PR: http://www.calmis.cahwnet.gov/file/lfmonth/cal1$pr.txt
 

IMF TAKES A HIT FROM G-7 FINANCE MINISTERS

     The finance ministers of the seven leading industrialized countries (G-7) met in Fukuoka, Japan, last week and fired off a "zinger missile" at the IMF.  As a result, the dialog regarding the role and effectiveness of the IMF has been raised to a higher level, culminating 3 years of criticism over the institution's lending policies and mode of operation.  Much of this was triggered by the IMF's response to the 1997 East Asian crisis and the 1998 Russian debt default.
     The G-7 proposed reform plan would encourage more private lending to "middle-income" countries and discourage reliance by certain countries on prolonged IMF lending facilities.  The plan would exempt the poorest countries from these constraints.  Later this week, the G-7 heads of state will hold their Economic Summit in Okinawa and the agenda includes debt forgiveness for the poorest countries.  It will be interesting to see whether the G-7 leaders can agree on this issue and broader reform of the IMF's role.  We are fortunate that the global financial markets have been crisis-free since the Brazilian episode of early 1999.
     Japan's demand for more voting rights within the IMF for Asian countries has to be dealt with.  Most member countries have also called for an enhanced surveillance role for the IMF that would detect early warning signs of financial crisis. Given the continuing disarray of the IMF, a new Managing Director, key resignations of senior staff specialists, and serious loss of credibility, one has to wonder how the next crisis will be handled.  This scenario is more than just a bit scary.  Check your blood pressure frequently in the months ahead.  Sleepless in Los Angeles. (Ken Ackbarali)
 

PRICE PRESSURE--TROUBLES AHEAD

     The Producer Price Index (PPI) for finished goods rose 0.6% in June, the largest monthly increase since the 0.9% increase in March.  Once again it's the sharp increase of energy prices (+5.1%) leading the pack.  Food prices dropped 0.3% and the core PPI, which excludes the more volatile food and energy prices, declined by 0.1%.  The core PPI--fluctuating between +0.3% and -0.2% monthly change since October--shows little sign of accelerating price inflation at the wholesale level.  However, the total PPI's seasonally adjusted annual rate of change for the first six months of 2000 is +4.8%, significantly higher than the +2.9% in 1999 and 0.0% in 1998.  (In 1997, the first year of Asian economic crisis, PPI for finished goods dropped 1.2%.)  The PPI for intermediate goods rose 0.9% mainly because of a 4.7% increase in energy prices.  The PPI for crude goods rose 5.8% as energy prices rose 16.2%.  Crude oil prices rebounded back above $30/barrel for much of June.  Global oil production actually decreased in June despite promised production increases.
     The U.S. Import Price Index report shows that import prices rose 0.8% in June, thanks to a 7.0% increase in petroleum prices.  Export prices declined by 0.1%.  The increased cost of petroleum will trickle down to consumer products if petroleum production does not increase sufficiently.
     There are now concerns over heating oil stocks for the coming winter.  Some of the normal heating oil stock-building resources are being diverted to gasoline production.  Currently heating oil inventory is about half of the June 1999 volume.  If this persists, low inventory levels will present a serious problem for the coming winter especially given that natural gas prices have also doubled in the past 12 months. The futures market prices for December delivery is about $4.30/Kcf (thousand cubic feet), compared to about $2.10/Kcf in July 1999.  Clinton's proposal for a heating oil reserve in the Northeast is nice but will probably be inadequate.  (George Huang)
PPI PR: http://www.bls.gov/news.release/ppi.nr0.htm
Export/Import Prices PR: http://www.bls.gov/news.release/ximpim.nr0.htm
 

AIRLINE PASSENGER TRAFFIC STILL STRONG IN MAY

     Total passenger traffic at Los Angeles International Airport in May increased 6.6% over the year, helped by a 13.0% jump in international traffic.  Ontario posted a 2.8% increase in May, while Palm Springs came in with a 4.3% gain.  However, the news was not quite so cheery at Burbank-Glendale-Pasadena, as May traffic at that facility fell 0.5% over the year.  BGP has posted a string of 8 consecutive months of year-to-year declines in traffic.
     Air cargo tonnage also increased in May, with LAX posting a 2.3% increase, while Ontario came in with a huge 43.1% gain.  International air freight tonnage at LAX continued to roll along, with May arrivals up 9.8% over the year and departures ahead 11.4%.  (Jack Kyser)
 

MAY HOTEL TRENDS ALSO STRONG

     According to PKF Consulting, hotel occupancy rates in Los Angeles County during May came in at 77.7%, compared with 72.6% a year ago.  The average daily room rate moved up 6.7% to $123.09.  This performance was attributed to strong levels of business and tourist travel.  Six areas in the County came in at or above the 80% occupancy level, including: Marina del Rey at 86.8%; South Bay, 84.9%; Valencia, 82.5%; Santa Monica, 82.2%; LAX, 80.7%; and the San Fernando Valley, 80.3%.
     Business also held up in Orange County, with a May occupancy rate of 74.5% compared with 65.9% last year.  The room rate increased 5.1% to $106.01.  The strongest sub-markets were south county and the airport area, but none made it to the magic 80% level.  The PKF data on San Diego County also pointed to a healthy level of business.  The May occupancy rate was 77.5%, versus 75.8% last year, while the room rate moved up 4.4% to $136.76.  Two sub-markets were above 80%:  Sports Arena/Old Town at 83.7% and downtown at 82.4%.  In Ventura County, the May hotel occupancy rate was 67.1% compared with 61.6% last year, while the room rate advanced 9.2% to $78.67.  And the Camarillo market posted a June occupancy of 84.1%.  (Jack Kyser)
 

POLA HAS A BUSY JUNE

     We're in peak shipping season, and the June data from the port of Los Angeles (POLA) was impressive.  The number of loaded import containers was up 30.5% over the year, while loaded export containers were ahead 17.4%.  POLA also handled 110,304 empties during the month.  June was the third month in a row that the port moved over 400,000 containers, and so far traffic is flowing smoothly.  Cross your fingers!  (Jack Kyser)
 
 

QUICK STATS:

* Cal EDD: California unemployment rate for 6/00: 5.2% (5/00: 5.1%)
* Cal EDD: California nonfarm employment for 6/00: +46,500 (5/00: +23,400)
* Cal EDD: LA County unemployment rate for 6/00: 5.4% (5/00: 5.7%)
* Cal EDD: LA County nonfarm employment for 6/00: -8,600 (5/00: +30,700)
* Cal Assn of Realtors: California housing affordability index for 5/00: 29% (4/00: 31%)
* Cal Assn of Realtors: LA County housing affordability index for 5/00: 36% (4/00: 33%)
* Census: US wholesale trade for 5/00: +0.4% (4/00: +0.3%)
* Census: US wholesale inventories for 5/00: +0.8% (4/00: +0.9%)
* Census: US retail trade for 6/00: +0.5% (5/00: +0.3%)
* Census: US business sales for 5/00: +1.0% (4/00: -0.6%)
* Census: US business inventories for 5/00: +0.8% (4/00: +0.5%)
* Federal Reserve: US industrial production for 6/00: +0.2% (5/00: +0.5%)
* Federal Reserve: US industrial capacity utilization for 6/00: 82.1% (5/00: 82.2%)

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